Police called in after £13m 'black hole' found in betting firm account
City of London police have been asked to investigate an alleged fraud at spread-better WorldSpreads.
The company was put into administration late on Sunday after a £13m "black hole" was found in the accounts, putting around 15,000 clients - mostly retail customers - at risk of losing almost half their money.
Administrators KPMG said clients were owed £29.7m, which should have been held in a segregated customer account, but that the group's total cash came to just £16.6m. It appears that WorldSpreads broke the golden rule that client money and company cash should not be "commingled".
Despite the missing funds, KPMG is hopeful that clients will get all their money back.
Clients had on average just £2,000 each on balance with the company, well below the £50,000 automatic protection given under the Financial Services Compensation Scheme (FSCS).
The FSCS, funded by the financial services industry, will be liable for any shortfall after recoveries made by the administrators. At its peak, the Dublin-based company, which listed on Aim in 2007, was worth about £40m. Shareholders are not expected to recover anything. WorldSpreads had no loans bar a small working capital facility.
The collapse of WorldSpreads will also pose questions for its auditors, Ernst -amp; Young.
E-amp;Y declined to comment yesterday.
It is not clear what will happen to the company's 66 staff, most of whom are based in London.