Suspended spreadbetting company allowed to make payments

The Irish Central Bank, which suspended the operations of financial spread betting firm Marketspreads last week , has loosened the restrictions slightly, allowing the company release between Euro 5 million and Euro 10 million in cash to clients.

The Irish Examiner reports that the Central Bank ordered Marketspreads to cease trading last Friday, citing “legacy financial issues” that included improper management of client funds, the firm’s capital adequacy and auditing concerns. The latter element referred to Marketspreads’ last set of filed accounts, up to the end of 2009, on which the auditors were “unable to express an opinion”.

Marketspreads’ management team said it has been working on rectifying questionable actions taken by the firm’s previous owners. Current management also recently secured a judgment against former directors Brian O’Neill and Fergus Rice relating to the diversion of Euro 1.68 million to another business.

Since the crisis began, Marketspreads has obtained a pledge to increase the company’s capital adequacy by Euro 2.5 million; the bank has also possibly been influenced toward leniency by the contents of an independent management review by Grant Thornton.

In a statement Wednesday, the bank commented: “Following an independent third-party review of client assets, the Central Bank is amending the direction on Marketspreads to allow for the repayment of client assets. The firm is still suspended from carrying out investment services until such time as it addresses our concerns about its financial statements and capital position.”

Marketspreads has said its 2010 accounts are being fast-tracked and are likely to receive a clean audit. They should be ready by April 23.