FCA seeks to fine and ban ex-spread betting company boss
7 Jul 2020
The Financial Conduct Authority (FCA) is seeking to impose a £658,900 market abuse fine on Conor Foley, former CEO of failed spreading betting firm Worldspreads, and ban him from performing any roles linked to regulated activity
7 Jul 2020
Worldspreads, which Foley founded, floated on the London Alternative Investment (AIM) market in August 2007. The Dublin-based business collapsed with debts of £32m in 2012 after the discovery of financial irregularities.
The FCA has issued a decision notice about the fine and ban, which Foley has referred to the Upper Tribunal where he and the FCA will each present their cases. The tribunal will determine what, if any, is the appropriate action for the FCA to take.
FCA said Foley was the ex-CEO of WorldSpreads Ltd (WSL), and its holding company WorldSpreads Group (WSG), and was involved in drafting admission documentation ahead of WSG’s flotation on AIM in 2007.
The FCA considers that these documents contained misleading information and omitted key information that investors would have needed to make an informed decision about the company.
In particular, the documentation did not mention that some WSG executives had made significant loans to WSG and its subsidiaries. This was also never disclosed in the annual company accounts.
It also did not mention an internal hedging strategy by which certain of WSG’s subsidiaries hedged considerable trading exposures internally with company executives. This was not disclosed in the annual accounts until at least 2009.
The FCA considers that between January 2010 and March 2012, large spread bets were placed on the shares of WSG on the trading accounts of WSL clients on terms which made statements in WSG’s annual accounts as to its credit policy false and misleading.
In addition, large spread bets were carried out on two clients’ accounts by Foley himself without the knowledge of the clients and this had the effect, in the view of the FCA, of giving the appearance of greater demand for WSG shares than in fact existed.
Foley is the third and last executive of WSL against whom the FCA has taken action following its collapse in March 2012.
The FCA fined and banned WSL’s CFO, Niall O’Kelly, and its financial controller, Lukhvir Thind, in April 2017 for falsifying critical financial information concerning WSL’s client liabilities and its cash position, which was passed to the company’s auditors.
By 31 March 2011, these misstatements amounted to £15.9m. WSL was unable to meet this client money liability which ultimately led to its collapse, and the company was placed into special administration by the High Court on 18 March 2012.
Foley, through a spokesman, said that as he had the right to appeal, he would not be commenting at this time on the FCA notice.