WorldSpreads has announced that their CEO Conor Foley, has resigned from the Board of WorldSpreads with immediate effect to pursue other interests. He remains the majority shareholder at Worldspreads, and according to the statement remains fully behind the Group's strategy and growth plans.
WorldSpreads has not long ago issued a profit warning, blaming an "unusual pattern of client trading". They said that revenues for the second-half of its financial year ended March 2012 will be behind previous expectations as although market conditions since January have been such that whilst transactions volumes have been high (60% higher according to some sources along with an increase in active customers of 35%), revenues have not increased at the same pace i.e. traders have been making the same number of trades but have been more successful and beating the brokers.
The one bit of good news for shareholders and by implication investors that have accounts with the firm is that the share price was not badly affected by the news. So for now the markets do not believe that the company is in much risk of going bankrupt. There is also the potential of a larger broker acquiring them as many feel the market is ripe for consolidation.
Lindsay McNeile who has been Non-Executive Chairman of WorldSpreads and of WorldSpreads Limited, the Group's FSA regulated London subsidiary, since 2007, will become Executive Chairman of both companies immediately.Dominic Bacon who has served since 2010 as General Counsel and Group Head of Compliance has also been appointed to the Board of WorldSpreads immediately. The Group floated on the London Stock Exchange's AIM market in August 2007 and gained a dual listing by joining the Irish Stock Exchange's IEX market in May 2008.
Client exposure to Spread Betting company failure
The fact that WorldSpreads is in financial difficulty may worry account holders with the broker. This therefore might be a good time for their customers to review the market and see if there are any other spread betting companies out there that can service their trading requirements better. It is important that investors diversify their trading funds across a number of brokers in case the unlikely situation arises that a provider goes into administration. In this situation traders will have to stand in-line with all other creditors and wait for their funds to be released. For a company to state that there has been unusual transactions also leads to further questions about the quality of controls at the company.