Tranona
Well-Known Member
The reason I have not commented on it is because I am not sure of the relevance of the "facts" bit of the report. Not only does much of the information there not warrant further mention, but seems to contradict the statement in the judgement that I quoted earlier about there always being enough funds in the account to cover the funds being held in trust. This suggests that the client account funds were not actually transferred to the current account but surplus above the limit merely used to calculate the size of the overdraft.
In other words, those people whose funds were proven (through the test) to be held in trust got their money. I believe there was also a surplus after these claims were met but I am not sure what happened to that money.
Those who lost out were mainly buyers of new boats who made their deposits on the promise that they would be going into the client account but did not. They became unsecured creditors of the corporate body. The judgement makes clear that brokerage clients funds were treated properly (very relevant to this thread) but treatment of new boat buyers were not always.
This re-inforces the advice to know the relationships in the transaction. By the nature of the specific types of transactions those most at risk in a brokerage transaction are the seller, because he has authorised the broker to hand over title before the money is transferred to him (being held in trust in the client account). On the other hand when buying a new boat, the risk is always with the buyer as the seller is also the trustee. In practice the buyer has often paid the deposit against nothing tangible - as in my case I paid a deposit in October for a boat that was not made until the next February.
