Clients of the closed Cork stockbroking firm, W & R Morrogh, will have to await the outcome of the various investigations before they can determine the extent of any losses.
All clients' funds were frozen yesterday by the Central Bank when it moved to close the firm. Investigators from the Bank are now examining its records. Clients cannot remove any funds from the firm until these investigations are finalised.
This may take some time as the Central Bank has also notified the Garda Bureau of Fraud Investigation of irregularities. W & R Morrogh operates as a partnership with the liability for any missing funds resting with the partners, Mr Alexander Morrogh and Mr Stephen Pearson.
A member of the Pearson family said last night they had been advised by the Central Bank to make no comment. Any debts arising out of the irregularities will initially have to be met through the liquidation of assets owned by the two partners. Where there is a shortfall, investors can apply to the Investor Compensation Company to make good some or all of their losses.
The Investor Compensation Company was set up under the Investor Compensation Act to protect private clients of investment companies from losses arising from the failure of authorised investment firms. In these circumstances, clients are entitled to a maximum compensation payment of €20,000 (£15,751) or 90 per cent of the net loss, whichever is the lesser. To date, customers of two companies - Money Markets International Stockbrokers in Dublin and Andrew Casey Life and Pensions in Cork - have made claims. It is likely to take some time before the extent of any compensation will be determined and whether investors are eligible to apply to the Investor Compensation Company.
The scheme covers all investment firms, stockbrokers, banks and building societies regulated or certified by the Central Bank.
Under the Act, payment should be made to eligible claimants within three months of the administrator's certification of their claim. Some 300 MMI Stockbrokers clients filed for compensation more than a year ago and their claims are still being processed.
Based on the number of claims received concerning MMI Stockbrokers, the compensation body made a payment provision of £640,000 in its accounts. Eight clients of Andrew Casey Life and Pensions in Cork have made claims with less than half of them deemed to be eligible for payment.
The compensation scheme is funded through contributions from firms which are authorised to conduct investment services.
