Morrogh investors will be compensated by ICC
The Central Bank controlled ICC is to publish its annual report this week and it is expected the negative financial implications of the recent High Court judgement by Mr Justice Roderick Murphy on the fund will be outlined.
Mr Justice Murphy issued an order that the estimated €5 million in shares held in trust for clients by W&R Morrogh should be used to pay the estimated €3 million-plus costs of receiver Tom Grace and the legal costs of the case before him.
Following this judgement the ICC reviewed its legal obligation to clients and has informed the Morrogh Action Group that any losses incurred by investors as a result of Justice Murphy’s controversial ruling is compensable.
However, the normal rules apply. The fund will pay eligible investors 90% of an investor’s net loss up to a maximum of €20,000. This means that, where the net loss is €10,000, the compensation payable is €9,000 (90%).
Where, for example, the net loss is €40,000, the compensation payable is €20,000 (the maximum). In the case of joint investments, each investor will be considered as having a separate investment equal to the amount that would be produced by dividing equally the total value of the investment.
The stockbroking community is demanding a change in the way the Investor Compensation Fund is funded as they bear the brunt of paying compensation.
However, Finance Minister Charlie McCreevy has already rejected calls to have the levels of compensation payable under the Investor Compensation Act increased from €20,000 to €1 million.
Mr McCreevy told the Dáil that an assessment of the regulatory implications of the collapse of W&R Morrogh is being taken forward by officials at his Department, in conjunction with representatives of the Irish Financial Services Regulatory Authority and the Investor Compensation Company Limited.
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