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

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.