Tuesday, January 21, 2014

Lehman mis-selling

The case brought against Lehman Brothers included 'breach of contract, negligence, misleading and deceptive conduct, and breach of fiduciary duty in recommending and selling complex, high-risk financial products as investments', leading to enormous losses when the global financial crisis hit. Obviously all oversights on Lehman's part, where the right hand selling didn't know what the left hand was investing. Ahem.

The decision handed down by the Federal Court has ruled that disclaimers in in term sheets, contract notes and offering memoranda may be ineffective in avoiding liability, and that a bank, by assuming the role of trusted advisor, in downplaying potential risk in various forms of communication, may indeed be held liable. 

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