[wit]

Hi Prufrock

I know nothing more about SO than has been reported in public about them – was never a client of theirs and have never looked at their trading terms, so have no information on what they did or didn’t promise clients.

The insolvency practitioners appointed are under a statutory duty to investigate the conduct of the directors in getting the company to this point, and to report on it to the DTI.

If anyone has any evidence of criminal wrongdoing, they could try getting the police involved – but I’ve not seen anything reported which points down that road.   Obviously these situations do cause anger and disappointment, but businesses fail for reasons other than criminality so need to be careful about what kind of inferrals are made at this stage.

I would just repeat that "ring-fencing" is basically just about trying in a technical way to put a particular group of creditors up the pecking order when divvying up the remains on an insolvency – it carries neither positive or negative connotations beyond that, and can be messed up and not achieve its objective for any number of reasons, culpable or non-culpable.

As a side-note, I did see that one of the directors of SO was named as a Paul Cooper with an address in Thirsk.  

Wasn’t there also a chap named Paul Cooper who some 15 years ago made a small fortune in backing the high draw in trifectas in the Dick Peacock Handicap at Thirsk?

And – memory lane this – wasn’t it Zorro himself who once interviewed the latter Paul Cooper some 10 years ago in a pub in Bethnal Green on the short-lived racing magazine Going Behind which came out on VHS tapes?

Anyne know if its the same Paul Cooper?

best regards

wit    

[wit]

hi bluechariot

Theft, whether in relation to client accounts or anything else, is defined in the Theft Act as "dishonestly appropriating property belonging to another with the intention permanently to deprive that other of it".

Each element must be shown:

– was there dishonesty, as opposed to misguided or imprudent acts?

– was there an appropriation (a wrongful exercise of owner-type  rights) ?

– was there property belonging to another?    If I take a £10  note from your pocket, yes: but if I owe you a debt of £10 but choose not to pay it with a £10 note that I own, then no there isn’t.    

<br>- was there an intention permanently to deprive? "it was a short-term loan/I just borrowed it/ I always intended to pay it back".

These are all specific technical features that have to be established in any set of events before it can be said that theft has occurred.

The answer to your first question is therefore "no, not necessarily at all".

Your second question is similarly dependent on establishing breach of specified elements.

Fraudulent trading requires basically showing theft and is a criminal offence.

Wrongful trading involves showing a point of no return having been reached in a company’s fortunes, and a downturn from that date.  In such a case if a director "knew or ought to have concluded that there was no reasonable prospect of the company avoiding an insolvent liquidation" then he could be ordered to make such contribution as the court thinks proper to the company’s assets – but its not a crime/ "offence".

Re Cubelock Ltd 2001 recently established that mere balance sheet insolvency does not in itself amount to wrongful trading.    In other words, your total liabilities may exceed your total assets, but so long as you’re able to meet your liabilities as they fall due – ie keep the balls up in the air – you’re not bound to stop juggling.

Ever since Mandelson and Byers decided that the reason the UK was not entrepreneurial enough was that there was too much stigma attached to being bankrupt, the law has changed to make insolvency far less of a burden – result, rocketing insolvency.

When the Enterprise Act 2002 came into force on April 1, 2004 (no kidding), the automatic discharge period for personal insolvency dropped from 3 years to 12 months or such shorter period within which the Official Receiver says he’s finished investigating the insolvent’s circumstances.

Some types of debt used to stay with you even after discharge – including originally student loan debts.  But then the law changed to make student loan debts wiped out on discharge of bankruptcy- hence student organisations now pointing to it as a possible route out of that burden (just borrow the money for the petition from your parents and bum around for a year until you’re discharged -sure you’ll have a black mark on your credit record, but how long before lenders then dismiss it as youthful indiscretion?)

By the way Seagull, the Crown lost its preferential creditor status for the last 12 months PAYE and NI and the last 6 months VAT, on 15 September 2003.   Since then it has been only an unsecured creditor for "assessed taxes", alongside trade creditors and business rates.

best regards

wit      

 

[wit]

Hi cubone

>>>>>>>>>>>>>>>>>>>>>>>>>>>>><br>… no one in history has done such a thing…<br><<<<<<<<<<<<<<<<<<<<<<<<<<<<<

I’m sure that’s right in the history of betting, but solicitors have been taking collective responsibility for decades, and without £1000 or 20% limits, for the bad apples among them who misapply client accounts.

Along with every other practising certficate renewee, I’ve just had to put £700 into the Compensation Fund for this year.   If there was a spectacluar failure, every solicitor in the country could be bankrupted under this obligation before any client lost a penny from a solicitor’s client account going walking.

That, and the incredibly detailed and specifically monitored statutory rules about Solicitors Client Accounts, is the ultimate protection available in terms of client accounts, not only in England but anywhere in the world.

Not even banks or insurance companies are subject to rules that protective of clients – there are relatively low compensation limits under the Financial Services Act for them, and the Bank of England has to try and persuade the banks to organise "lifeboats" if something spectacular happens.

The same kind of collective responsibility just isn’t applied in other areas of commerce.  

The Gambling Bill is miles away from doing anything like that, and Betfair is to be applauded for showing the way, albeit with an obvious eye to its own commercial interests.

What folk have to realise is that when an exchange talks of "segregated" or "client" or "ringfenced" accounts, they are talking basically about an insolvency order of payment – if properly operated, the funds will not be part of the pool available for division among general trade creditors but will be reserved for distribution among the pool of clients responsbile for those deposit balances.

In an exchange context, there is no criminal sanction if client account funds are dipped into for other purposes, unless you can show a separate independent dishonesty offence such as theft/ obtaining a  pecuniary advantage by deception  – which is not the same thing as the imprudent or over-optimistic businessman trying to trade out of a liquidity crisis – he may be sad or mad but not necessarily bad.

best regards

wit

[wit]

Hi Ian, Dungheap

I don’t disagree with much of what you say, but on Nick’s original question of whether the Big 3 could get together and produce their own unified SP  – no, the OFT just won’t let that happen.

The "market" is not unified – the folk who spend their time in betting shops are, as you both say, different from those who have computers, and that makes them as a market very vulnerable to the Big 3.   That’s why they need protection.

The best the Big 3 could do, as No axe affirms, is for each of them to run their own SP from their own book.

They won’t do that (a) because it will confuse their punters and (b) maybe also because their shop business is less and less reliant on SP on horses.

IMHO the thrust of the shop trade is heading for something between an amusement arcade and a casino, with the push on virtual rather than real horses, plus self-owned real dog tracks.  

Best regards

Wit

[wit]

Hi Ian

Couple of months ago Argos and Littlewoods were fined £22m by the OFT for price-fixing in relation to toys such as Monopoly and Action Man.

Though there was no formal agreement between them, the OFT decided that they were exploiting a market phenomenon whereby if one decided on a price for a toy, the other tended to follow suit, and due to their predominance in the market, what the two of them did effectively set the standard for the whole market.

Apparently most consumers look up the price of the toy with Argos, check the price with Littlewoods (or vice versa), and that determines what they’re ready to pay.

You might say "If a punter can’t be bothered to do that [shop around] and get value for himself, why should we be bothered if he gets ripped off", but price-fixing is seen as theft from the consumer and often is implied from observation of a market.

Difficult then to see how somethiing as blatant as an industry SP could be squared with the competition laws.

So real question is whether the Big 3 really want to compete among themselves in returning their own separate individually-arrived-at SPs ?

<br>Best regards

Wit

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