30th of April 2013 Author: Glo Wood
Financial betting company Worldspreads is suing the business services and accountancy firm Ernst & Young for alleged negligence over its auditing services after the betting company was subject of a big-scale financial scandal resulting in suspension of its activities late last year, the Irish newspaper The Independent reports.
According to the WorldSpreads, the company could not sustain its trading activities after a shortfall - which may exceed GBP 22 million - was allowed to grow in its client account balances over a number of years.
The company was unable to comply with UK Financial Service Authority (FSA) regulations which resulted in its board deciding to put the company into special administration in March 2012.
Ernst & Young was negligent in the performance of its services and obligations to WorldSpreads Ltd related to audits performed from 2007 to 2011, the Worldspreads management claims.
WorldSpreads Ltd is registered in the UK and a wholly-owned subsidiary of WorldSpreads plc, which is registered in Ireland. Ernst & Young's office in Dublin was hired to perform audits in line with the FSA's supervision rules.
In its claim, WorldSpreads Ltd alleges that the auditor issued unmodified opinions on its financial statement audits from March 2007 which stated that WorldSpreads Ltd maintained systems to comply with the relevant FSA 'client asset sourcebook' rules, in addition to listing breaches of the regulations.
Yet, in March 2012, following the disclosures by WorldSpreads Ltd's finance controller, the company learnt that there was a substantial GBP 22 million shortfall in the amount of client money which should have been held in a separate account.
Following the consent between the parties, the case was transferred to the Commercial Court this week by Mr Justice Peter Kelly.
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