Case Law Update: Misselling Financial Products

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In a recent case, Cassa di Risparmio della Repubblicca di San Marino SpA (“CRSM”) v Barclays Bank Ltd (“Barclays”), CRSM brought claims in fraud, negligent misrepresentation and breach of contract against Barclays arising out of a bespoke, synthetic CDO deal.

In a careful judgment, the Court has provided a clear summary of the legal principles which apply in CDO misselling claims. In particular, it has underlined that in deciding if a misrepresentation claim has become barred as a result of a contractual disclaimer, the effect of the disclaimer must be analysed closely and placed in context. Only if the disclaimer can fairly be said to exclude the precise representation which the claimant is alleging will the court find that claims based on that representation have been excluded. On the facts, however, CRSM failed to establish that Barclays was liable for its losses. The Court also rejected CRSM’s claim that a discrepancy between the risks of investing in the Notes projected by Barclays’ internal modelling and those implied by the AAA rating given to the Notes gave rise to a fraudulent misrepresentation.

Please see full article below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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