Austock Group has been hit by rumours it will be the next mid-sized stock broker to fall victim to sharemarket turmoil, but the broker says it is not in trouble.
Shares in the company, which comprises eight divisions including its stockbroking arm, have traded in increasingly thin volumes and lower prices since it first floated on December 11.
Managing director Tim Boyle said Austock hasn't lost $1 to bad debts since August.
In the wake of Tricom, Opes Prime, and now Lift Capital, speculation has focused on Austock because of its size in the market, similiar to the other brokers that failed.
"The only way (Austock) could be hit is if we had a margin book, but we don't have one,'' Mr Boyle said. "We are a life insurer, property company, stock exchange, and asset manager (in addition to a broker).''
He said after the first market ructions in August, Austock had asked a "large chunk'' of clients with highly leveraged positions to wind them down or to transfer them elsewhere.
"Bad money in drives good money out,'' Mr Boyle said.
Market rumours have been circulating that Austock has laid off 40 traders.
According to Mr Boyle, Austock only closed a three-person private client office in Brisbane because it lacked the scale to succeed in that market.
"In my time I've not seen markets like this,'' he said, noting the depth and speed of the downturn. "There's a lot of lot of emotive and illogical thinking going on.''
Austock floated 62.5 million shares out of 119.2 million total at the price of $1.80 on December 11, 2007, weeks after the S&P/ASX 200 peaked at 6828.70.
Since then shares of the company, which has a small free float, have been caught up in a downward market momentum that has put increasing scrutiny on financial sector stocks.
Based on Austock's Tuesday share price of 90 cents, when the thinly traded stock last moved, the value of the company was $107.3 million.
BusinessDay
