Financial and investment servicesInterest Rate Swap mis-selling cases.
Expert Evidence has been involved in a number of cases involving the mis-selling of Interest Rate Swap Agreements (“IRSAs”) both to private individuals and also small and medium sized enterprises (“SMEs”). The IRSAs come in a whole range of different types from Collars, Caps and Fixed Rate agreements which use the derivative markets to produce the results over a fixed period of time. In the majority of cases the agreements do not match the time period of the underlying loans they were seeking to reduce the risk on. In general the agreements come under the legislation relating to investments and so the Financial Services Authority Conduct of Business Rules apply.
Case ReportTrusts and SettlementsInappropriate actions by offshore trustees on behalf of beneficiaries.
Over the years many clients have used the facility of a trust structure usually based in an offshore location. It is important that the Trustees act in a fiduciary capacity for all the beneficiaries and frequently some of teh beneficiaries believe that the Trustees have not acted appropriately. At Expert Evidence we have advised on how Trustees have undertaken their role and whether a case exists for compensation of those which have been disadvantaged. It frequently involves the investment actions taken by Trustees on the funds held in the Trust. Consideration of the investment environment and basis of the investment decisions is highly pertinent to the consideration of the evidence.
Case ReportProfessional NegligenceProfessional Indemnity cases brought against surveyors and independent financial advisors (‘IFAs’).
Given the traumas of the investment markets over the 2007-2009 period, a number of clients and banks have lost substantial funds which are considered caused by the actions by professionals who have provided advice. Expert Evidence has considered a number of cases on behalf of the Professional Indemnity insurers and determined if there is a cause for action or not. Professional advisors can include Surveyors, Independent Financial Advisors and Investment Managers which need to act in an appropriate fashion to avoid charges of negligence. Consideration of the investment environment and basis of the professional decisions is highly pertinent to the consideration of the evidence.
Case ReportFinancial AdviceDerivative mis-selling cases.
Derivates, including Puts , Calls, Futures, Options and complicated structures are frequently provided as a risk mitigation strategy to clients. While they may also have substantial benefits, sadly they frequently carry other risks which may result in financial loss in certain circumstances. However it is important that clients understand what they are doing and the risk associated with the investment instruments provided. In many cases this would require the clients to be sophisticated investors and it is required that the providing financial institution ensures that this duty is carried out correctly under the rules. Expert Evidence has advised on a number of cases where the clients have realised substantial losses and the determination of the appropriateness of the strategy proposed needs to be considered.
Case ReportFinancial and investment servicesContract for differences cases.
Contracts for Differences are much used investment instruments due to the ease of dealing, ability to gear the exposure and the favourable taxation treatment. As a result many clients have chosen to deal through this medium. However they also can have additional risks particularly as the liability under the management agreement can be very substantial. Where there have been major movements in the underlying stock market, so clients have sometimes found that the risk level has been under-estimated and returns have not met their expectations. Insider dealing and normal investment requirements for clients still apply.
Case ReportFinancial AdviceA case which was brought against a firm of accountants which had been involved with a client who had taken out a multi-currency mortgage.
Multi-Currency mortgages have been popular with some clients due to the lower interest rate environment for a number of other of the international traded currencies particularly the Swiss Franc, Yen and Euro. At Expert Evidence we have been requested to provide advice on the appropriateness and suitability of the product as well as the on-going supervision of the mortgage loan during its life. Once again the products carry their own risks particularly in the area of currency exposure which clients need to appreciate and can cause significant loss.
Case ReportFinancial and investment servicesSituation where a client had provided an order which was misinterpreted by the Investment Manager.
The relationship between a bank and their clients can take many forms and usually involves a specially appointed person to represent the financial institution with the client. This can lead to a high level of service but it also has got risks where a Relationship Manager misinterprets a client instruction. The result is that an order may be not executed as a client may have required and when substantial loss occurs the situation can be examined with greater scrutiny.
Case ReportFinancial and investment servicesOffshore Clients which had a Portfolio and were represented by Offshore and Onshore Banks, Investment Advisors and Managers.
It is frequently the case that clients will have their investment account with an offshore bank although the account will be managed and/or advised by managers in one of the world’s main financial centres. This is intended to provide the benefits of tax efficiency yet also that the managers are near the heart of the financial community. In some cases the clients will have their custody arrangements in a third location and also the facility of onshore bank accounts and credit cards for their day-to-day expenditure requirements. Whilst highly beneficial in theory, these arrangements have been seen to cause issues for some clients and in a minority of cases they have believed that this will give them a cause for action. Expert Evidence has advised in a number of cases where problems have been brought to light and sought to advise both the banks and clients on the merits of the case.
Case ReportFinancial and investment servicesA portfolio which had been managed with an inappropriate risk profile and substantial costs had been incurred through investment in over risky assets.
The turmoil in the world’s financial markets during 2008 caused many asset classes to react in a way that was highly unpredictable. Whilst every effort was made to invest the funds correctly, the losses incurred may have been totally different to those that clients were led to believe was possible. In some cases the losses have been highly substantial and clients have sought to seek redress. The cases will be decided by the detail of the advice given to clients and the investment experience of the clients themselves. In cases where the concentration of investments in highly risky areas do not fit the clients risk profile, then there may well be a case of negligence by the investment manager in discretionary managed portfolios. For advisory portfolio, it will depend often on where the investment idea was initiated. The normal FSA rules needed to be obeyed in all cases.
Case ReportFinancial AdviceInvestment Managers obligations in the provision of advice.
Since the introduction of the Conduct of Business Rules (“COBs”) on the 1st November 2007, the requirements on investment manager has become significantly more onerous on understanding the particular circumstances of the clients and their background in relation to the investment markets. This is normally referred to as Appropriateness and Suitability which needs to be satisfied for all retail clients. The investment requirements in the case of more sophisticated clients, usually called intermediate clients, is significantly less but then the investment institution must be able to show that the client has appropriately classified. This area has led to many cases over the years and Expert Evidence has advised in a number of situations where the case has been decided on these requirements.
Case ReportFinancial AdviceIndependent Financial Advisors obligations to Clients.
The role of the independent financial advisor has been very general and can include almost any area where the finances of their clients are concerned. The majority of IFAs deal with clients who are looking for advice in the fields of investment and insurance. Many of the IFAs have traditionally received their income from the product providers and this is thought to have led to a conflict of interest between the IFAs and their clients. As a result many IFAs are looking to move to a fee based approach paid by the clients. The IFAs role has now been additionally complicated by the introduction of the Retail Distribution Review. All these areas are where disputes between the IFA and their clients can arise.
Case ReportFinancial and investment servicesClients which had suffered loss through foreclosure of a loan arrangement.
Banking relationships with clients are very different to investment relationships but have some of the underlying requirements. The issues of PPI insurance have been highly material in recent years but whatever the situation the Bank retains a duty of care to its clients. The issues found in the termination of banking facilities or even the foreclosure are fraught as the bank is by this stage seeks to protect its position and it can have a material detrimental effect on the clients. This process needs to be managed correctly by the bank and clients should normally be provided with an opportunity to correct a adverse situation and be treated fairly through the process. Expert Evidence has been involved with a number of tricky situations, particularly where it involves a largely illiquid market for the asset collateral.
Case ReportFinancial and investment servicesInvestment managers obligations in execution of client instructions.
Client instructions to an investment manager need to be executed promptly and professionally at the best price available in the market at that time (Best Execution Requirements of COBs). Occasionally an order can be lost or delayed which can be highly frustrating to clients in a fast moving market. The situation becomes more complex when it involves a limit order that may sit on the market for an extended period (sometimes many days) although these types of error have become rarer with more sophisticated dealing room software.
Case ReportBusiness LawA reporting error in the quarterly valuations sent to the client, which showed a grossly inflated valuation.
Occasionally some of the highly complex investment instruments are not correctly recorded by the investment institution and so continual errors can be made in the periodic reporting that is sent to clients. Whilst these situations can be highly upsetting for the clients and cause significant distress, it is normally not a situation where a liability for redress would be made. Expert Evidence has advised in relation to a number of situations which have arisen and sought successful resolution of the case.
Case ReportTaxDeduction for US income tax made when client had not completed appropriate documentation.
International tax has become ever more complicated and financial institutions usually have a responsibility to deduct some withholding tax at source. This has become much more important in recent years with the introduction of the Foreign Account Tax Compliance Act (“FATCA”) legislation by the US. This follows the parallel regime set up to create Qualified Intermediaries (“QIs”) which related to investments. Clients may object to not receiving their income gross but institutions have their own requirements from their National Governments which have to be applied.
Case ReportCrimeCriminal cases involving Fraud, Confiscation of Assets and Insider Dealing.
Expert Evidence also has a wealth of experience in dealing with a whole range of Criminal cases and determining the advice to the court on the precise situations which have been uncovered. Sometimes in the cases of Fraud the case may be brought as a Civil matter to then follow the Criminal hearing. We are able to act for both the prosecution or defence and investigate the circumstances of the case under either the CPR 35 requirements for Civil cases or CrimPR 33 rules for Criminal cases.
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