MMI Stockbrokers has emphatically rejected claims by some of its clients that they were actively encouraged to roll-over their liability to the broker by postponing payment for their shares.

A number of MMI clients contacted The Irish Times yesterday, claiming that, when their 20-day settlement periods expired, they were advised by MMI that they should not sell the Dana shares on which they had arranged the deferred payment under the rollover facility. They claim they were advised to "roll-over" again by MMI.

The investors hoped that further developments could transform the Dana share price. There was speculation around the shares and talk that a big deal was imminent in Russia. One supposed deal was a joint venture with Shell, another was a suggestion that Elf Aquitaine wanted to buy 10 per cent of Dana at well over the market price.

But Mr Oisin Fanning, who stepped down as MMI managing director last week, said that in all cases the clients concerned were given the opportunity to buy or sell the Dana shares and were never encouraged to enter into another 20-day roll-over.

"We always felt that Dana was a good stock; it has oil production in Russia for sale in dollars as well as two-thirds of income coming from North Sea oilfields."

He said that MMI directors themselves did not have a major exposure to the recent collapse in the Dana Petroleum share price.

The Central Bank has said that MMI Stockbrokers may only trade up to next Wednesday in transactions given the express permission of the bank. The associated money broking and asset management companies are not affected by the order, the Bank said yesterday. The London Stock Exchange announced yesterday that it would ban MMI from trading until further notice.

Mr Fanning also rejected suggestions that MMI was unique among Irish stockbrokers in operating such a roll-over payments system, although other stockbrokers contacted by The Irish Times said they did not provide such easy payments facilities to their private clients.

Mr Fanning said that the Dana exposure - which was triggered by London market-maker SBC Warburg's decision to withdraw as a supplier of finance to the scheme - was "controllable" until the collapse of FTSE stocks in the past two months.

While Dana shares were the single biggest element contributing to MMI's financial crisis, clients had also taken position on FTSE stocks using the roll-over facility. "After the fall in FTSE shares, we decided to call in our regulator (the Central Bank) and inform them of our liquidity and cash flow problems."

He repeated that no client funds taken in by MMI are in any danger nor are any funds invested in MMI's various tracker bonds.

Mr Fanning confirmed that MMI was over £1 million out of pocket as a result of around 100 clients refusing to pay for shares they had bought using the rollover facility. In turn, MMI owes this money to London brokers. He hoped the situation would be sorted out next week but declined to comment on reports that MMI was involved in talks with a British investor who would provide equity funding that would allow it to get over its current financial crisis.

Market sources believe, however, that MMI will have to find an investor quickly if the stockbroking company is not to be closed by the Central Bank. While the newly-appointed managing director, Mr Tim Murphy, said the broker would pursue clients for money owed and that solicitors' letters have already gone out seeking repayment, it is thought that this process is too time-consuming to get it out of its immediate crisis.