Odds not in favour of investors in 'forward accumulator' court cases
David Smyth of Smyth & Co, in association with Reynolds Porter Chamberlain, consider disputes arising out of 'forward accumulators'
Forward accumulators are making headlines because of a number of high profile disputes working their way through the courts. These disputes have their origins in losses incurred by investors as a result of investing in certain structured investment products during the "bull market" run that preceded the 2008 financial crash. The underlying investments are usually shares.
The disputes tend to take two forms. First, the investor sues the financial institution (usually a bank) to recoup significant losses that the investor blames on the bank and its staff.
The investor's usual modus operandi is to claim that the bank breached its contractual duties or assumed a responsibility to advise the investor before some of the losses were incurred. For good measure, the investor may claim the bank and its staff committed regulatory breaches.
Second, some disputes involve the bank suing the investor to recover substantial losses over and above the security held by the bank and/or the amount held on deposit by the investor with the bank.