MMI Stockbrokers, a Dublin firm specialising in investments for private clients, has run into serious financial difficulties.
It has been ordered to cease trading by the Central Bank - except where the bank gives its express permission - and has been given until next Wednesday to put its financial affairs in order.
It is understood that MMI's financial problems are so severe that the company is in danger of going into liquidation. Market sources said the financial deficit at MMI is likely to run into millions of pounds, mainly as a result of the broker's dealings in recent months in Dana Petroleum shares on behalf of its private clients.
The collapse of the Dana price from 24p sterling to 8p sterling in the past two months has left the broking firm holding large volumes of Dana shares, which are now worth less than half what MMI paid for them.
With many MMI clients apparently refusing to pay for the shares MMI had bought on their behalf, the broker was left with a huge loss on its dealings in Dana. It had entered into rollover arrangement, which allowed its clients to continually delay settlement of their liabilities to it. This has been a key factor in the broker's problems.
In a brief statement last night, the bank, which is the regulatory authority for stockbroking firms, said that it has been monitoring liquidity - essentially MMI's ability to meet its financial obligations - for several days and that on Wednesday it had instructed MMI to cease trading, except with the bank's prior approval.
"The bank's priority is the protection of clients' funds," the bank stated.
It is understood that client funds taken in by MMI or its associate fund management company are not in danger and that the Stock Exchange's compensation scheme is unlikely to be required. None of the MMI directors could be contacted for comment last night.