It could be more than a year before the Garda interview Mr Stephen Pearson, the W&M Morrogh partner alleged to be responsible for the collapse of the company.

The Garda may have to await the report of the receiver, Mr Tom Grace, before it is clear exactly who lost money as a result of the collapse of the firm. The financial shortfall is believed to be in the order of £5 million (#6.35 million), far higher than had originally been suspected.

A Garda Bureau of Fraud Investigation inquiry is under way based on complaints received from clients of the Cork stockbroking firm, but it is likely to be towards the end of the investigation that Mr Pearson will be interviewed.

Mr Grace is unlikely to report to the High Court in under a year, although it is understood he is in contact with the Garda.

Informed sources have said that although the final figure has not yet been arrived at, the estimate for the shortfall being considered in the stockbroking firm is approximately £5 million.

This is more than five times the Central Bank's original estimate and means it is likely some of Morrogh's 9,000 clients may be left seriously out of pocket.

The Investor Compensation Scheme has a ceiling of #20,000 (£15,700) per client and this is likely to be totally insufficient to meet the losses of some of Morrogh's clients.

The Central Bank and Mr Grace of PricewaterhouseCoopers have been anxious to interview Mr Pearson. Last week Mr Grace was granted to raise the matter in the courts if he did not receive co-operation and the fact that he has not done so is thought to indicate he may have had contact with Mr Pearson.

Mr Grace would not comment on the situation, nor would the Central Bank or the Garda Bureau for Fraud Investigation. The Central Bank is the regulatory authority for stockbroking firms. Mr Alec Morrogh, the firm's senior partner, could not be contacted.

In the High Court last week, Mr Pearson's solicitor, Mr Michael Hanahoe, said Mr Pearson was being hospitalised but would give full co-operation.

The High Court was told Mr Pearson had lost £3.2 million in trading financial futures and that there was a shortfall of almost £1 million at W&R Morrogh even after the firm sold more than £2 million worth of London Stock Exchange shares.

It is understood these shares were the personal property of the firm's partners, who have also sold other property, of less value, to help meet the shortfall at the firm.

Sources have told The Irish Times that further investigations since the High Court hearing have indicated that the losses incurred are substantially more than first thought when the Central Bank was drawing up its affidavit for last week's hearing.

The sources said that Mr Pearson's losses on his futures trading might be "up to £7 million". This would put the shortfall at Morrogh at around £5 million, after the £2 million proceeds from the sale of the LSE shares belonging to the partners are taken into account.

In the Central Bank's affidavit, it was stated that Morrogh employee Mr Pat Sexton had estimated the shortfall in client funds at £168,000 while there were irregularities totalling £800,000 in Morrogh's stock custodial account with Merrill Lynch.

It is understood that clients who bought shares through the firm may not find themselves at a loss if they can prove the "lineage" of the shares, even where they are in nominee accounts. However, clients who have significant amounts of cash on deposit with the firm, perhaps following the sale of shares, are in danger of losing out. Some clients are understood to have sums on deposit which are substantially in excess of the maximum compensation available under the Investor Compensation Scheme.

As the firm's overall shortfall is substantial, there are serious financial implications for Morrogh's senior partner, Mr Alec Morrogh - who owns 60 per cent of the firm - and Mr Pearson, who owns the balance.

As a partnership, Mr Morrogh and Mr Pearson are personally liable for any shortfall and required to realise sufficient of their personal assets to cover the shortfall. They are understood to have already put in excess of £2 million in personal assets into the firm and there is unlikely to be much more.

The Investor Compensation Scheme covers losses which exist after all the funds available are taken into account and clients, who are at a loss, are given settlement payments.

Any of Morrogh's 9,000 clients who suffer financial loss can apply to the scheme. However, it has a ceiling of #20,000 (£15,700) or 90 per cent of the net loss, whichever is the lower.

Last week, the High Court gave Mr Morrogh until next Monday to pursue negotiations with potential investors. This process is understood to be ongoing. If Mr Morrogh cannot convince the court he has found a way to rescue the company, the court is expected to confirm Mr Grace as receiver.