Saturday, 22 October 2016
Last updated 20 hours ago
Feb 11 2013 | 10:21am ET
A former hedge fund manager who lost about £20 million ($31.4 million) in a Ponzi scheme will not be compensated by the bank that ran the accounts used in the alleged £300 million fraud.
Jeremy Stone, formerly a portfolio manager at Marble Bar Asset Management, had sued Royal Bank of Scotland Group's NatWest and an employee, Paul Aplin, seeking damages of up to £26 million.
Stone claimed the bank was negligent for missing suspicious activity surrounding Essex-based Saunders Electrical Wholesalers. The U.K.'s Serious Fraud Office has been investigating the company and in 2010 made five arrests. The man behind the company, Jolan Saunders, appeared at the Stone trial but declined to give evidence because he is facing criminal charges.
Judge Philip Sales, reports Bloomberg, was not sympathetic to Stone in his ruling, writing that Stone and others associated with his firm gave testimony “heavily colored by a very strong wish that they had not been duped as they were and a strong impulse to think” someone else must be to blame.
Sales exonerated accounts manager Aplin, saying he was an honest man. He also declined to blame the bank for not using automated fraud-detection systems.
Saunders Electrical's business—supplying electrical equipment to hotel chains—was described by Sales as “wholly fictitious." Sales said Saunders used money from new investors to repay loans and give the illusion of profits.