Half-way House Fiduciary Duties: Medsted Associates Ltd v Canaccord Genuity Wealth (International) Ltd
Author | |
DOI | 10.3366/elr.2019.0574 |
Published date | 01 September 2019 |
Date | 01 September 2019 |
Pages | 388-395 |
In
Medsted was an introducing broker in the field of contracts for difference (“CFDs”). Its role was to introduce investors to second-tier providers of CFDs, which in turn dealt with first-tier providers. Due to the nature of these derivative instruments, investors were not allowed to deal directly with first-tier providers. Medsted formed a business relationship with Collins Stewart (“CS”, subsequently acquired by Canaccord), a second-tier provider, whereby the former introduced clients to the latter, in exchange for a share of the commission and funding rebate that clients paid directly to CS. Representatives of both parties agreed orally that the clients should not be told of the split of the charges between Medsted, CS and the first-tier provider.
Medsted sued CS to recover the share of the commissions it would have been entitled to, alleging that CS had breached the non-circumvention clause of their agreement.
At trial, the judge ruled in favour of Medsted.
In analysing the relationship between Medsted and its clients, Teare J began by observing that it was not the paradigm agency relation, where one party acts on behalf of the other and has the power to affect the latter's relations with third parties.
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