NRI sues broker for fraud, seeks 30 million pounds

LONDON | NEW DELHI: It should have been a dry legal battle, but it���s turning into a gory spectacle of the inner workings in the world of high finance, with all the elements of sleaze and scandal spilling into open court. The case of Rajesh Gill, an NRI derivatives trader, who is suing his former broker, now MF Global, for fraud and damages of up to 30 million pounds, has caught the attention of even the tabloid press in the UK.

Neil Kitchener, representing Mr Gill, introduced in court, tapes recording conversations between members of MF Global���s broking desk, talking about how to convince Mr Gill to rope in his ���rich uncle in India���, as Indians are into ���ripping off their families��� in order to fill in the gaps in Mr Gill���s account. MF Global has denied the allegations, and maintained that he was involved in highly complex trades ���akin to even bets on a roulette table���.


The case will be heard for over six weeks before any decision is reached.

Mr Gill, a London-based NRI has sued MF Global, then Man Financial, and his account manager, Matthew Bomford, alleging that they deliberately lied to him about his positions. He has argued that Mr Bomford told him that he had over 9 million pounds, when he had only about 2 million pounds in October 2001. Aria Investments used this broker till 2002, and filed the case in 2006.

Mr Gill, an LSE graduate, traded in complex short-term derivatives from his personally managed fund, Aria Investments. He has alleged his broker deliberately deceived him, making him believe that he had a golden touch, when in reality he was making huge losses, to earn hefty commissions.

In what is being seen as a potentially landmark case, amid the scrutiny of the financial sector, it raises questions about broker obligations to clients who make huge losses, even while paying hefty commissions and bonuses. ���It is unfortunate that this individual has decided to use the court���s time and resources in an attempt to shield himself from the risks and transfer the responsibilities that he knowingly undertook,��� said an MF Global spokesperson. MF Global, in its defence, has contended that Mr Gill���s financial and tax matters were complex, and it was acting as an execution only broker, and not offering any advice.

The case hinges on recorded conversations of all parties concerned, as Mr Gill has argued that as he was executing over 200 trades a day, he relied on the telephonic information from Mr Bomford, his account manager, for accurate updates, and not on the monthly written statements sent to his Isle of Man address. Aria Investments was set up in the Commonwealth of the Bahamas and is one of the trading vehicles of Mr Gill. Its entire share capital is owned in trust for the benefit of Mr Gill and his family.

MF Global is a broker for exchange-traded futures and options and an intermediary in the markets for other major financial instruments across several countries. It provides independent execution and clearing services for exchange-traded and over-the-counter derivative products as well as for non-derivative foreign exchange products and securities in the cash market. It operates in around 12 countries and on more than 70 exchanges.