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FSA poised to investigate brokerage over £30m fraud lawsuit
Wednesday 25th March 2009An international brokerage is set to receive an FSA investigation after it emerged that a former senior broker intentionally and continually misled a day trader, causing him to lose millions placing trades through the firm.
MF Global, which used to be known as Man Financial, a spin off from hedge fund manager Man Group, is facing a £30 million fraud lawsuit brought against them by prolific trader Rajesh Gill.
Mr Gill claims that his former account manager at MF Global, Matthew Bomford, misled him into believing that he was making vast profits when in actual fact, he was losing thousands of pounds each day.
Mr Bomford, who was handed bonuses of over £500,000 between 2001 and 2002 for carrying out Mr Gill’s high commission trades, has been accused of causing the trader to lose £3.2 million, including £2.6 million in commission payments, over a nine month period.
During the high court case yesterday, Mr Gill’s lawyer, Neil Kitchener said: “This case involves not only fraud but also wholesale compliance failure at MF Global - including a deliberate decision to continue to employ an individual who directors of the company knew to be a fraudster.”
The trial will reconvene later this week, however the brokerage continues to contest the amount of damages being claimed, saying that Mr Gill was a “compulsive trader” who would have lost the money, regardless of their broker’s actions.
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