The UK Financial Conduct Authority said on Friday that it was seeking to fine the former chief executive of collapsed spread-betting firm Worldspreads, Conor Foley, £658,900 (€730,160) for market abuse and to ban him from performing any roles in a regulated financial firm.
Worldspreads, founded by the Irish man, floated on the London AIM market in August 2007. The Dublin-based business collapsed with debts of £32 million in 2012 after the discovery of financial irregularities.
Spread betting allows players to bet on the movement of stock market indices, share prices, commodity values, currencies, asset values and sports results.
The FCA’s so-called decision notice, which is essentially a proposal, on Mr Foley will now come before an independent judicial body, known as the Upper Tribunal, where both sides will present their cases. The tribunal will ultimately decide on the matter and refer this back to the FCA for final action.
Mr Foley, through a spokesman, said that as he had the right to appeal, he would not be commenting at this time.
The FCA said it considered that Worldspreads’ flotation documents, which Mr Foley was involved in drafting in 2007, “contained misleading information and omitted key information that investors would have needed to make an informed decision about the company”.
In particular, the documentation did not mention that some Worldspreads executives had made significant loans to the company and its subsidiaries that were never disclosed in annual accounts, it said.
Allegations
The FCA alleges that between January 2010 and March 2012, “large spread bets” were placed on Worldspreads’ shares by accounts of clients on terms that went against credit policy of the group.
“In addition, large spread bets were carried out on two clients’ accounts by Mr Foley himself without the knowledge of the clients, and this had the effect, in the view of the FCA, of giving the appearance of greater demand for [Worldspreads] shares than in fact existed,” the authority said.
Mr Foley is the third and last former Worldspreads executive the FCA has taken action against following the company's collapse in March 2012. While Worldspreads Group was Irish registered, its Worldspreads Limited unit was based in the UK and regulated by the FCA.
The FCA fined and banned the company's former chief financial officer, Niall O'Kelly, and its financial controller, Lukhvir Thind, in 2017 for falsifying critical financial information concerning Worldspreads' client liabilities and its cash position, which was passed to the company's auditors.
By March 31st, 2011, these misstatements amounted to £15.9 million. The company was unable to meet this client money liability, which ultimately led to its collapse.
