One of Australia's largest brokers, Halifax Investment Management, is set to head into liquidation after administrators discovered that $20 million of customers' money was used to cover losses on bad bets made by other clients.

Halifax called in administrators just before Christmas, freezing customer funds.

Administrators are trying to figure out how and why the funds were "co-mingled". Credit:Jessica Shaprio

Ferrier Hodgson has likened the collapse of Halifax, which had 12,000 clients in Australia and New Zealand, to other high-profile stockbroker collapses in recent years including BBY, Sonray and Opes Prime.

Action against the company by the corporate regulator is possible, with sources saying the Australian Securities and Investments Commission was taking a close interest in the outcome of the administration.