What has Dorries got against Worldspreads?

Now here’s a funny thing.

When a Member of Parliament makes use of parliamentary privilege to place serious allegations about a company or individual on the public record you’d expect them to have made every effort possible to check the accuracy of their statements before addressing the House.

It doesn’t always work out that way. In 1996, an MP initiated a debate on social housing and used it to ‘name and shame’ a constituent as an alleged ‘neighbour from hell’, repeatedly giving their full name and residential in the process. On the occasion, the MP had got their facts badly wrong. The person they named in the House wasn’t the perpetrator of a serious nuisance but rather the victim of a disgraceful and allegedly racist hate campaign by neighbours in to which the MP has unwittingly been co-opted; the same people who fed the MP the false information which formed the basis of the defamatory speech given to the House. As a consequence of the MPs actions, the individual named in the House found themselves on the receiving end of the not-so-tender ministrations of the Bristol Evening Post and, inevitably, the Daily Express and went on to receive racist hate mail:

16. The applicant subsequently received hate mail addressed to her at 50 Concorde Drive. One letter stated that she should “be in houses with your own kind, not in amongst decent owners”. Another letter stated:

“You silly black bitch, I am just writing to let you know that if you do not stop your black nigger wogs nuisance, I will personally sort you and your smelly jungle bunny kids out.”

17. The applicant was also stopped in the street, spat at and abused by strangers as “the neighbour from hell”.

Used wisely, parliamentary privilege is an important tool of democracy but it also has its serious flaws as this unfortunate case, which eventually ended up before the European Court of Human Rights, clearly illustrates – once information is placed into the public domain under parliamentary privilege, it is close to impossible to get that information corrected or withdrawn if it proves to be inaccurate or even wholly untrue:

19. On 2 August 1996 the applicant wrote through her solicitors to the MP outlining her complaints and seeking his comments thereon. The letter was referred to the Office of the Parliamentary Speaker by the MP. The Speaker’s representative replied to the MP on 12 August 1996 to the effect that the MP’s remarks were protected by absolute parliamentary privilege:

“Subject to the rules of order in debate, Members may state whatever they think fit in debate, however offensive it may be to the feelings or injurious to the character of individuals, and they are protected by this privilege from any action for libel, as well as from any other molestation.”

This letter was copied and forwarded to the applicant’s solicitors in September 1996.

20. Also on 2 August 1996, the applicant’s solicitors wrote to the then Prime Minister, Mr John Major, asking that, as leader of the political party to which Mr Stern belonged, he investigate the applicant’s complaints and take appropriate action. The Prime Minister’s Office replied on 6 August 1996, stating that:

“It is a matter for individual Members of Parliament to decide how they deal with their constituents and it is not for the Prime Minister to comment. There is a strict Parliamentary convention that Members of Parliament do not intervene in the affairs of other Members’ constituencies and this applies equally to the Prime Minister.”

27. General control is exercised over debates by the Speaker of each House of Parliament. Each House has its own mechanisms for disciplining members who deliberately make false statements in the course of debates. Deliberately misleading statements are punishable by Parliament as a contempt. Alternatively, as the Parliamentary Select Committee on Procedure (1988-89) has observed:

“… there already exists a wide range of avenues which can be pursued by an aggrieved person who wishes to correct or rebut remarks made about him in the House. He can approach his Member of Parliament with a view to his tabling an Early Day Motion, or an amendment where appropriate; there may be cases which can be raised through Questions if some ministerial responsibility can be established; he can petition the House, through a Member; and he can approach directly the Member who made the allegations in the hope of persuading him that they are unfounded and that a retraction would be justified. We believe that in these circumstances, the House would not expect a rigid adherence to the convention that one Member does not take up a case brought by the constituent of another, particularly if the latter was the source of the statement complained of, and so long as the courtesies of proper notification were observed.”

In short, your only means of redress is that of finding an MP who’s willing to do the right thing and behave honourably, qualities that too-often seem to be in extremely short supply.

All this brings me to a rather remarkable statement given in the House of Commons on 27 July 2010 by – you guessed it – Nadine Dorries MP, which I’ll reproduce in full, to being with, without comment or annotation:

Nadine Dorries (Mid Bedfordshire) (Con): First, may I say what a pleasure it is to follow so shortly after my hon. Friend the Member for Witham (Priti Patel)? It is a delight to be speaking in the same debate in which she made her maiden speech. I am sure some of us can remember how terrifying that is, and my hon. Friend did amazingly well.

I want to use this opportunity to highlight the unusual case of an institution that fails people who look to it for protection and help when situations go wrong. I shall mention the names of a number of people and organisations, but there is no court case pending so that is not sub judice.

Many people work hard all their lives, and save hard. Some people may run corner shops or work as self-employed plumbers and save a deal of money, and a time comes in their life when they realise that they want to use that money for their pension or to help them through their later years, so they look to make investments with that money. Some people will use organisations such as investment banks and stockbroker firms, and I want to talk about a particular stockbroking firm with which, in 2007, a number of people decided to invest their life savings. This story is also about the Financial Services Authority. The company took these people’s life savings-a number of people’s livelihoods were also involved-and within weeks it had all gone.

A trader by the name of Stuart Waldron handled the accounts of these people. He asked all of them to set up a separate e-mail account that he could use for trades only. He then rang particular people and said that the e-mail account was not working and asked for their password. The investors thought that there was nothing unusual in that, because the account was just for trading, so they gave the trader their password. He then proceeded to send messages to and from himself giving instructions on buys and sells. When that became apparent, the FSA became involved and I sent a number of documents to the authority. That was a considerable time ago and I have not yet had a response from it. I e-mailed the relevant inspector at the FSA, Margaret Cole, three weeks ago because I knew I was going to speak about this matter today, but I have not had a reply.

The stockbroking firm is called WorldSpreads, and it operates outside the City of London-surprise, surprise. Therefore, it does not come under the jurisdiction of the City of London police. It appears that the people who run WorldSpreads used to run a stockbroking firm called Square Mile Securities, which was inspected and closed down, although because of its financial situation at the time, it paid a reduced penalty. Those people from SMS who were closed down and had to pay that fine then went on to set up WorldSpreads. The inspector who closed down SMS was Margaret Cole.

WorldSpreads held up its hands and said Stuart Waldron was a rogue trader. My investors decided not to believe that and chose instead to take the case further. They had a meeting with the directors of WorldSpreads, which was recorded. On the recording it is made very clear that Stuart Waldron was not a rogue trader but that the operation was planned-indeed, it was a procedure that the company appeared to carry out regularly.

One key point is that the FSA has so far failed to represent the individuals who have lost their life savings, but there is also a bigger point. I am aware of this group of individuals-I know what has happened to them in their particular case-but how many more stockbroking firms are operating in such a way? How many more individuals are the FSA failing to protect? How many people are walking into a stockbroking firm with their life savings-even as I am giving this speech today-trusting that firm and hoping that there is a procedure behind them and an organisation such as the FSA that will regulate and monitor events and protect them should something go wrong and their life savings are taken away?

I am not being naive in making this speech, and I am aware that financial journalists might want to pick up on this story. If they do so, we would love to know whether Stuart Waldron, who disappeared overnight, is still trading somewhere in the City of London. We have a barrister’s statement of case that analysed the whole situation. Unfortunately the case cannot be taken on any further because there is no money left to do so; the people involved cannot fight their corner. If any financial journalist would like a copy of the barrister’s statement of case they would be very welcome to it.

It is amazing that an organisation such as the FSA, which is supposed to protect the interests of ordinary hard-working people, should have let people down so spectacularly. It will not be the stockbrokers, the City bankers or the huge institutions that bring about the upturn in this country; it will be the hard-working individuals who set up their own businesses, go to work every day, save as hard as they can and hope that, with those savings, they can look after themselves and their families and see the rewards of their labour. It is an absolute disgrace when organisations such as WorldSpreads try to blame their own misdemeanours, corrupt dealings and failings on one individual, Stuart Waldron, who disappears overnight-paid, we believe.

I hope that while I am giving this speech there is not someone sat in the WorldSpreads offices handing over their life savings, because we will know what will happen to them. We know the pattern: over a number of weeks, those savings will dwindle and suddenly, a situation will occur-perhaps like that involving BP-and the explanation given will be, “We are so sorry your savings have disappeared, but the markets were badly affected by the current situation”. That provides the smokescreen for such activities. We know the corrupt e-mails that such organisations send. They depend on the naivety and inexperience of those who do not have the educational background in, or experience of, the financial markets.

I am sorry to have taken the House’s time up with this case. I hope that, as a result of highlighting it today, some steps might be taken towards providing justice and to returning some of those people’s money to them.

An unusual case indeed, not least for the very serious nature of the allegations placed on record by Dorries. If the section dealing with the alleged activities of a trader named Stuart Waldron are to be believed then we appear to have criminal offences under sections 1 and 2 of the Computer Misuse Act, carrying a maximum sentence of five years imprisonment for the section 2 offence, plus an offence of fraud under section 1 (fraud) and section 4 (fraud by abuse of position) of the Fraud Act 2006, carrying a maximum sentence of 10 years imprisonment – and yet Dorries’ speech seems to suggest that there has been neither a police nor an FSA investigation in what is, on the face of it, a rather serious case of fraud.

That said, we are dealing with Nadine ‘70% Fiction’ Dorries here, so before going any further we need to check the factual accuracy of her remarks and look for corroborating evidence, and straight away we appear to run into a number of problems.

Dorries identified the company for which Stuart Waldron was allegedly working at the time of the alleged fraud as ‘Worldspreads’, which she describes as a stockbroking firm which operates outside the City of London and, consequently, outside the jurisdiction of the City of London Police.

Checking that information, what we find is that:

Worldspreads is not a firm of stockbrokers, its a spread-betting company which specialises in gambling on movements in the financial markets, and its a large enough, and reputable enough, operation to have entered into a partnership, last year, with the bookmakers Ladbrokes, for whom it provides a spread-betting platform.

Looking a little more closely at Worldspreads, what we find is that although it is a global operator, with subsidiary offices in the Irish Republic, France, Germany, Sweden, Denmark, Spain and Malaysia and partnerships in Hungary, Greece, Poland, Slovenia, South America and South Africa, the company’s head office is in London, where it is listed on the AIM market and registered with the Financial Services Authority, with both Companies House and the FSA indicating that its registered office is in the City of London in a location covered by the South Area Neighbourhood Policing Team of the City of London Police.

Dorries also suggests that:

It appears that the people who run WorldSpreads used to run a stockbroking firm called Square Mile Securities, which was inspected and closed down, although because of its financial situation at the time, it paid a reduced penalty. Those people from SMS who were closed down and had to pay that fine then went on to set up WorldSpreads.

This does not appear to be true inasmuch as I can find no evidence to indicate that Square Mile Securities had any relationship with Worldspreads beyond the fact that a number of Square Mile’s ex-traders are listed by the FSA as having left the company to become customer relations representatives (sales reps) at Worldspreads.

What I did, however, find on the FSA register for Square Mile Securities was a reference to an ex-trader named Stuart Joseph Walden, who is now listed by the FAS as ‘inactive’.

Stuart Joseph Walden has three entries listed under ‘controlled functions’ on the FSA register. The earliest indicates that he worked as an investment advisor for Square Mile Securities from April 2005 until March 2007. In March 2007, he left Square Mile and become an investment advisor at Worldspreads, a job that lasted on seven months, at which point he appears to moved jobs, internally, to become a customer relations representative (i.e. sales rep) for Worldspreads. Walden left Worldspreads in April 2008 and does not appear to have worked as a trader in an FSA regulated position since.

It would appear, therefore, that Dorries’ issues with Stuart Waldron/Walden, if this is who she means, have nothing whatsoever to do with the collapse of Square Mile Securities in February 2009 and may well be entirely unrelated to the FSA’s decision, in January 2008, to fine the company £250,000 for what appears to have been aggressively mis-selling investments to customers between March 2006 and May 2006. Although Stuart Walden is listed by the FSA as having worked for Square Mile at the time this occurred, there is nothing on record to indicate that he was personally involved in these activities, although the FSA did impose a ban on one ex-Square Mile trader, Mohammed Suba Miah, for what looks suspiciously like the same conduct for which the company was, itself, fined.

The Square Mile Securities story appears to have ended with one of its directors, John Joseph Gaskin, being banned from becoming a company director for 14 years:

John Joseph Gaskin, 44, of Writtle, Essex, has been banned from boardrooms for 14 years. He was a boss of broker Square Mile Securities, which misled investors into buying high-risk shares and ran up debts of £2.5m.

I warned it recruited staff from notoriously corrupt Pacific Continental Securities, where Gaskin was a salesman.

As for the reference to Pacific Continental Securities, its demise is covered in this article from Citywire, alongside that of Square Mile.

So, having unpicked the factual mess that Dorries made of her speech, the implication appears to be that Waldron/Walden picked up a few tricks of the trade while working for Square Mile, given that the description of the alleged fraud seems very similar to the modus operandi that the FSA found in use at both Pacific Continental and Square Mile, which he took with him when he jumped ship and joint Worldspreads. Except… Worldspreads are in the business of spread betting on movements in the markets and not – it appears – in the business of selling shares in AIM-listed companies, so the description of the scam doesn’t seem to match up with the nature of Worldspreads operation.

As Dorries dates the incidents to which her allegations relate on to 2007, but gives no indication of when in 2007 they allegedly occurred, its not entirely clear whether these allegations relate to the last three months of Waldron/Walden’s employment with Square Mile or the remaining nine months of that year during which he worked for Worldspreads. The description of the alleged fraud suggests the former, but everything else Dorries is saying seems to indicate the latter, even if it not entirely clear that the manner of the fraud described is feasible, or even possible, under the Worldspreads business model.

Beyond that, Dorries clearly accuses Worldspreads not only of outright corruption but, seemingly, of seeking to cover up its activities by paying Walden/Waldron to disappear off the face of the earth, so far as the allegedly bilked investors are concerned, and all in order to provide the company with a scapegoat. These are extremely serious allegations that the company cannot directly challenge, despite the glaring errors and inaccuracies in Dorries account, because the statements were made under parliamentary privilege.

There is one thing missing from this picture that I find rather puzzling. In situations such as that described by Dorries, one thing you expect to find very easily, are requests for information about the individuals and/or companies allegedly involved in such activities, on the multitude of financial services and investor forums, of which perhaps the best known in Motley Fool. In the cases of Pacific Continental and Square Mile, one has little or no difficulty picking up the traces and finding warnings posted to financial/investor forums about these companies and their alleged activities and request for information or for investor who’ve lost money to make contact with lawyers acting for others who’ve lost money.

In the case that Dorries raised, I can find nothing at all to corroborate her allegations on the investor boards, in fact I can’t find much by way of complaints or allegations – either they have the fasted lawyers in the business or – as far as the Internet is concerned – they run a very clean operation.

What is out there on the boards, which may raise an interesting question or two, is this short thread on Motley Fool, the first post of which was made on 16 September 2009, the text of which I’ve reproduced below:

Author: Chamberint

Subject: Paul Dorries and Investment Advice (16/9/2009)

To all fool members, if there’s anyone out there who has had any business dealings with, and particularly investment advice from a gentleman by the name of PAUL DORRIES, then please get in contact with me via this board. I would love too hear your story.

Author: Chamberint

Subject: Re: Paul Dorries and Investment Advice (17/9/2009)

I am Uk based, and have checked that Mr Dorries is not a registered to give investment advice.

It seems that Mr dorries works for himself.

I have a group of people who have all paid money into Mr Dorries’ bank accounts and seen nothing in return.

They also seem to have been duped into Spread betting type contracts, sold as surefire cannot drop investments.

I would love to speak to anyone else who may have had dealings with this man.

Subject: Re: Paul Dorries and Investment Advice (18/9/2009)

You need to give more detail. Do you have any other names, web sites, telephone numbers? Which bank was the money paid into? I have an inkling but need more info

The first two forum posts (non-italicised) were made by the same user and are, in fact, the only posts ever made by that user on the Motley Fool forum, who registered the day before making the first of their two posts. On the same day that ‘Chamberint’ posted the first request for information on Motley Fool, a user named ‘Chamber’ posted this message on the forum at Journalism.co.uk.

Topic: Paul Dorries and Investment Advice

I am currently researching a story on a Mr Paul Dorries and investment advice given by him. Does any other member have anything they think may be of use to the story?

Now, its certainly been suggested, although not confirmed, that the Paul Dorries about whom information is being sought in these two forum posts may well be the same Paul Dorries who used to be the second husband of Nadine Dorries – yes, there is apparently a first husband out there as well, not that he appears in the official Dorries biography, but please don’t pursue the matter any further than this as I’ve been advised that he’s much better off out of things – and that Chamberint/Chamber, despite the reference to researching as story, may be rather more of a private investigator seeking the whereabouts of a Paul Dorries on behalf of one or more former ‘clients’ than a journalist (financial or otherwise) looking for a story.

That last bit, as I said, is unconfirmed, but its a hell of a coincidence given the content of the speech that Nadine Dorries gave in the House of Commons a little over 10 months later, in which she levels serious but unproven allegations against a spread-betting company.

Of how [Nadine] Dorries came upon this particular story, she has very little to say beyond stating that she is ‘aware of this group of individuals’ – ordinarily, one would assume that this means that at least one of the disgruntled investors is a constituent but earlier in the same speech she, somewhat curiously, refers to ‘My investors’:

WorldSpreads held up its hands and said Stuart Waldron was a rogue trader. My investors decided not to believe that and chose instead to take the case further.

Can we take that to be nothing more than a figure of speech, or as implying some sort of ownership of the issue on Dorries’ part, and if so, in what sense?

Even earlier than this remark, Dorries makes the following statement:

Some people will use organisations such as investment banks and stockbroker firms, and I want to talk about a particular stockbroking firm with which, in 2007, a number of people decided to invest their life savings. This story is also about the Financial Services Authority. The company took these people’s life savings-a number of people’s livelihoods were also involved-and within weeks it had all gone.

In what sense, exactly, were a number of people’s livelihoods involved? Is she referring solely to the impact of the losses on investors or do we take it as being possible that at least some of these investors had received third party advice on their investors from individuals whose own livelihood and reputation would have, of course, a taken serious hit as result of this ‘investment’ proving to be a complete dud. Who would seriously suggest that anyone should invest their life savings in trading with spread betting company anyway? If you’re going to that then you might just as well stick the lot on a horse in the 3:30 at Kempton for all that either provides a secure investment with reasonable chance of making a profit.

There are ambiguities here. Loose ends. Things that don’t quite seem to add up.

If Dorries is working from a barrister’s statement and firing documents off to the FSA, where Margaret Cole is no mere investigator – she’s currently the interim managing director of its Conduct Business Unit having joined the Authority in 2005 as its Director of Enforcement – then how did she manage to make such a half-arsed job of setting out the alleged facts of the case and include, in her speech, such basic errors as the claim that Worldspreads operates outside the City of London and outside the jurisdiction of the City of London Police, when this is anything but the case. Surely, the barrister who prepared the statement of case that Dorries refers to cannot have incorpoated such elementary errors of fact in its preparation?

And even if that had been true, why would that have precluded the investigation of the serious allegations of fraud made in her speech by another police force? Is the City of London force the only one in the UK which investigates financial fraud?

Who are these disgruntled investors?

Are they all Dorries’s constituents? Are any of them her constituents, and if any of them aren’t, then have they contacted their own MP about this issue?

The adjournment debate in which Dorries spoke is one in which, by convention, MPs stick firmly to raising matters which relate directly to their own constituency – if you read the full debate, you’ll see Dennis Skinner state that there were problems with the coalition he could have raised before performing a verbal pirouette and settling, instead, for raising a couple of constituency matters. In fact, Dorries is the only MP who spoke in that debate who did not refer directly to her own constituency.

This strikes me as just a little odd, as does the absence of any other MPs jumping in on the back of Dorries’ statement with a corroborating ‘one of my constituents is caught up in this too’ comment? This is not what you’d general expect – issues like this don’t usually appear out of nowhere and then disappear just a quickly without further comment from anyone.

Moreover, and still on the subject of parliamentary procedures and mores, if you’re seriously trying to call attention to an alleged case for fraud and take a knock at the FSA for failing to investigate, would you not try to get your intervention in during Treasury questions, or questions to Business Secretary, where it would be much more likely to be picked up by the media, rather than wait for an adjournment debate just before the summer recess, a time when all the lobby correspondents will have gone demob-happy have retired to the bar for a good long lunch?

Since 1974, the rules of the House of Commons require MPs to openly declare any relevant interests when speaking in the House:

“In any debate or proceeding of the House or its Committees or transactions or communications which a Member may have with other Members or with Ministers or servants of the Crown, he shall disclose any relevant pecuniary interest or benefit of whatever nature, whether direct or indirect, that he may have had, may have or may be expecting to have.”
(Resolution of the House of 22 May 1974)

The main exception to this general rule is that interests need not be declared in the chamber is they are already included on the Register of Members’ Interests.

Dorries’ entry on the register of interests – the full history of which is rather sparse – can be viewed here and contains very little beyond rental income from a couple of properties, one overseas junket to Israel and a bung from the Duke of Bedfordshire which is also registered with the electoral commission. Clearly there’s nothing in the register that would cover any personal interest in this issue on the basis of information already entered in the register.

You will, however, not that the rules state that interests have to declared if they are ‘direct or indirect’, and indirect in this context would mean any situation in which a family member, business associate or an organisation with which the MP is personally associated could benefit from a matter on which an MP speaks in the House and the rules also cover interests that the MP may have had, have or may be expecting to have – within reason, prior interests have to be declared even if those interests are no longer active.

Suppose, then, that the Paul Dorries being sought, in 2009, in connection with losses arising out of investment advice relating to spread-betting contracts were indeed the same Paul Dorries who was once married to Nadine Dorries MP.

So far as what’s in the public domain goes, the couple appear to have separated at sometime around the beginning of 2007, at least according to the Daily Mail, which ran a story on the separation in January 2007, and by November of that same year, the  Telegraph were describing Dorries as ‘now divorced’ in a puff piece published in November 2007. So, the couple may still have been legally married at the time that the events to which the allegations made by Dorries in July 2010 took place, if that is indeed what actually happened.

We’re firmly in the land of If here:

a) If the Paul Dorries mentioned in the Motley Fool forum post is Nadine Dorries’ ex-husband, and

b) If the reference to spread betting type contracts relates to Worldspreads, and

c) If the allegations made by Nadine Dorries on July 2010 relate to matters in which her now ex-husband was involved at a time before their divorce was finalised…

… then there would seem to be a declarable interest here which should have been disclosed verbally at the time these issues were raised in the House.

As I said, however, we’re very much in the land of If here in terms of just about everything that’s been said on this matter, so even that is, at best, speculative.

What we do certainly have is an MP making a prima facie allegation of fraud and corruption against an individual member of public and an FSA register company in a manner which seems to preclude either answering the allegsations levelled against them.

We also have no indication that the police have investigated these allegations, nothing to indicate that the FSA have investigated the matter or that an investigation may be ongoing, no sign of any relevant internet chatter, complaints or warnings on any investor forums, save for the poster searching for information on a Paul Dorries, and if Dorries’s goal in addressing the House last July was that of gaining publicity and attracting the attention of a financial journalist to the case, then that too has proved to a complete and abject failure. she might well have been better off referring ‘her’ investors to Don’t Get Done, Get Dom, for all that she appears to have achieved anything at all here beyond place a stream of unsubstaniated, uncorroborated and, in places, factually incorrect claims and allegations into the public domain, in an entirely unanswerable fashion.

So, Cue Bone? Who benefits from any of this?

That’s a question I’ll leave you to ponder.