Inevitably, the company didn’t comment and, because I was busy, I forgot about it. This morning, I notice that it has been widely reported that the Financial Services Authority has “forced Global Trader to shut shop”.
The company itself has put out a statement on its website saying that “a regulatory capital deficit has arisen in GTE as a result of a single client margin call default. Under these circumstances GTE applied, at the close of business on Wednesday, 13 February 2008, to the Financial Services Authority (FSA) in the United Kingdom for a Variation of Permission – the official method by which companies change the terms of their authorisation, limiting principal activities to closing existing trades.”
The client had built up a large position in a small-cap UK AIM-listed stock. According to the FSA, GTE’s move is used by companies that don’t want to lose their registration. However, it does change what they are allowed to do. GTE adds: “The board and management of GTE, continues to evaluate alternatives for the recapitalisation of GTE, including the possible introduction of an international equity partner. However, to ensure that the various alternatives can be evaluated within an orderly operational structure and regulated financial exposure, GTE will today file for administration.