Two Spread Betting Disasters

Spread betting is currently illegal in almost all the United States, however this may well change due to legal moves by several states. While spread betting offers the prospect of untold riches through such means as Cantor financial betting, it can sometimes go the other way.

A 22 year-old who makes a living from playing poker was left out of pocket to the tune of $252,000 when an English High Court judge ruled that he had to pay the man who had made spread bets on his behalf. Rabbi Simon Nissim told Andrew Feldman that he would pay him any winnings he made from online spread betting after the latter lost in excess of $1,130,000 playing poker online in the first week of October 2008, which the judge described as an astonishingly large sum.❠Feldman said that he would pay for any losses, and was left with a bill of $220,000. Nissim was evidently in acute need of better spread betting tips. Feldman asked a judge to be excused the debt, but the judge found against him, and also charged him costs.

The two men were brought together in 2007 by a charitable Jewish organisation which employed Nissim. Their mutual predilection for gambling led to their becoming friends. Nissim agreed to give Feldman the winnings from spread bets placed on the Wall Street Index and Feldman agreed to pay for any losses. Feldman admitted to telling Nissim he was willing to risk $323,000. His barrister said that he esteemed Nissim highly and consequently placed great trust in him. Feldman said he had not consented to the large number of bets Nissim made. He declared that he had given authority for no more than five bets to be made per session, but Nissim once made 77 bets over a period of four hours.

The judge said he believed that Nissim would not put money of his own at risk on account of an unsecured promise. He said that jeopardising a large quantity of one’s own money was not an obvious hallmark❠of a person committing fraud.

Another, greater tale of woe is that of a leading figure in the City of London who was made bankrupt after losing $10 million on spread betting. Geoffrey Conway-Henderson, formerly a director of the broker, Intercapital, placed spread bets on oil and gas stocks of the Alternative Investment Market.

The bets were made with City Index, which is owned by Conway-Henderson’s close friend, Michael Spencer. Spencer founded Intercapital, and worked with Conway-Henderson for more than two decades. Relations between the pair are likely to have cooled, as City Index closed Conway-Henderson’s positions in July 2008, rendering him bankrupt, and then sued him for $259,000 of unpaid interest.

City Index wrote off $126 million in the two years leading up to March 2009, which caused Spencer to inject $113 million of his own money into the business. Less than a dozen major clients, of whom Conway-Henderson was one, accounted for most of this loss. One unnamed client lost $47 million betting on a Spanish property company.