Court Denies Hedgie Compensation For Ponzi Scheme

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.


In Depth

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note