Earthport dragged back to earth by apparent client fraud

(ShareCast News) - Shares in Earthport have fallen back to 2012 levels after a potential fraud by a corporate client put its Baydonhill foreign exchange business at risk of a potential £5m loss.One corporate customer, which has since been found to have appointed an administrator, reneged on paying its bills and initial investigations "indicate the customer intentionally engaged in fraud".The company, which has made payments on the client's behalf for over a year, is now pursuing regulatory and legal action to recover the loss.Earthport stressed that no client funds were affected, nor would be in future, by the transaction, which was limited to a single customer relationship at Baydonhill, and that its core cross-border payments business had no exposure."While the potential financial impact of this incident is material, Earthport possesses sufficient capital to continue pursuing its growth strategy while maintaining a substantial capital buffer."At its 31 December half-year stage, the AIM-listed company had a £24m cash balance.Just before the close on Thursday, Earthport shares were down 28% to 17.9p, a three-year low.