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Troubled Irish Stockbroker Is Wound Up

by Robert Lee, Tax-news.com, London

23 May 2001

We reported earlier this month that the Irish Stock Exchange (ISE) had suspended W&R Morrogh Stockbrokers from carrying on business as a member firm of the ISE because of "apparent irregularities". The suspension took effect on April 26, and at the time the Central Bank of Ireland and the ISE instructed that it should last until 30 June 2001. The website of W&R Morrogh is still carrying an old and very brief statement saying that the Central Bank has imposed a direction on the firm to cease trading, but things have moved on since then. The High Court on Monday wound up the 100-year-old Cork-based stockbroker, which had 9,300 clients but also losses of I£5.5m.

An attempt to rescue W&R Morrogh failed. Money was being raised, but the extent of the company's losses were not fully realised. There was talk of a number of retail banks negotiating with the troubled stockbroker and the partners of the firm injected I£2.4m before the receivership. However, this has not proved enough and now the High Court has ruled that the company must be dissolved.

The firm's senior partner, Alec Morrogh, is said to be held in high esteem in Cork business circles. He held 60 per cent of the company. The problem apparently lay with junior partner Stephen Pearson. According to a report in the Irish Times, Pearson told a Dublin accountant that he had become involved in "gambling futures and options which resulted in him fraudulently embezzling funds from clients to meet losses". Pearson added that he was involved in the activity on his own and no other partner or staff members was involved or aware of what he was doing.

There are more than 2,000 clients of W&R Morrogh facing losses as a result of the collapse of the firm, although sources say they should be protected by the state under the Compensation Act, which covers losses of up to I£15,500. Clients who wish to continue trading have been referred to Bloxham, a rival stockbrokers also based in Cork.

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