A £15.9 million shortfall: how WorldSpreads concealed the gap in client funds

When the UK regulator, the FCA, finally untangled WorldSpreads' finances, it emerged that the shortfall in client money amounted to at least £15.9 million. The most troubling aspect of the story was not the fraud itself, but who had committed it. The culprits were not outside fraudsters or hackers, but the company's own finance director and financial controller — people whose very roles existed precisely to guarantee the accuracy of the reporting.

WorldSpreads Group (WSL) operated in the UK spread-betting and CFD-trading market, offering clients products on indices, currencies and commodities. The company was public, listed on the London Stock Exchange's AIM market, and regularly reported to shareholders and the regulator on the state of client accounts and its own financial position.

Under UK rules, client money must be held separately from a company's operating assets. It was precisely this boundary that finance director Niall O'Kelly and financial controller Lukhvir Thind systematically blurred, falsifying key financial information about liabilities to clients and the company's cash position — data that was then passed on to the external auditors. As of 31 March 2011, the misstatement in the accounts had reached £15.9 million.

When the true state of affairs came to light, the company proved unable to meet its obligations to clients. On 18 March 2012, the High Court of England appointed a special administration over WorldSpreads Limited.

In April 2017, five years after the collapse, the FCA fined O'Kelly (£11,900) and Thind (£105,000) and banned them from professional activity in the financial sector for falsifying the accounts. The regulator also separately examined the conduct of the company's former chief executive, Conor Foley, for market abuse; he initially faced a fine of £659,000, which was later replaced with a public censure due to the entrepreneur's financial difficulties.

Published 8 February 2021