Slater and Gordon Lawyers are investigating allegations by hundreds of investors after they lost £18million with IG Index Ltd.
The investors were using the risky form of investment called spread betting where both gains and losses can vastly exceed the original stake.
They claim that IG’s systems failed to allow them to “close” or settle their positions in relation to Swiss franc before the losses become too large. It is the losses incurred over and above the Stop Loss orders which could comprise a Group Action against the company.
Spread betting is the term used for a wide variety of wagers based on the outcome of an event, where the payout is based on the accuracy of the wager, not just win or lose. It can be used in sports betting, but it is being used more and more in financial markets as in this instance.
This type of betting allows investors to speculate on movements in price, and it doesn’t matter whether the markets are rising or falling. Another appealing aspect of it is that the profits are tax-free.
Spread Betting (particularly with leverage) isn’t without its risks as the losses can far outweigh the original stake, but then it can seem awfully attractive as the gains can far exceed the money staked.
To try and minimise loss, there are Stop Loss Orders (SLOs) in place which means that an investor can automatically close trades and limit their losses if the market moves against them. The SLO should come into play at the point at which it is set.
In the case of the investors and IG as outlined above, the allegations are that the company’s systems failed to implement the SLO until well below the agreed rate, meaning that the investors lost a lot more than they were willing to risk. A number of the investors say that the company took over 30 minutes to close their positions, and consequently they suffered huge losses.
If you were one of the investors who suffered a loss due to IG’s alleged failings in January this year Slater and Gordon UK would like to hear from you. Please call us on freephone 0800 916 9015 or contact us online and we will call you.
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