CL-2020-000117 - [2025] EWHC 1620 (Comm)

Falcon invested a total of €3.5m in a security issued by EFG International Finance Guernsey Limited on 2 February 2015 and disposed of it on 18 December 2015 for a total of €145,000, representing a 96% loss on investment. The product was a derivative product which depended on the value of four foreign currencies against the US Dollar over the period of life of the product. The more those currencies devalued against the Dollar the less likely it was that the investor would profit from the investment. All the relevant currencies weakened against the Dollar over the period of Falcon’s ownership and continued to weaken after the product was sold. Mr Holt considers that this deterioration, whilst justifying a drop in price, may not have justified a drop of 95%. In my judgement there is no sufficient evidence to justify such a conclusion. If this product was a market traded product then market information ought to be available to enable this to be evaluated properly. However all Mr Holt says is that “… further information … is required to conclude on whether a better sales price could have been achieved…”. That being so, I am not able to conclude that the product was sold at a lower price than it should have been nor am I able to conclude that the sale of the product at the time it was sold was irrational given the performance of the currencies concerned against the Dollar at the time of sale and the absence of any evidence that at that time a reversal of this trend was considered likely or even possible. I am not able to accept that this investment was not a proper investment for the relevant Falcon sub fund to have made at the date when it made it in the absence of expert investment evidence that supports such a conclusion. By definition the product like all currency hedge products was attended by significant risk. However that does not lead to the conclusion that the product was not in principle a proper one to invest in as part of an appropriate diversified portfolio depending on the risk profile for the portfolio concerned. There is no evidence that enables to me to conclude that this was an inappropriate investment bearing in mind those considerations.

In relation to commission, on 10 February 2015, SVC invoiced Leonteq for “Sales Commission for Leonteq Warrants” in the sum of US$1,950,000. The documentation raised by Leonteq in relation to this invoice confirms that it is in respect of the acquisition of the product I am now considering. That commission represents 49% of the amount received by Leonteq from Falcon for the product and in my judgment is manifestly excessive for the reasons I have given when considering the earlier EFG transaction. There is no invoice that can be specifically tied down to a payment to Mr Ökten in respect of this transaction although inferentially he was paid in relation to it by reference to one or more of the payments made to him in the period between 9 – 15 March 2015. I so conclude in the absence of any evidence from either Mr Serwin or Mr Ökten that answers the claimant’s inferential case on this point.