Global Trader clients club together

Clients of Global Trader Europe (GTE) say they have received a cold response from the company after it ran into capital difficulties earlier this month. A group of clients have started a website – http://www.globaltraderclients.com/ – where they have a platform to share information and club together.

Clients, who have been in contact with Moneyweb, say they have not received an apology from GTE or any assurance that their money is safe.

Global Trader CEO Charles Savage counters that he can understand clients’ frustration, but says the administration process restricts him from making comments to clients. He asks clients to give the administrators time to evaluate the business before they can issue a statement regarding funds that clients can “hang their hats on”.

GTE was placed into administration earlier this month after one of its clients incurred trading losses that he wasn’t able to cover. As a result of the losses, a shortfall developed in GTE’s minimum capital, as required by UK regulations. Under the administration process, clients are unable to open new trades or withdraw funds.

GTE is a division of Global Trader, which in turn is a subsidiary of JSE-listed Purple Capital (JSE:PPE). Purple Capital shares set a new 12-month low on Thursday. They have fallen 44% in the past two months.

Global Trader insists that local clients have nothing to worry about and that the business is “highly profitable”. Global Trader pioneered contracts for difference (CFDs) in South Africa, and its business here accounts for over 80% of the group’s profits.

But some UK clients ask if Global Trader South Africa is so robust, why it or Purple Capital didn’t step in to cover the capital deficit at GTE.

Savage is quoted of saying that if Global Trader could have stepped in, it would have. The losses were simply too large for the parent to cover.

UK clients also complain that communication from GTE and the administrators, Smith and Williamson, has been poor. After the troubles arose, they received three e-mails: one from Global Trader informing them of the client’s default, and two from GTE’s administrators.

Savage asks clients to give the administrators time to follow the process. He says they are very reputable, and that the administration process is very clearly defined in the UK.

“They have been in control for just over a week,” says Savage. “They need time to get comfortable with the facts.” He stresses that they are protecting clients’ interests.

Savage says he is in daily communication with the administrators and is giving them information. He is also trying to find an angel investor to bail out the business.

Meanwhile, the Financial Times of London reports that GTE’s administrators are moving to recover assets of the troubled client. It reported Tuesday that an exclusive £16m residency on one of London’s most sought-after streets is set to come under the control of GTE’s administrators.

The defaulting client is rumoured to be Cold Investments, a company with links to colourful businessman Robert Bonnier. What is known is that the client incurred losses by betting on two technology shares: Artilium and SCI Entertainment Group.

Global Trader has admitted that the trades would not have been allowed under new risk control measures that were introduced after it was acquired by Purple Capital last year.

Tags: Global Trader Europe

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