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Former Spreadbet Employees Fined & Banned for Market Abuse

11th  April 2017

Worldspreads CFO & Financial Controller Fined & Banned

The Financial Conduct Authority has in the past week banned and imposed financial penalties against two former employees of Worldspreads – a former spread betting business that collapsed in March 2012.

The regulator fined Worldspread’s former CFO Niall O’Kelly £11.9K and former Financial Controller Lukhvir Thind £105K for engaging in market abuse and permanently banned them from performing a function related to any regulated activity ever again.

Summary of Market Abuse:

In August 2007, Worldspreads’ holding company floated on the London Stock Exchange (on the Alternative Investment Market – AIM). It transpires that Mr O’Kelly who was closely involved in drafting and approving the documentation for admission of the flotation included materially misleading information and also omitted key information that investors would have needed to be aware of to make an informed decision about the company.

The regulator also found that Mr O’Kelly helped to manage an undisclosed ‘internal hedging’ strategy at Worldspreads using made-up client trading accounts as well as the unauthorised use of actual client trading account. In so doing, he artificially inflated the assets of the holding company’s balance sheet.

Client Money Shortfalls

Furthermore, in the 2010 and 2011 Annual Accounts, both Mr O’Kelly and Mr Thind knowingly falsified information that concerned Worldspread’s client liabilities and its cash position that was then passed to the company’s auditors.

In effect this meant that there were material shortfalls in Worldspread’s client money position that were hidden from investors. At 31 March 2011, these misstatements totalled £15.9 Million. It was due to this enormous shortfall that Worldspreads was unable to meet its client money liability which ultimately led to Worldspread’s collapse the following year, in 2012.

Mark Steward, FCA Director of Enforcement and Market Oversight, said that the two individuals “deliberately and repeatedly disseminated false and misleading information relating to a publicly listed company. Their actions amounted to serious market abuse, undermining the integrity of our markets and this will not be tolerated.”

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