Skip to main content
Normal View

Dáil Éireann debate -
Tuesday, 30 Sep 2003

Vol. 571 No. 1

Written Answers. - Financial Services Regulation.

Jim O'Keeffe

Question:

151 Mr. J. O'Keeffe asked the Minister for Finance his views on the High Court ruling on the collapse of a company (details supplied) in County Cork which has raised huge question marks over the security of electronic-based shareholding; if new legislation will be necessary to deal with the issue; and if he has proposals to deal with the establishment of an adequate compensation fund or bonding system to cover the liabilities of defaulting stockbrokers. [20547/03]

The case of the defaulting stockbroking firm to which the Deputy refers has given rise to a number of applications to the High Court by the receiver. In a judgment of 6 May 2003, the High Court gave a ruling which covered, inter alia, the entitlement to ownership of shares recorded in the books of the firm or in nominee accounts.

In a further judgment by the High Court on 31 July 2003, it addressed the issue of how to meet the fees, costs and expenses of the receiver in dealing with the distribution of client assets and the performance of his functions under the Stock Exchange Act, 1995, and the Investor Compensation Act, 1998, having regard to the fact that there were insufficient non-client assets to meet these costs. The High Court ruled that the receiver could access client assets to meet those costs, which could be in the order of €3 million.

An order summarising the judgments issued by the High Court was perfected only recently on 9 September 2003. This order is long and complex, comprising almost 70 pages. Moreover, the 21 day period for appeal expires today and to the extent that parties avail of the appeal route, the outcome of such action will have to be considered.

In the circumstances, it is much too soon to arrive at definite conclusions on this complex issue. I have asked that the matter be looked into by officials from my Department, in conjunction with representatives of the Central Bank and Financial Services Authority of Ireland and of the Investor Compensation Company Limited. When their assessment of the situation is available, the question as to whether further legislation is required will be addressed.

In the meantime, I would remind the Deputy that a scheme which meets the requirements of EU legislation to compensate investors for the failure of an investment or stockbroking firm already exists. That scheme, which is managed by the Investor Compensation Company Limited provides compensation for investors up to a maximum of €20,000, or 90% of their compensatable loss, whichever is the lesser.
Top
Share