Supreme Court ruling on Daiwa has far-reaching implications

A recent decision from the highest court in the United Kingdom confirms the liability of financial institutions if they carry out transactions where a mandated employee of a customer is acting fraudulently. “This is not a comfortable conclusion” argue Oliver Lodge and Ian Mason as they explain the key takeaways of the case.

Oliver Lodge is director of OWL Regulatory Consulting (www.owlrc.co.uk) and was appointed as expert witness by Daiwa in this case. Ian Mason (ian.mason@gowlingwlg.com) is a partner and head of the UK financial services regulatory team at lawyers Gowling WLG.

Despite limited press attention, the Supreme Court judgment delivered in late October in the case of Singularis Holdings Limited (in liquidation) v Daiwa Capital Markets Europe Limited [1] should be of considerable interest and concern to regulated financial services firms in the UK. The case began three years earlier in the Chancery Division of the High Court and, in February 2017, Mrs Justice Rose delivered a judgment, which has been upheld in both the Court of Appeal and the Supreme Court.