MF Global Holdings Ltd. won a lawsuit brought by an investor who claimed the brokerage caused him to lose about 1 million pounds ($1.6 million) by encouraging him to make short-term, risky trades.
Michael Wilson, an Aberdeen, Scotland-based businessman claimed in a trial that started in November that an account manager at MF’s GNI unit gave him “market commentary and investment advice” contrary to the rules on execution-only accounts that led him to pursue a flawed trading strategy.
Justice David Eady said there was “an air of unreality” about Wilson’s case. After listening to tapes of Wilson speaking with his broker “it is clear to me that what was happening can best be characterized as exchanging information and ‘bouncing ideas’ off each other or swapping hunches about the market.”
During the trial Wilson’s lawyer, Jalil Asif, said Wilson followed the advice of his account manager and took a “risky” strategy of short-term buying and selling of a type of derivatives that resulted in large losses. The brokerage should have “balanced what was said” by the account manager by telling Wilson the risks, Asif said.
In a separate case in 2009, another MF Global unit was ordered to pay a U.K. day trader about 20 million pounds over claims an account manager provided misleading information about profits on trades.
Wilson operated an execution-only account at GNI between 2003 and 2005, his lawyer Asif said during the trial. The brokerage denied ever giving out investment advice. MF lawyer James Smith said during the trial that Wilson made his own mistakes.
The case is: Michael Duthie Wilson v MF Global Ltd., HQ09X01868, High Court of Justice, Queen’s Bench Division.