The case being taken by Cantor Fitzgerald involves a dispute over Contracts for Difference brought by private clients of Davy Stockbrokers.

Irish-based holders of CFD products lost at least 50m in a few minutes late last February when the Elan share price tumbled 70% after the company announced that it was suspending its multiple sclerosis drug Tysabri.

It is thought that the Canton Fitzgerald case involves Davy clients that took a long position on Elan, and were effectively betting that the share price would rise. One source claimed the case could relate in part to a single Davy client who had lost substantially and is refusing to pay, but this could not be confirmed.

A spokesman for Davy declined to comment on the case. Charlie Knott, head of the CFD desk at Cantor Fitzgerald, also declined to comment when reached in New York late last week. One source close to Davy Stockbrokers, said that the case was likely to be settled before coming to court. Cantor still provides Davy with CFD products for its private clients, while Davys continues to offer its own CFD products to institutional investors.

Cantor Fitzgerald sells CFD products to Irish stockbrokers such as Davy, Goodbody, NCB, Merrion, Dolmen and Bloxham, and is the main provider of such instruments in the Irish market.

CFD products allow investors to leverage up to five times their holding in a stock without buying the underlying share. When the share price rises they can deliver huge gains, but when a stock collapses in value an individual's losses are greatly enhanced.

The CFDs in Elan generated a substantial amount of business for Cantor in the early part of last year.

In the weeks and months before the Tysabri suspension last February, private Irish clients had reportedly staked at least 15m on CFDs based on the Elan share price rising.

A single family reportedly lost up to 7m on Elan CFDs, while a host of Dublin brokers and their wealthy clients also nursed huge losses.

CFD products are not specifically regulated by the Irish Financial Regulator, but a Stock Exchange investigation into all open positions in Elan after February's share price collapse did seek information in relation to the CFDs.