UK based spread betting firm Worldspreads has suspended operations after the company abruptly halted trading on the London Stock Exchange following the discovery of accounting irregularities and entered the FSA's special administration regime.
After the company's close of business on March 16th the company reportedly had a shortfall of £13 million of client money. This allegedly stems from the company not separating business and client funds. The company is expected to formally announced its insolvency on Monday, as there have been no bids by competitors to rescue the business.
Over the weekend, the High Court in London appointed Samantha Bewick and Jane Moriarty of KPMG as joint special administrators for Worldspreads, although KPMG was reportedly the auditor of Worldspreads' accounting books.
The FSA has announced that depending on circumstances, Worldspreads customers may have access to the FSA compensation scheme. Under the plan, up to £50,000 of investments may be retrieved. It has not been made clear if the bill for claims would be the responsibility of advisers.