Management at troubled spreadbetting company Plus500 got blasted by investors today at the company's annual general meeting in London.

The Israel-based but London-listed company froze thousands of customers' trading accounts at its UK operation last week after a review by the financial watchdog, the Financial Conduct Authority, found its anti-money laundering checks weren't up to scratch.

Shares fell over 60% last week as all this emerged and investors understandably had a lot to say to management.

Business Insider was at today's AGM and in a tetchy meeting shareholders blasted the board for over an hour on their handling of the whole thing and at times management snapped back. Here's a summary of all the investors' main problems:

"You can't tell customers first"

One of the biggest criticisms being launched at Plus500 is that the company's communication is terrible. The company froze accounts on Friday May 13, posting a notice on its website, but only informed investors on the afternoon of Monday May 18, by which time shares had already fallen over 30%. 

One private investor, who didn't identify himself, said: "The problem is [the share price] was at 7.70. Clearly some people decided from the information on your website to sell or short the shares. The price was already 2 off before you made any announcement whatsoever. Thats terrible for shareholders."

Another investor who holds shares through Fitel Nominees, a subsidiary of wealth manager WH Ireland, said: "The reality is, on the website you told customers before the RNS [an announcement sent to shareholders] that there were problems with the site. There was no justification for that. You cant tell customers first, its just wrong."

Plus500 chairman Alastair Gordon, who stood throughout the meeting and acted as a peace keeper, said: "We spent a lot of that morning trying to clarify what our UK subsidiary was saying to the FCA so we could put that in an RNS and get that out to the market. We were in a difficult situation trying to evaluate that situation."

"No warning"

Investors are also annoyed that they weren't even told there was an FCA investigation going on until it was too late.

The unidentified investor said: "The worry for me was the way this came out. This information was forced out in a way. 

"Lots of other companies in their annual reports have announced that they've got a 166 [the FCA review] hanging over them. Why didnt you feel the need include it in your company information? Then at least shareholders would then know there was something that could potentially happen."

A 166 is an order from the FCA for a "skilled person review." This means an independent person with regulatory expertise is appointed to review a company to make sure everything meets requirements.

The Fitel shareholder added: "Weve asked on at least two occasions about documentation and on two occasions weve been explicitly told there wasnt a problem. You were adamant you had no problems with documentation and the FCA and then suddenly you have."

Gordon said: "We had a lot of controls in place that we thought were adequate."

"Unfair to customers"

A shareholder identifying himself as Lionel, who said he was a consultant in risk and compliance, raised the issue of how customers have been treated during this whole episode. Several others asked about how Plus500 planned to stop customers leaving. 

Lionel said: "One key compliance requirement of the FCA is treating customers fairly and from the examples Ive heard they are definitely not being treated fairly. You were aware from January that the section 166 was going to take place and you chose to carry on your practices as they were. Wouldn't you have thought it would be prudent to inform your customers so they could make their own decisions?"

Several Plus500 account holders who have spoken to Business Insider say they are angry about how they've been treated and the lack of communication from the company.

Plus500 chief executive Gal Haber replied: "If I had a time machine I would do that. I didnt know what was going to come out of the review. We were actually quite confident."

Lionel also asked if Plus500 has set aside any cash to cover potential fines arising from the FCA investigation.

Gordon said: "We had the 166, were putting the thing right, what happens after that is conjecture. "


A private investor called George asked the board: "Do you think youve scaled so quickly that your capacity to maintain new customer acquisition was stretched. Youre reaping the reward in terms of coming through but were you lazy in terms of checks to ensure this wouldnt happen?"

Haber replied: "I dont think we overstretched ourselves. I think the problem was with the controls that we had over the review process not in the funnel or manpower that was working on it. We have scaled our operations side."

Haber and Gordon blamed former management at the UK division for the failings and said changes have been made. You can read more about what management revealed about the account freezes at the meeting here.

NOW WATCH: Kids settle the debate and tell us which is better: an Apple or Samsung phone

See Also:

Plus500 just admitted that ALL of its UK accounts are frozenPlus500 customers are going to have to wait another month to get their frozen cashPlus500 just told us that the UK's financial watchdog is behind its account freezes