In the matter of Market Wizard Systems (UK) Limited and in the matter of the Insolvency Act 1986
| Pages | 75-81 |
| Date | 01 January 1999 |
| Published date | 01 January 1999 |
| DOI | https://doi.org/10.1108/eb024999 |
| Author | Joanna Gray |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 7 Number 1
Computerised trading system gives
investment advice
In the matter of Market Wizard Systems (UK)
Limited and in the matter of the Insolvency
Act 1986
Chancery Division of the High Court: Mr Justice Carnwath
Date of Hearing: 19th-26th June, 1998
Date of Judgment: 14th
July,
1998
Joanna Gray
Reader in Financial Regulation, University of Newcastle upon Tyne, Newcastle Law School,
21-24 Windsor Terrace, Jesmond, Newcastle upon Tyne NE1 7RU; tel: 0191 222 7685;
fax: 0191 212 0064 or tel/fax: 01669 650 349; e-mail: joanna.gray@newcastle.ac.uk
FACTS
Between September 1997 and March 1998
Market Wizard Systems (UK) Ltd (the
Company) advertised and sold a computer
software package called the Market Wizard
Equity Options Trading System (the
System). The petition in this action
described the System thus:
'The System is said to comprise a
formula imprinted upon 11 computer
disks and a 50 page operating manual,
and requires a customer to have access to
a telephone modem link and an IBM
compatible computer. In order for the
System to function, daily prices and
other information must be downloaded
and entered by the customer, such infor-
mation being provided by the company
to the customer by means of the
required telephone line. The System
operates by producing buy, sell or hold
signals in respect of options in each of
the 12 traded stocks. These signals do
not indicate the amount of stock to be
bought or sold, but show the customer
the current positions which should be
held on that day (that is, neutral, short
or long positions), and whether the
customer includes a blank authorisation
form which the customer may sign and
date in order to pass on the instructions
to his broker. The trade is then made
through the customer's broker who
needs to be licensed and a member of
LIFFE'.
The System was marketed to individuals
and companies. Advertisements were
placed in national newspapers with a
follow-up freephone number. Upon calling
this number prospective purchasers would
then be sent a standard letter, a brochure
describing the product and an application
form for the product. The company had
no authorisation to do investment business
under the Financial Services Act 1986 and
its customers were required to sign a state-
Journal of Financial Regulation
and Compliance, Vol. 7, No 1,
1999,
pp 75-81
© Henry Stewart Publications,
1358-1988
Page 75
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