Australian broker loses millions of dollars in clients’ funds

One of Australia’s largest brokers, Halifax Investment Management, is heading into liquidation after administrators discovered some of the A$210 million (NZ$217m) of client money was used to cover losses on bad bets on investment products by other clients.

Investigations by administrators from Ferrier Hodgson have found about A$20m of customers’ money is missing.

Ferrier Hodgson has likened the collapse of Halifax, which had 12,000 clients in Australia and New Zealand, to other highprofile stockbroker collapses in recent years, including BBY, Sonray and Opes Prime.

Action against the company by the corporate regulator is a distinct possibility, with sources saying the Australian Securities and Investments Commission was taking a close interest in the outcome of the administration.

More than A$190m of client money remains frozen as the administrators seek court approval for distributing the money back to clients.

Given the ‘‘co-mingling’’ of client funds, this could see all customers of Halifax receiving less money than they had placed into their trading accounts, despite not being responsible for how their money was used by the company.

The missing money is equivalent to 9 per cent of the total customer funds held by Halifax ahead of its collapse.

Halifax called in administrators just before Christmas, freezing customer funds.

Its clients can still close out trades but they are not able to recoup their funds.

Halifax operated and offered three trading platforms – Interactive Brokers (IB), MetaTrader 4

(MT4) and the MetaTrader 5

(MT5) platforms.

These platforms allowed Halifax’s clients to invest in a range of products and equities, foreign exchange derivatives, equity derivatives and indexed contracts for difference.