Source: All England Reporter
Publisher Citation: [2013] All ER (D) 221 (Jan)
Neutral Citation: [2013] EWHC 92 (Ch)
Court: Chancery Division, Companies Court

David Richards J

Representation Antony Zacaroli QC and Adam Al-Attar (instructed by Weil, Gotshal and Manges) for the Administrators of MF Global UK Ltd
  Richard Snowden QC and Ben Shaw (instructed by Simmons and Simmons) for the first respondent.
  Barry Isaacs QC and David Allison (instructed by MacRae & Co LLP ) for the second respondent.
  Glen Davis QC for the FSA
Judgment Dates: 29 January 2013


Company - Administration - Assets available for creditors - Regulation of financial services - Client money pool - Company - Company going into administration - Whether client money entitlement to be valued as at primary pooling event or by reference to iquidation value (hindsight principle) - Whether 'hindsight principle' being applicable to determination of claims to client money for purposes of distribution under Financial Services Authority rules - European Parliament and Council Directive (EC) 2004/39 - Commission Directive (EC) 2006/73 - Financial Services Authority's Client Assets Sourcebook, Ch 7.

The Case

Company Administration. Chapters 7 and 7A (CASS 7 and 7A) of the Client Assets Sourcebook section of the Financial Services Authority Handbook created a requirement for investment firms to segregate money received from or held for their clients and hold it on trust for them. In certain circumstances, including the administration or liquidation of the firm, the money held for clients (client money) had to be distributed among the clients, pro rata according to their entitlements. The administrators of a company which carried out business as broker-dealers in financial markets, sought the court's direction as to whether the client's money entitlement in respect of its position was to be valued as at the primary pooling event or by reference to the liquidation value (the hindsight principle). The Chancery Division, Companies Court, held that the hindsight principle was not applicable to the determination of claims to client money for the purposes of a distribution under CASS 7A.

Practice Areas

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