MF Global ordered to pay former client £20m after trading 'deceit'

A High Court judge yesterday told MF Global to pay damages of up to £20m to a former client who lost millions of pounds after being "ensnared in a web of deceit" spun by a former employee of the City brokerage firm, previously known as Man Financial.

Rajesh Gill, a prolific day trader, unknowingly racked up hefty losses in 2001 and 2002, after Mathew Bomford, his account manager at MF, created a "parallel universe", telling Mr Gill that he was trading profitably when he was in fact losing money.

"The overall effect was to create the intricate web of deceit, perpetrated over a lengthy period, that the trading being carried out was profitable and was building up a fund worth approaching £10m by the time the truth came out, whereas in fact the fund was diminishing rapidly throughout the period of deceit," Mr Justice Flaux said in his judgment yesterday.

Mr Bomford's team had only recently moved to MF, and the judge said it seemed likely that he had been motivated at least in part by a perceived need to generate commission for his team, which would be under scrutiny.

"Equally, Mr Bomford may just have lived for the moment, as glimpses of his lifestyle, such as his admitted use of illegal drugs, would suggest," the judge added.

The brokerage admitted the allegations of fraud against Mr Bomford on the tenth day of the trial, which came after what the judge said "can only be described as a disastrous three days in the witness box for Mr Bomford, during which he was exposed not just as a fraudster throughout the relationship between Tangent [Mr Gill's trading vehicle] and Man but also as a persistent and inveterate liar in almost everything he said, both in evidence and elsewhere".

A spokeswoman for MF characterised the award as "greatly disproportionate" to Mr Gill's actual losses, and said the brokerage was now a "different company under a different management structure".

In an internal memo to employees, Bernard Dan, MF's current chief executive, added: "I strongly disagree with how the judge calculated damages in this case and we will appeal this decision."