Spreadex Ltd v Sekhon

Spreadex Ltd v Sekhon

Spreadex breached COB 7.10.5R by failing to close Dr Sekhon's positions after an unmet margin call on 4 September 2006 and did not grant credit in accordance with COB 7.9.3R. Dr Sekhon was not properly reclassified as an intermediate customer under COB 4.1.9R until 5 October 2006, but Spreadex took reasonable steps to classify him as such from that date. Spreadex is liable for the deterioration in Dr Sekhon's positions from 14 September 2006 to 5 October 2006, subject to 85% contributory negligence by Dr Sekhon.

Parties
Claimant: Spreadex Limited; Defendant: Sanjit Sekhon
Jurisdiction
England and Wales
Judgment Date
23 May 2008
Procedural Posture
Civil (contract/statutory Duty) / Judgment After Trial
Outcome
Judgment for the claimant in part; counterclaim for damages for breach of statutory duty allowed in part, subject to contributory negligence.
Legal Topics
Spread Betting, Margin Calls, Client Classification Under FSA Rules, Breach of Statutory Duty, Contributory Negligence
Financial Services Regulation Contract Law Tort (statutory Duty) Spread Betting Margin Calls Client Classification Under FSA Rules Breach of Statutory Duty Contributory Negligence

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Parties

Spreadex Limited

Claimant

Sanjit Sekhon

Defendant

Procedural Posture

Civil (contract/statutory Duty) / Judgment After Trial

Legal Issues

  1. 1 Whether Spreadex breached COB 7.10.5R by failing to close Dr Sekhon's positions after an unmet margin call
  2. 2 Whether Spreadex granted credit in accordance with COB 7.9.3R
  3. 3 Whether Dr Sekhon was properly reclassified as an intermediate customer under COB 4.1.9R

Ratio Decidendi

Spreadex breached COB 7.10.5R by failing to close Dr Sekhon's positions after an unmet margin call on 4 September 2006 and did not grant credit in accordance with COB 7.9.3R. Dr Sekhon was not properly reclassified as an intermediate customer under COB 4.1.9R until 5 October 2006, but Spreadex took reasonable steps to classify him as such from that date. Spreadex is liable for the deterioration in Dr Sekhon's positions from 14 September 2006 to 5 October 2006, subject to 85% contributory negligence by Dr Sekhon.

Court Disposition

Judgment for the claimant in part; counterclaim for damages for breach of statutory duty allowed in part, subject to contributory negligence.

Orders

  • Spreadex is liable to Dr Sekhon for the deterioration in his open positions between 14 September 2006 and 5 October 2006, subject to an 85% reduction for contributory negligence.
  • The parties are to calculate the appropriate figures reflecting this finding.