Shares of Plus500 shed over a third of their value on Monday after the Israeli online trading company said some clients’ accounts had been suspended as it sought to meet money-laundering rules.
Plus500, which runs most of its operations from Israel but has its official headquarters in London, said in a statement on its website that the restrictions would remain in place until it completes a review of the documentation and information it holds on some 17,000 British customers.
London-based hedge fund Odey Asset Management is the top external shareholder with almost 13%, according to Thomson Reuters data, while JP Morgan Asset Management holds a 6% stake.
A further statement from the company said it was in “close talks” with the Financial Control Authority, Britain’s financial watchdog, and assured shareholders that dividends would be paid in full.
“In addition, shareholders should note that Plus500’s UK subsidiary, Plus500UK ... has in recent weeks been implementing certain enhanced client on-boarding and Anti-Money Laundering processes which have resulted in additional documentation checks being required,” the company added.
Shares in Plus500 plummeted 36.3% in London Stock Exchange trading to end at 478 pence ($7.48), the biggest daily fall in the firm’s history.
“Until the review has been satisfactorily carried out, you will be unable to open any new trades on your account, deposit or withdraw funds,” the statement said.
“If you have any open trades you will, however, still be able to freely service your existing positions with additional Maintenance Margin, although again, will not be able to withdraw funds until the review is complete.”
It could not be immediately reached for further comment.
Plus500, which was founded by six alumni of the Technion Israel Institute of Technology, operates an online trading platform for retail customers to trade so-called contracts for difference, of CFDs, in more than 2,000 different underlying financial instruments, such as equities, foreign currency and commodities.
With a CFD, the seller agrees to pay to the buyer the difference between the current value of an asset and its value at contract time. If the difference is negative, then the buyer pays the seller. Investors buy or sell the contracts with leveraging of up to 100 times the value of their original investment.
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