High Court Case Provides Clarification On Application Of CASS Rules

In MF Global UK Limited [2014] EWHC 2222 (Ch) the High Court found in favour of an application to enable a settlement agreement which would release all tracing and other claims to a client money trust, referred to as the client money pool ("CMP"). The judgment provides further clarification following the analysis of an earlier version of client money rules in the Lehman Brothers case.

The settlement related to a shortfall in the CMP resulting from the firm's breach of its obligations to segregate client money under CASS 7 and CASS 7A of the Client Assets Sourcebook of the Financial Services Authority's Handbook. Nothing in the rules expressly excludes compromise and the court concluded that in order to administer the client...