A broker must pay £20 million damages awarded to a financial trader he deceived and defrauded, the Court of Appeal ruled today.
Both the broker and the company he worked for had challenged the amount of the award, claiming the High Court judge should only have taken into account lost interest on investment and not an estimate of lost profits.
Mr Justice Flaux said that Rajesh Gill's multimillion-pound losses during his time trading with Man Financial, now MF Global, were the direct result of repeated deception by broker Matthew Bomford.
The three appeal judges today repeated the words in Mr Justice Flaux's ruling that the broker had been exposed in the witness box as "a persistent and inveterate liar in almost everything he said".
Mr Gill, 38, one of the most successful independent traders in the world whose only losses were when he dealt with MF Global, said after today's judgment: "MF Global's conduct today, in again refusing to accept the consequences of fraud by one of its brokers, mirrors its whole approach to this litigation over the past eight years. It seems they're just desperately prolonging the inevitable, at increasing expense to their shareholders. It's a misguided and costly strategy."
His solicitor, Peter Atkinson, said the Court of Appeal's decision was important because it made clear that a fraudster has to provide full compensation to his victim for the loss of his money and will not be allowed to hide behind suggested uncertainty as to what might have happened to the money if the fraud had not occurred.
"This is the first time that a trader has recovered damages representing the profits he says he would have made if he had not been defrauded out of his trading capital.
"Influential commentators had previously thought the law was not able to provide compensation in such circumstances and that the victims of fraud would simply have to live with the loss of the chance to make a profit on the stolen funds."
Mr Gill is a self-taught trader who started with £7,000 in 1998 and by 2000 had turned it into £7.5 million. He became known as the "7 to 7 man".
He took action against the broker when not knowing of his losses, he unwittingly wiped out his entire trading account containing almost £10 million.
Mr Bomford repeatedly told Mr Gill his account was making profits when it was actually losing millions of pounds.
While this was going on, Man received £2.5 million in commission directly from Mr Gill's trades and Mr Bomford personally pocketed more than £500,000 in bonuses.Reuse content