Whilst reading this morning’s newspapers and the revelation that Wonga.com has been forced to write off a whacking 41% of revenues in bad debts (so much for selective, stringent lending procedures eh…?!), it led me to a related news story regarding the fraudulent UBS trader – Kewku Adoboli and the revelation that he lost £123,000 spread betting with IG Index.
It is an open secret withing the industry that Mike Ashley of Sports Direct fame and the owner of Newcastle United dented his not inconsiderable fortune by, according to some sources close to the story at the time, around £300m in losses through speculating on the pre-merged HBOS – again with predominantly IG Index.
Nick Levene, the recently convicted fraudster who was sentenced to 13 years in jail for duping such business luminaries as Richard Caring and the Souter family – owners of Stagecoach – out of tens of millions of pounds also ran up extensive losses with IG Index. In fact he was taken to court by IG for the sum of £720,000 plus interest.
What is surprising to me is why there seems to be no compliance overlay at IG in particular to investigate individuals from within the financial services industry to ascertain the ability of them to hold a spread betting account. A simple verification with the Compliance dept or superiors of these traders would do the trick. In the Adoboli case, according to press reports, it seems that his superiors were unaware of his spread betting account.
Conor Foley, former CEO Worldspreads
Coming on top of the Worldspreads fraud – and to which we hope to update readers with some news shortly as to whether the Directors who were at the heart of this fraud are to be face civil charges (in our opinion they should be stripped bare of their personal assets) – the spread betting industry has had a rough couple of years.
My own personal suggestion is that client accounts should be graded in terms of experience and understanding from novice through to expert and each of these should then have tiered leverage facilities – the more experienced you are the more leverage you receive. Similarly, credit accounts should be reserved only for the well capitalised and appropriately experienced. A statistic that disheartens us is the reality that over 90% of punters lose most of their cash in the first 12 months – the reason we believe is very simple – leverage and inexperience – a deadly cocktail.
The primary aim of this website and magazine is to educate and deepen the understanding of spread betting and trading by all clients and hopefully reduce this 90% death sentence somewhat!
If you want to learn some of the hard earned methods that succesful traders who have made seven figures out of spread betting use and other little known tips, then try reading the e-guide below (click the image for a free copy)