# I won't invest in shares again because of my losses in Morroughs



## RainyDay (4 Aug 2014)

Cowpat said:


> Also I'm not interested in equities (been there, been burnt - thanks to Morrough Stockbrokers, Cork).


Slightly off-topic, but did investors lose out in Morrough? I thought the compensation scheme had kicked in;

http://www.investorcompensation.ie/current_cases_003.php


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## Cowpat (4 Aug 2014)

Hi Rainyday,
Letter from PWHC (W&R Morrogh [In Receivership] to me dated June 2007 - 
"I set up out hereunder the calculation of the net dividends after tax due to you and after deduction of your contribution to the costs of the receivership calculated at 28.5% of the value of clients assets..."
In addition, the shares were short-term investments and were frozen during the receivership period. Meanwhile the stock price plummeted...


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## RainyDay (4 Aug 2014)

Cowpat said:


> Hi Rainyday,
> Letter from PWHC (W&R Morrogh [In Receivership] to me dated June 2007 -
> "I set up out hereunder the calculation of the net dividends after tax due to you and after deduction of your contribution to the costs of the receivership calculated at 28.5% of the value of clients assets..."
> In addition, the shares were short-term investments and were frozen during the receivership period. Meanwhile the stock price plummeted...



Thanks - was any of the loss compensated by the ICCL;

http://www.independent.ie/business/irish/morrogh-compensation-move-26080392.html

http://www.irishtimes.com/business/...l-payment-to-clients-of-w-r-morrogh-1.1697909


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## Cowpat (4 Aug 2014)

There was some compensation paid Rainyday but it didn't cover the losses incurred. Meanwhile I'd appreciate to keep the subject on-topic. Much thanks to dub_nerd and others for the insightful contributions!


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## PMU (4 Aug 2014)

RainyDay said:


> Slightly off-topic, but did investors lose out in Morrough? I thought the compensation scheme had kicked in;


  This is a very complex issue and difficult to summarize.  Here are some source documents. 

  Concerning the Morrogh case, in 2003 the High Court determined that  as there were insufficient non-client assets, the receiver could access client assets in order to recover his costs.  See http://www.investorcompensation.ie/HighCourtCase.php
  .

  IN 2004 the Minister for Finance established a working group to examine issues arising from the Morrogh case. The Final Report of the Morrogh Working Group was published in 2006 and is available here:

  .

  Following the use of client funds for unauthorized transactions in certain cases in 2011, the Central Bank produced in 2012 a “ Review of the Regulatory Regime for the Safeguarding of Client Assets” available here http://www.oireachtas.ie/parliament/media/committees/pac/correspondence/2013-meeting961010/%5BPAC-R-1071%5D-Correspondence---3A.1---Review-of-Regulatory-Regime.pdf

  The Central Bank has also issued instructions on the treatment of client assets pursuant to certain EU regulations. [broken link removed]


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## RainyDay (4 Aug 2014)

Thanks for the clarifications, folks. In my innocence, I thought the compo scheme covered all the losses. 

On the broader issue, I don't think it makes sense to chose property over equity on this one single experience. For every one of the small number of stock investors who lost out in this one particular case, there are thousands of regular investors who have one or lost, based on their own investment strategy, and nothing else.

And these boards are full of stories of those who have invested in residential property, and incurred significant losses, geared up by borrowed money in many cases.

It's your own choice of course, but it's a bit like saying that I'll never drive again because I had one fender bender accident.


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## Branz (4 Aug 2014)

The court was told that junior partner Stephen Pearson had been gambling on futures and eventually turned to embezzling funds from clients to meet losse - See more at: http://www.independent.ie/business/...ation-move-26080392.html#sthash.x482ezJ2.dpuf
At least if we invest and lose, we are not getting stuffed by this sort of carry on which is another regulatory and audit failure example


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## PMU (5 Aug 2014)

RainyDay said:


> In my innocence, I thought the compo scheme covered all the losses.


 Basically, the max amount of compensation you can expect to receive as an eligible investor if a regulated firm in Ireland fails is up to 90% of the amount lost, subject to a maximum compensation of  EUR 20,000, i.e. the EU minimum requirement.    See www.investorcompensation.ie/ 

  In the UK it’s up to GBP 50,000. 

[broken link removed]


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## alwaysonit (11 Sep 2014)

Would there be any chance of something like this happening with an ETF brokered by Saxo?
I emailed them and was told
[FONT=&quot]"The ETF is held in a Saxo account but allocated to you so in the event of Saxo going bankrupt you would receive your ETF.[/FONT]"


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