A broker who persistently lied to a trader client about the fact his account was losing money, wiping out his £10m fund, has been ordered to pay him £20m damages in the first ruling of its kind.
Matthew Bomford repeatedly lied to Rajesh Gill, a self-taught trader who started with £7,000 in 1998 and by 2000 had turned it into £7.5m, earning him the nickname "the 7 to 7 man".
The Court of Appeal's ruling yesterday that Bomford must compensate Mr Gill is the first time a trader has been awarded damages representing the profits he says he would have made if he had not been defrauded out of his trading capital.
Both Bomford and the company he worked for had challenged the amount of the award, claiming a High Court judge, in an earlier decision, should only have taken into account lost interest on investment and not an estimate of lost profits. Mr Justice Flaux had said that Mr Gill's multimillion-pound losses during his time trading with Man Financial, now MF Global, were the direct result of repeated deception by Bomford.
The three appeal judges yesterday 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 took action against the broker when, not knowing of his losses, he unwittingly wiped out his entire trading account containing almost £10m.
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 £2.5m in commission directly from Mr Gill's trades and Mr Bomford personally pocketed more than £500,000 in bonuses.
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 the Court of Appeal 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.
"Commentators had 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," he said.Reuse content