On 24 March 2009, Sir Andrew Park sitting as a High Court judge in the UK Companies Court handed down his judgment in the case of Global Trader Europe Limited (Global Trader). The case is highly significant both for the global financial services industry and for those having to deal with the insolvency or near insolvency of financial institutions. The directors of this minor player in the derivatives arena would not have known that their company’s treatment of its various types of clients and counterparties would become the focus of attention by the legions of lawyers, bankers and accountants dealing with the largest financial group collapse the world had ever seen: Lehman.

Sir Andrew Park’s judgment is identified in a substantial number of the issues which the administrators of Lehman Brothers International Europe (LBIE) have brought before the UK court for determination. A directions hearing with preliminary matters takes place on 19 June. The extent to which the findings in the Global Trader case are to be applied in LBIE will be determined within the next few months. Whether some or all of the findings will be the subject of appeals will be a question in the forefront of interested parties’ thinking.

The Global Trader judgment is easy to read, a blessing for those having to grapple with the complexities of the relationships between such financial products providers and their counterparties and clients. The judgment gives a judicial interpretation of the application of the UK client asset and money rules implemented under the Financial Services and Markets Act 2000 (the CASS Rules) where none has been given before. It is therefore essential reading for those faced with advising clients on the interpretation of those Rules. Click here for full article.