A group of former clients of collapsed Cork stockbroking firm W&R Morrogh are to ask the High Court today to hear a submission from them in relation to what should be done with their shares.
The group is to seek to be heard in a case taken by the receiver to the firm, Mr Tom Grace of PricewaterhouseCoopers. Mr Grace is to ask the court for directions as to what he should do with a large block of shares being held in electronic form in the firm's name for clients of the stockbrokers.
The court will be asked whether the shares should be given to the people for whom they were bought, or whether they should form part of the general assets of the receivership. This latter course would see the shares being used in part to fund the expenses of the receivership.
The shares, mainly US shares, are being held by custodial agents Merrill Lynch and Crest in nominee Morrogh accounts. Ownership of the shares in the nominee accounts is reconciled in the books of W&R Morrogh. In some cases the reconciliation does not match the shares held in the nominee accounts, because of transactions on the accounts.
The Morrogh Investor Action Group wants to ask the court that any shares which can be directly identified as having been bought for particular clients, should be given to those clients. Those accounts for which shortfalls exist could be dealt with differently.
Alternatively, if the shares are to be treated as part of the general assets of the firm, the group wants the court to order that the people whom they were bought for be compensated by the Investor Compensation Company Ltd.
The group represents about 70 former clients of the firm. Mr Kieran Coogan, an organiser of the action group, said he had shares in US companies worth about $120,000 (€118,000) when Morrogh collapsed in April 2001, but are now worth approximately $20,000. He has asked the receiver for them but has not been successful. He said clients of the firm can contact him at 087-2355260.
If the High Court rules that the receiver should sell the shares and include the proceeds as part of Morrogh's assets, it could have serious implications for the thousands of people who hold their shares indirectly.
Market sources have said people who hold shares in this way would have to reconsider how their shares were held. An alternative would be to open a personal account with a settlement house, such as Crest, which would then hold the shares on the stockholder's behalf. Shareholders might also be more inclined to hold their shares in the nominee accounts of major banks, which would be less likely to run into difficulties.
