Plus500 suspends shares after it suffers a shorting attack
Beleaguered spread-betting firm Plus500 today suspended trading in its shares on London's junior market, following a sell-off sparked by a hedge fund's blog post which said it was shorting the company's stock.
US hedge fund Cable Car said it was shorting the trading platform with a price target of 76 pence per share. This sent the Israeli-based tech firm's share down as much as 39 per cent to 230p per share earlier today.
The company's chief executive Gal Haber released a statement saying that the situation was "regrettable" while customers and shareholders could expect to be updated with progress in the coming days and weeks.
Plus500 customers can rest assured that we are doing everything in our power to resolve the current issues.
Customer balances are protected in segregated accounts with major international banks and we are mobilising significant resource to complete the verification project.
Shareholders can also rest assured that we are doing everything in our power to protect our UK market position and we are in close dialogue with the FCA.
The current situation is regrettable, and we apologise to customers whose accounts are frozen; we intend to resolve these issues within as short a time as possible.
We will update customers and shareholders with the progress being made over the coming days and weeks
Shares in the company, which lets investors bet on asset price movements, already plummeted earlier this week after it froze thousands of trading accounts held by UK investors.
“We have no alternative but to place a restriction on your trading account until such time as we have been able to undertake a complete review of the documentation and information we hold currently on you,” it said.
On Wednesday a spokesman for Plus500 told City PM that the company was hoping to unlock the accounts of “core customers” who trade regularly within the next day or two.
“Those customers are the ones who can be readily identified as wanting to continue to trade,” he said.