Legal issues from High Court and Court of Appeal judgment on Lehman

The Court of Appeal’s judgment overturned the low court with an immediate impact on the parties involved. The Court of Appeal increased the size of LBIE’s pool of client money and increased both the number and size of claims on that pool by ruling that the client money rules require the pooling of credit money wherever it is found and allowing each client whose money should have been segregated to participate in the total pool of client money. The administrator will, based on the judgment of the Court of Appeal, recalculate the size of the LBIE client money pool and revalidate the legitimate position of entitlement to the pool. It is significant for the authorised firms and their client understand the rules enshrined in the judgment of the Court of Appeal. Financial Service Authority was criticised by the Court of Appeal for the “ambiguities and inconsistencies that its judgment discovered in client money rules”.The primary statutory objective of the Financial Services Authority, as mandated by the Financial Services and Markets Act 2000 is to “maintain confidence in the financial system”. The ambiguities and unclearness will lose the confident of stakeholders of a reliable and competitive financial system.