Many in the Australian financial markets were stunned when stockbroking firm BBY announced yesterday morning that it had called in administrators.
The board had been attempting to secure an injection of capital from George Wang’s AIMS Financial Group over the weekend, but talks failed. It was over a surprisingly small amount, too: the number being tossed around is that they were looking for around $3 million. BBY runs something in the region of $2 billion worth of accounts.
But the company needs enough capital to cover its exposures to margin calls. Tony Boyd reports in today’s AFR that there are “suggestions that a $2 million loss incurred by a BBY client in Melbourne stretched the BBY capital reserves too thin”.
If true, it would make it all the more bitter for BBY that one guy’s bets backfired so badly that it has resulted in the failure of the firm.