CL-2018-000297, CL-2018-000404, CL-2018-000590, - [2025] EWHC 2364 (Comm)

Fecha: 02-Oct-2025

Taken with mark-to-market differences on the other open stock loans shown on Europa’s account, that contributed to a debit entry in the 5 April 2012 “Cash” account of £7,430,521.25. The effect of that

72.

Taken with mark-to-market differences on the other open stock loans shown on Europa’s account, that contributed to a debit entry in the 5 April 2012 “Cash” account of £7,430,521.25. The effect of that was to treat Europa as returning £1,769,698.51 of the collateral on the Carlsberg stock loan. It is not apparent what DKK:GBP exchange rate was being used for account entries on 5 April 2012, but at (say) 9:1, £1,769,698.51 would have been close to DKK16 million, meaning that, in effect, the cash collateral on Sample Trade Salgado 1 was reduced on 5 April 2012 to c.DKK449 per share. In cross-examination, Mr Klar could not see the impact it might be thought this should have had on any stock loan recall price for the unwind phase. He correctly articulated that the provision of cash collateral under a stock loan is functionally like a cash loan, but failed to grasp that his mark-to-market check, once it was translated into a cash debit from Europa, functioned as a part repayment that prima facie should have reduced the cash obligation when the stock loan was recalled.

73.

It was evident to me that Mr Klar does not now recall at this level of detail how he dealt with the book entry accounting on these trades (and indeed he said as much). Furthermore, his cross-examination on the point by Mr Rabinowitz KC for SKAT was not informed by a complete analysis of the available accounting records:

the 5 April 2012 statements were the first to be produced after the settlement date of any Klar Model trades;

in later monthly statements, the “Stock Loan Cash Collateral Pool” item may have sought to aggregate: (i) stock loan mark-to-market differences on the new statement date for any stock loans then running; (ii) a reversal (in effect) of the prior month’s mark-to-market adjustment; and (iii) an exchange rate adjustment to balance what would otherwise be a foreign exchange gain or loss caused by returning, on stock loans that had been unwound since the previous monthly statement, the GBP value treated as originally received by way of collateral rather than the GBP value on the unwind settlement date of the obligation to return a non-GBP collateral amount;

thus, for example, in the 5 May 2012 statements, marking open stock loans to market showed Europa to be notionally over-collateralised to the tune of £4,015,377.85, but the “Stock Loan Cash Collateral Pool” item was a credit entry of £6,751,779.50, a difference in Europa’s favour of £10,767,157.40;

that difference may have been the aggregate of (i) the reversal of the 5 April debit of £7,430,521.25 and (ii) what would otherwise have been an FX gain for Salgado (and loss for Europa) through not booking the unwind collateral return on stock loans at then current GBP values.

74.

If that is how Mr Klar was accounting for things, then the effective trading outturn for Europa, on paper, of the Salgado 1 Sample Trade may have been the second of the two figures referred to in paragraph 70.g above. SKAT drew attention, in a written note provided at my request after Mr Klar had given evidence, to some possible problems with that explanation. Overall, I was left sufficiently unclear as to be unable to make a finding as to how exactly, acting for Salgado, Mr Klar was accounting for transaction cash flows and, in consequence, Klar Model parties’ profits or losses on paper other than tax refund claim receipts.