MAN FINANCIAL (MF) Global lost an appeal yesterday that will see it have to pay out almost £20m in damages to a trader who was deceived and defrauded by one of its brokers.
A decision handed down by the Court of Appeal said that the broker, Matthew Bomford and the company he worked for, MF Global would have to pay out the sum, which was based on the total amount of profits lost by the trader, Rajesh Gill, as a result of the fraudulent activity.
MF Global challenged the decision made by a High Court judge in May last year to pay the sum of £20m.
The group argued that the total amount of damages awarded to Gill should have be based on the amount of interest lost on investment and not lost profits.
The court dismissed the appeal on the grounds that there was no reason why the discovery of the fraud should have been used as a cut off point for the damages claim.
Yesterday’s ruling is considered by City lawyers as a landmark decision in fraud cases, as Gill is the first trader to receive damages based on what he could have made after the fraud had been committed.
“This is the first time a trader has been awarded damages for the profits he would have made if he had not been defrauded,” said Gill’s lawyer, Peter Atkinson of Gordon Dadds.
He said: “This makes it clear that fraudulent activity has to pay back.”