W & R Morrogh

From Wikipedia, the free encyclopedia

This article does not cite any references or sources. (May 2008) Please help improve this article by adding citations to reliable sources. Unverifiable material may be challenged and removed.

W & R Morrogh was a 100-year-old Cork stockbroker firm that was wound up in April 2001 as a result of Ireland’s largest ever proven fraud. Originally a member firm of the Cork Stock Exchange this third and forth generation family stockbroker firm was both the last regional stockbroker firm and the last two-partner stockbroker firm in Ireland. It was a member of both the Irish Stock Exchange and the London Stock Exchange and also facilitated trading in New York and most European Bourses. The firm had two partners, Mr Alexander Morrogh (with a 60 per cent holding) and Mr Pearson (with a 40 per cent stake), both partners shared decedents of the original founders and were cousins. The collapse of the partnership occurred after the Stephen Pearson, the junior partner lost an estimated €12 million gambling on futures and options and fraudulently embezzling funds from clients to meet losses. Mr Pearson received a 2 year prison sentence for the crime, which represented was a very significant prosecution for the Gardaí. In 1993, on a considerably smaller scale Stephen Pearson used client monies and stocks without client authorisation in a similar manner but that these losses were made good by his father Mr Peter Pearson, a partner in the firm.

On 30 May 2006, Stephen Pearson had his jail sentence increased to five years by the Court of Criminal Appeal. Mr. Pearson had received a three-year sentence, with the last year suspended, for forty seven guilty charges of forgery, obtaining funds under false pretences and fraudulently converting clients’ funds. The DPP appealed against the leniency of the punishment, and this appeal was upheld on the grounds that the original level of punishment was not proportionate to his fraudulent use of his customers’ life savings, many of whom were widows and elderly people. Justice McGovern dismissed the case put forward by the defense that Mr Pearson got caught up in a trading deficit and could not help himself. He described Mr Pearson as a pathetic character who stole from the elderly and those who money had been entrusted to him for their well being.

The actions of the Pearson family were also widely condemned as investigation into the firms accounts proved that Mr Pearson had paid significant sums over the years to father Peter, brothers Mark, David, Roger, Christopher, Peter Jnr and sisters Daphne, Ruth. Members of the Pearson family were among the first to seek losses from the firm's receiver, Mr Tom Grace, who later dismissed their claims.

The firm had 9,000 clients but only 2,500 submitted claims for losses, and most were dealt with under the Irish Central Banks investor compensation scheme. The scheme did not protect larger clients who sustained a significant portion of the €7 million shortfall in client funds. The complex and legally fraught receivership by Tom Grace of PriceWaterhouseCoopers cost a further €5.9 million.