Legal commentary

Legal commentary Purpose – The purpose of this paper is to discuss the High Court's rejection of claims made against a UK bank by a US‐based customer in relation to foreign exchange dealing it carried out as agent for its US affiliate based on common law and breaches of COBS Rules ( BankLeumi (UK) plc v. Wachner , Queens Bench Division, Commercial Court; Mr Justice Faux). Design/methodology/approach – The paper discusses this action and counterclaim by the defendant. Findings – The Judge did not find any of the three causes of action underlying the counterclaim to have any foundation, and he found the defendant liable for the full amount of the claim. Originality/value – This paper draws attention to investors' attempts to shift trading losses onto the counterparties with or through whom they dealt through the use of common law, fiduciary principles or statutory tort claims. Such claims have no chance of succeeding unless the claimants can establish that they were incorrectly classified as an expert customer. Another point of interest to draw from this decision is to recall that product design and pre‐emptive restrictions on product innovation are once again a prominent feature of current debates on regulatory reform. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Regulation and Compliance Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1358-1988
DOI
10.1108/13581981111162228
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to discuss the High Court's rejection of claims made against a UK bank by a US‐based customer in relation to foreign exchange dealing it carried out as agent for its US affiliate based on common law and breaches of COBS Rules ( BankLeumi (UK) plc v. Wachner , Queens Bench Division, Commercial Court; Mr Justice Faux). Design/methodology/approach – The paper discusses this action and counterclaim by the defendant. Findings – The Judge did not find any of the three causes of action underlying the counterclaim to have any foundation, and he found the defendant liable for the full amount of the claim. Originality/value – This paper draws attention to investors' attempts to shift trading losses onto the counterparties with or through whom they dealt through the use of common law, fiduciary principles or statutory tort claims. Such claims have no chance of succeeding unless the claimants can establish that they were incorrectly classified as an expert customer. Another point of interest to draw from this decision is to recall that product design and pre‐emptive restrictions on product innovation are once again a prominent feature of current debates on regulatory reform.

Journal

Journal of Financial Regulation and ComplianceEmerald Publishing

Published: Jul 26, 2011

Keywords: Legal decisions; Financial services; Banks

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