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England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> IG Index Plc v Colley & Ors  EWHC 478 (QB) (07 March 2013)
Cite as:  EWHC 478 (QB)
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| IG INDEX PLC
|- and -
|(1) JAMES COLLEY
(2) KIM BENN
(3) THOMAS NATHANIEL BENN
(4) ANNIE COOPER
(5) MARK COWAN
(6) STUART DALTRY
(7) MICHELLE DOVE
(8) FENTON GOLDSTEIN
(9) RICK IAN ILETT
(10) THOMAS OSBORN
(11) RODERICK AUSTIN REGAN
(12) CHRISTOPHER SLANEY
(13) ADAM TELLER
(14) SALLY TELLER
(15) TZVIA TELLER
(16) BEN ROSSFIELD
Mr Oliver White (instructed by Grosvenor Law ) for the 11th Defendant
Hearing dates: 16-18, 21-25, 29-30 May 2012
Crown Copyright ©
The Honourable Mr Justice Stadlen :
Spread betting is not so much or not merely a bet, although it can be described as such, as a form of contract for differences. It enables a customer to take a position on a market (or an event) for a very small stake. Thus if the Dow Jones Index is, say, at 10,000, one can "buy" or "sell" the market at a spread around the index of, for the sake of example, 10 points either way, 9,990 to 10,010. If one buys, one is betting that the market will rise above 10,010. If one sells, one is betting that the market will fall below 9,990. If one buys and the market rises, one stands to gain £1 for every point that the index exceeds 10,010. If one sells and the market falls, one stands to gain £1 for every point that the index drops below 9,990. If, however, one calls the market wrong, then one will stand to lose £1 for every point that the index exceeds the spread point in the wrong direction. Thus if one sells at 10,000 with a sell spread point at 9,990, one will make £1 for every point the market falls below 9,990 and lose £1 for every point the market rises above 9,990. Until the bet or "trade" is closed, the gains and losses are merely "running" gains or losses. They are real enough, but constantly changing with every change in the index, and have not yet been fixed. Closing the bet will fix the position, win or lose. Unlike a classic bet, the customer can of course lose more than his stake. Indeed, on the example given, of a sale spread point of 9,990 when the market is at 10,000, if the market does not move an inch, the customer will lose £10 for every £1 staked. Nor, again unlike a classic bet, are his winnings fixed at the outset by an agreement on odds. In theory winnings based on rising markets are infinite (in practice of course they are not) and losses based on falling markets are limited only in so far as they cannot exceed the consequences of a fall in the index to zero.
Normally, of course, to gain by £1 for every rise (or fall) of a single point in a stock market index such as the Dow Jones would take an investment of significantly more than £1. In effect, one's £1 bet commands a position in the market significantly greater than the stake. In other words, there is a large element of gearing in the trade, and the situation is correspondingly volatile. Where the market in question is itself in a volatile phase, the risks become even greater. Thus, if the Dow Jones is capable of moving within a range of 100 or 200 points in a single day, the customer can be £100 to £200 richer or poorer per £1 stake within a matter of hours of his trade. On a trade of £100, those figures become £10,000 to £20,000."
"The Claimant offers spread bets on, inter alia, the future price of individual US quoted stocks. As an example the Claimant might offer the quoted September 2009 price of "US Inc" as being 99-101 cents. The difference between 99 and 101 is the "spread". If a client considered that the quoted price of US Inc would rise the client would "buy" at 101 cents for a stake of e.g. £5 per point (cent). If a client considered that the quoted price of US Inc would fall the client would "sell" at 99 cents for a stake of e.g. £5 per point (cent).
The client is free to close out his bet at any time before the relevant settlement date. Thus, in the example above the client may have placed his "buy" bet on the 1st June 2009. If, by 1st August 2009 the underlying quoted price of US Inc has increased, then the offer for the September price will increase accordingly. Thus the price offered by IG on the 1st August 2009 for the September 2009 price may now be, e.g. 109 – 111 cents. The client can choose to close out his bet by "selling" at 109 for the same stake i.e. £5 per point. This would lock in a profit of £40 (8 point increase x £5). Conversely if the price offered on the 1st August 2009 had fallen to 89-91 the client may choose to crystallise his losses by selling at 89 for the same stake. This would lock in a loss of £60 (12 point fall x £5).
HOW THE CLAIMANT SETS THE PRICE
The price quoted by IG is made up as follows.
(1) The underlying quoted price of the stock on the day of the quote (on, for example, the New York Stock Exchange);
(2) any dividend anticipated to be paid on the stock in the relevant period between the date of the quote and the date of settlement;
(3) a small interest element.
For the purposes of this example, and for the purposes of these proceedings, the interest element can be ignored.
Thus if on the 1st June 2009 the quoted price of US Inc on the New York Stock Exchange is $1.05 per share and it is anticipated that the company will declare a dividend of 5 cents per share between the 1st June 2009 and the September settlement date the price would be $1 ("the mid price"). To this mid price would be applied the spread to give the offer of 99-101. Assuming there to be no change to the anticipated dividend, for each 1 cent rise (or fall) in the underlying quoted share price the mid price would rise (or fall) 1 cent.
The alleged fraud
"11 Colley was an experienced and trusted employee of IG. Part of his responsibilities involved setting and inputting the level of anticipated dividend for individual stocks.
12 Colley would select individual US stocks in which (usually) no other IG client held any position and in respect of which no dividend was anticipated in the relevant period.
13 Colley would then place a false anticipated dividend into the system for that stock ("the false dividend"). Again taking the example above if the underlying quote for US Inc on any particular day was $1.05 and no dividend was anticipated the mid price would be $1.05. If Colley inputted a false dividend of 5 cents the mid price would fall to $1.00.
14 After inputting the false dividend one of the other Defendants, acting in concert with Colley, would then place a "buy" bet on the stock at the lower price. Such bets were, usually, placed on the internet or mobile phone platform but occasionally by telephone call to Colley. Shortly thereafter Colley would remove the false dividend from the system. The mid price would revert to its proper, higher, level. The other Defendant would then close the bet for an immediate profit (subject, of course to any legitimate movement in the underlying price of the stock). In the example above the other Defendant would make a fraudulent profit of five times his unit stake (less the effects of the spread).
15 Colley employed sophisticated techniques to ensure that this simple fraud was not capable of being detected by IG. These techniques included the following.
i) Fraudulent activity was spread across 17 client accounts that were also active in other stocks, indices and Foreign exchange.
ii) On average there were a total of 3 fraudulent trades every 2 weeks and the average profit was £3,000.
iii) Accounts were rarely used for a fraudulent trade twice in close succession and no two accounts ever dealt on the same dividend change.
iv) Trades were mostly kept below the maximum automatic online size and therefore rarely went 'manual' for a dealer to check.
v) Trades were nearly always on stocks in which no other client had a position (who may have complained about the odd prices). Colley was able to check this data.
vi) Trades were always denominated in £ sterling and individually small. Through Colley's position of trust he frequently also reconciled the profit and loss on the US stocks.
vii) Individual trades were not large enough for Financial Dealing Director, Shares Dealing Director or Head of Equity Trading (or previously Financial Dealing Director or Risk Department) to see a need to investigate the Profit and Loss on the stock.
viii) Even if the trades were investigated the investigating dealer would have simply deleted the dividend and phoned the client with a position to tell them the opening level would be amended - clearly the other Defendant would agree to this as they were complicit in the fraud. There would be no trigger for the dealer to do anything else and he would naturally assume that the dividend being in the stock price was a simple data entry error.
ix) Dividend information was stored in 2 places - a spreadsheet and Xcon. Colley, as a senior trusted shares dealer, had access to both and fraudulently changed the dividend in both places. This circumvented the check to compare the dividend component of IG's dealing prices to the spreadsheet..
x) A comparison of information from Bloomberg to information held on Xcon for dividends payable in the next 5 days was performed. Colley circumvented this control by always entering a false dividend more than 5 days in the future. Through his position of trust he frequently had the responsibility to carry out these comparisons.
xi) The Shares Dealing desk performed an audit of trades performed throughout the day to determine if dealing prices for that day were in line with current valuation prices The audit was started each day at approximately 20:30 and completed by 20:45. Colley frequently performed the audit and usually placed the false dividend after 20:45.
xii) A wider audit was performed by a graduate trainee dealer each morning to (1) compare the price traded by the client to the current valuation on the asset concerned and (2) compare the price traded to other trades from other clients in that asset that day. Colley always used stocks with no other open positions to circumvent the second part of the check and the first part triggered no alarms as he left the false dividend in place until after the audit had been done. This meant that the other Defendant's trade and the current valuation were at very similar levels (especially as they dealt so near the close)."
"By his actions as set out above the First Defendant was acting fraudulently.
"Further the First Defendant, as a senior employee of the Claimant, owed a fiduciary duty to the Claimant to act honestly and in the best interests of the Claimant. By his actions as set out above the First Defendant was in breach of the said duty."
"18 In respect of each of the other Defendants there is annexed to these Particulars a spreadsheet listing all bets in which the individual defendant profited from the fraudulent activity of the First Defendant as set out above ("the relevant bets"). Each spreadsheet contains an explanation of the contents and sets out the extent by which the individual defendant profited from the fraud. The amount claimed from each of the Second to Fifteenth Defendants takes into account any balance due to any of these Defendants as a result of legitimate transactions between that Defendant and the Claimant and set off by the Claimant against the sums due as a result of the matters referred to herein.
19 The profit from any relevant bet would be credited to the account of the particular Defendant who placed the bet. The First Defendant could not profit from his fraudulent activity unless he was acting in concert with the particular Defendant. The Claimant avers that it is an irresistible inference that the other Defendants were acting in concert with the First Defendant.
20 Further the Claimant avers that the timing and nature of the relevant bets placed by the other Defendants, in particular the fact that the bets were opened shortly after the false dividend had been entered by the First Defendant and closed shortly after the false dividend was removed by the First Defendant, also indicates that the other Defendants must have been aware of the fraud being perpetrated by the First Defendant and must have been willing participants in that fraud.
21 Further the sums by which the other Defendants profited by the fraud were sums that were diverted from the Claimant by reason of the breach of fiduciary or other duty owed by the First Defendant to the Claimant. The other Defendants were knowing recipients of such sums. The Claimant relies upon the matters set out above in support of the allegation of knowledge."
The defences to the fraud allegation
Mr Colley's Defence
Mrs Benn's Defence
Mr Osborn's Defence
Mr Regan's Defence
Mr Slaney's Defence and Counterclaim
Mr Teller's Defence and Counterclaim
IG Index's discovery of suspicious trades and Mr Colley's response to being confronted by IG Index with the allegation that he had entered false dividends
" Date: 2 October 2008
Time: 12:00 noon
Attendees: James Colley, John Noble (Director, Financial Dealing), Jackie Bornor (Head of HR)
- JB introduced the meeting by confirming that this was a disciplinary investigation meeting and not a disciplinary meeting at this stage and that whilst JC had been given the right to be accompanied, he chose not to be.
- JC confirmed that this was the case and stated that he was sorry to have messed JN and JB around in terms of moving the meeting.
- JB advised that in line with the three letters that had been sent to JC, this was an investigation into suspected fraudulent activity that had been uncovered and there was evidence to suggest that JC had been involved – JN would go through the evidence and we wanted JC's feedback on that evidence.
- JN highlighted several examples of where the settlement data had been altered (from August September 2008) and demonstrated how the amendments were all tagged to JC's log-on.
- JN asked JC for his views on this and JC said that he didn't know what to say.
- JB asked JC to tell the truth and again JC said that he didn't know what to say and said that he felt that he should have legal representation
- JB confirmed that the situation that JC found himself in was an employment issue and within the disciplinary procedure – whilst he could be represented by an IG Index employee, it would be inappropriate to have a lawyer representing JC when actually what we wanted was his feedback and views on the evidence that JN had presented.
- JC again stated that he didn't know what to say
- JN outline that there were several options available including having the police involved.
- JB confirmed that it was highly unlikely that JC would keep his job if it were to be found that he was involved in the fraudulent activity but there were options where we may be able not to involve the police if JC were to be honest and co-operate with the investigation.
- Again JC said that he didn't know what to say and felt that he should have a lawyer involved.
- JB confirmed that where we were at this stage was an internal disciplinary process and was very much connected with JC's contract of employment – if at the end of the investigations there was enough doubt of JC's honesty and subsequent lack of trust on IG Index's part, whether he co-operated or not, IG Index could bring his employment to an end and by not co-operating and making no comment it added to the evidence that we had. Equally, there was no apparent outrage or claims that he was innocent again for us to believe that the evidence was damning.
- JN asked if JC had defrauded IG Index, if anyone else was involved, how much was it and how long it had been going on for.
- Again, JC said that he didn't know what to say.
- JB said that he should tell the truth, that it would be better in the long-run if he co-operated, especially if there was a possibility of not involving the police. JC needed to see if there was a possibility of him avoiding the police he should work towards that as the chances are that he would receive a prison sentence and this would not be viewed as a first offence – the first time that he changed the system would be the first offence – any subsequent time would be viewed as additional acts.
- JC said that he felt uncomfortable about this and didn't know what to say as anything he did say might be the wrong thing – again JB advised him to tell the truth.
- JB suggested that JC may wish to speak to JN on his own and the investigatory was adjourned at that point – 12:40 p.m."
Did a fraud take place?
"P + i – D = F"
where F is the futures price, P is the price of Vodafone on the LSE, D is the amount of dividend known to be paid between 1 January 2006 and the expiry date and i is the interest value of 200p at 5% for the time between 1 January 2006 and the expiry date (72 days).
"200 + (5% x 200 / 365 x 72) – 10 = 191.97"
"190 + (5% x 190 / 365 x 21) – 0 =190.55"
The size of the dividend inserted
The timing of the insertion
The choice of the stocks
The timing of the bets
The removal of the false dividends and its timing
The failure to correct or void bets placed at prices which benefited from the insertion of false dividend
Evidence of connections between the Defendants
Conclusion on whether there was a fraud
If there was a fraud was Mr Colley responsible for it?
Conclusion in relation to Mr Colley
"The balance of probability standard means that the court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probabilities. Fraud is usually less likely than negligence…built into the preponderance of probabilities standard is a generous degree of flexibility in respect of the seriousness of the allegations. Although the result is much the same this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established."
"Lord Nicholls was not laying down any rule of law. There is only one rule of law, namely that the occurrence of the fact in issue must be proved to have been more probable than not. Common sense, not law, requires that in deciding this question, regard should be had, to whatever extent appropriate, to inherent probabilities. If a child alleges sexual abuse by a parent, it is common sense to start with the assumption that most parents do not abuse their children. But this assumption may be swiftly dispelled by other compelling evidence of the relationship between parent and child or parent and other children. It would be absurd to suggest that the tribunal must in all cases assume that serious conduct is unlikely to have occurred. In many cases, the other evidence will show that it was all too likely. If, for example, it is clear that a child was assaulted by one or other of two people, it would make no sense to start one's reasoning by saying that assaulting children is a serious matter and therefore neither of them is likely to have done so. The fact is that one of them did and the question for the tribunal is simply whether it is more probable that one rather than the other was the perpetrator." (para 15)
IG Index's primary case against Mr Teller
IG Index's primary case against Mr Slaney
IG Index's primary case against Mr Regan
"No expert evidence was adduced about whether the views held or expressed by Mr [S-A] were views that a banker in his position might reasonably have held and expressed. … They rely upon the observation of Butler-Sloss LJ in Samson v Metcalf Hambleton  57 Con LR 87,  26 EG 154  PNR 542, 549 B in which she said that "… a court should be slow to find a professionally qualified man guilty of a breach of his duty of skill and care towards a a client (or a third party) without evidence form those within the same profession as to the standard expected on the facts of the case and the failure of the professionally qualified man to measure up to that standard. It is not an absolute rule… but, less than in an obvious case, in the absence of relevant evidence the claim will not be proved". I take and accept that as a general observation that, in the absence of expert evidence, the court will have the less material from which it can conclude that there was professional negligence (or gross negligence) and so will be less likely to conclude that negligence is proved, but this neither excuses the court from examining the evidence it has nor imposes a higher standard of proof upon the Claimants in professional negligence cases where there is no expert evidence. That said, I have, as a I shall explain, found it impossible to uphold some parts of Camerata's contentions without expert evidence to support them."
IG Index's primary case against Mr Osborn
IG Index's primary case against Mrs Benn
IG Index's causes of action against Mr Colley
"…After inputting the false dividend one of the other defendants, acting in concert with Colley, would then place a "buy" bet on the stock at the lower price. "
As already mentioned in a Request by Mr Colley dated 30 November 2009 for Further Information Mr Colley asked whether it is alleged that prior to each of the transactions referred to in the spreadsheet annexed to the Particulars of Claim Mr Colley agreed with the relevant defendant that, in relation to that specific transaction: (1) Mr Colley would input into IG Index's trading system a false dividend, so causing the quoted price of the stock to fall; and (2) the relevant defendant would subsequently purchase the stock concerned."
"IG Does not know the precise details of how the Defendants operated the fraud between themselves and, in particular, the precise details of when or how any agreement was reached between Colley and the other Defendants or the precise details of such an agreement. The steps set out in paragraphs 3.1 and 3.2 of the Request did take place. As is made abundantly plain in the Particulars of Claim it is IG's case that it is an irresistible inference from all of the pleaded circumstances that the relevant other Defendant was acting in concert with Colley and both were participants in the fraud."
"10. The Claimant avers that the First Defendant systematically and fraudulently entered "false" dividends into the Claimant's systems, thus lowering the mid price of various stocks. The other Defendants then fraudulently traded at the false price. The First Defendant then removed the false dividend from the system, thus increasing the mid price to its proper level. The other Defendants then closed their bets at the higher price thus making a profit (subject, of course to a legitimate movement in the underlying price of the stock)."
IG Index's causes of action against Mr Regan, Mr Slaney and Mr Teller
"Honesty is said to be a "duty of universal obligation. This obligation exists independently of contract or of special obligation [whenever] a man intervenes in the affairs of another". So, for instance, despite the absence of a representation by agent to principal, the rule in equity, as at common law, is that "any surreptitious dealing between one principal and the agent of the other principal is a fraud on such other principal." Another example might be the so called "accessory liability" of a person who assists dishonestly in a breach of trust."
"Derry v Peek simply illustrates the principle that honesty in the strict sense is by our law a duty of universal obligation. This obligation exists independently of contract or of special obligation. If a man intervenes in the affairs of another he must do so honestly, whatever be the character of that intervention. If he does so fraudulently, and through that fraud damage arises, he is liable to make good the damage. A common form of dishonesty is a false representation fraudulently made and it was laid down that it was fraudulently and if the Defendant made it knowing it to be false, or recklessly, neither knowing nor caring whether it is false or true, that is fraud in the strict sense." (Emphasis added).
The words highlighted suggest that fraudulent misrepresentation is not the only circumstance in which liability for fraudulent intervention in the affairs of another may rise.
"The case against the appellants must, even as amended, depend on fraud, and nothing else: I fully agree that fraud may assume many disguises and wrappings, but the court will always look at substance, and, if it finds the wicked intent and consequent damage will give effect to its findings. As Sir Horace Davey QC is reported to have said in his argument in Derry v Peek at p 339:
Fraud never has been and never will be exhaustively defined, the forms which deceit may take being so many and so various. There is a negative characteristic: it must be something which an honest man would not do; not merely what a logical or clear-headed man would not do."
"The appellant Mrs Lloyd had bought some property and thus had come to know of the Defendant, a solicitor. She had doubts about having got her money's worth and went to the Defendant's office to enquire. When there she saw one Sandals, the Defendant's managing clerk, and was induced by him to give him instructions to sell or realise this property, and for that purpose to give him the deeds and to sign two documents which she neither read nor knew the tenor of, which put into Sandal's possession her interest therein. She gave him the deeds as the Defendant's representative. Having got them and the signed documents, he dishonestly disposed of this lady's property and pocketed the proceeds. That is the whole story as it is either found or admitted because it was incontestable. It is clear in my mind from the simple facts that the jury ought to have been directed if they believed them to find for the plaintiff. The managing clerk was authorised to receive deeds and carry through sales and conveyances, and to give notices on the Defendant's behalf. He was instructed by the plaintiff, as the representative of the Defendant's firm – and she so treated him throughout – to realise her property. He took advantage of the opportunity so afforded him as the Defendant's representative to get her to sign away all that she possessed and put the proceeds into his own pocket. In my opinion there is an end of the case. It was a breach by the Defendant's agent of a contract made by him as Defendant's agent to apply diligence and honesty in carrying though a business within his delegated powers and entrusted to him in that capacity. It was also a tortious act committed by the clerk in conducting business which she had a right to conduct honestly and was instructed to conduct on behalf of his principals." (page 724).
"20. The decision of the House of Lords in Armagas v Mundogas was solely concerned with the principles applicable to vicarious liability for deceit. Having cited Lloyd v Grace Smith and Co  AC 716 for the proposition that the absence of authority is not decisive in showing that conduct is not within the course of employment, Lord Keith observed (at p.82 D-E; 99, 205):
This dictum… may have some validity in relation to torts other than those concerned with fraudulent misrepresentation, but in my opinion it has no application to torts of the latter kind, where the essence of the employer's liability is reliance by the injured party on actual or ostensible authority."
"This is a claim to enforce a constructive trust on the basis of knowing receipt. For this purpose the plaintiff must show first, a disposal of his assets in breach of fiduciary duty; secondly, the beneficial receipt by the Defendant of assets which are traceable as representing the assets of the plaintiff; and thirdly, knowledge on the part of the Defendant that the assets he received are traceable to a breach of fiduciary duty."
"70. The claimants finally assert claims on the basis that bribes were paid by Mr Nikitin or companies associated with him to Mr Privalov, Mr Borisenko, Mr Skarga and Mr Izmaylov. English law takes a broad view of what constitutes a bribe for the purposes of civil claims. It considers that a bribe (or 'secret commission' or 'surreptitious payment') has been paid where '(i) …the person making the payment makes it to the agent of the other person with whom he is dealing; (ii) …he makes it to that person knowing that the person is acting as the agent of the other person with whom he is dealing; and (iii) …he fails to disclose to the other person with whom he is dealing that he has made that payment to the person whom he knows to be the other person's agent': Industries and General Mortgages Co. Ltd v Lewis,  2 AER 573 at p.575G. Thus, a bribe is 'a commission or other inducement which is given by a third party to an agent as such, and which is secret from his principal': Anangel Atlas Compania Naviera SA v Ishikawajima-Harima Heavy Industries Company Limited,  1 Lloyd's LR 166 at p.169.
71. 'When an agent receives or arranges to receive by way of bribe or secret commission in the course of his agency from a person who deals or seeks to deal with his principal, the agent is liable to his principal jointly and severally with that person (1) in restitution for the amount of the bribe or secret commission; or (2) in tort for any loss suffered by the principal from entering into the transaction in respect of which the bribe or secret commission was given or promised, and the bribe, if it was paid, is held on trust for the principal and the person who pays or promises the bribe is also liable in restitution and damages to the principal: Bowstead and Reynolds on Agency (2010) 19th Ed. at 6-084. The principal may also require either the agent or the briber to give an account of profits."
"19. I now turn to the issue of vicarious liability. The first point taken by the defendants was that bribery is a species of the tort of deceit and, so the argument ran, Alpina would only be liable in tort (or presumably in respect of the alternative cause of action in restitution) by reason of the actions of Mr Van der List and Mr Tissot if its employees were acting within their actual or ostensible authority: Armagas Ltd v Mundogas SA  AC 717: (1986) 2 BCC 99, 197. It was not suggested by the claimants that the two employees of the defendants were acting within their authority in tendering the bribes. Indeed it is not easy to envisage an agent having actual, let alone ostensible authority to proffer bribes. The short answer is that the claim based on bribery is not a species of deceit but a special form of fraud where there is no representation made to the principal of the agent let alone reliance. I am unable to accept the suggestion that there is to be discerned an implied representation that 'the transaction is at arm's length with no secret profit'. To the contrary, the whole premise of the cause of action in fraud is that no representation has been made to the principal: 'the real evil is not the payment of money but the secrecy attending it': see Shipway v Broadwood  1 QB 369 per Chitty J at p.373." (Emphasis added)
The claim against Mr Regan Mr Slaney and Mr Teller based on Manifest Error
(1) We reserve the right to void without your consent from the outset or to amend the terms of any Bet containing or based upon a manifest error. If, in our discretion, we choose to amend the terms of any such Manifestly Erroneous Transaction, the amended level will be such level as we reasonably believe would have been fair at the time the Transaction was entered into. A "Manifest Error" is any error that we believe to be obvious of palpable. In deciding whether an error is a Manifest Error we may take into account any relevant information including without limitation the state of the Underlying Market at the time of the error. Or any mistake in a lack of clarity of, any information source or pronouncement upon which we base our quoted prices. In making such a decision we will act in our sole discretion, reasonably and in good faith. Any financial commitment that you have entered into or refrained from entering into in reliance on a Bet with us will not be taken into account in deciding whether or not there has been a Manifest Error.
(2) In the absence of wilful default or fraud we shall not be liable to you for any loss, cost, claim demand, or expense following a Manifest Error. In the event that a manifest error is made by any information source, commentator or official upon whom we reasonably relay we shall not, in the absence of wilful default or fraud, be liable to you for any loss, cost, claim, demand or expense. Following a Manifest Error we may decide to void the Bet, or, at your request, we may agree to amend the terms of the bet to what we believe would have been fair and reasonable at the time it was entered."
"25. In circumstances where the opening level of the relevant bets was based upon an anticipated dividend when no such dividend was anticipated the bets were based upon a Manifest Error i.e. an error that was, in the reasonable belief of the Claimant, obvious or palpable. The Claimant has decided that each of the relevant bets was placed upon a Manifest Error.
26. The Claimant was entitled to and has amended the opening level of each relevant bet to that which would have been the correct opening level had the false dividend not been fraudulently entered by the First Defendant.
27. Term 8 (9) of the Customer Agreement provides as follows:
(9) Upon closing a Bet:
(a) you will pay us the difference between the Opening Level of the Bet and the Closing Level of the Bet multiplied by the Stake if the Bet is:
(i) a Down Bet and the Closing Level of the Bet is higher than the Opening Level of the Bet; or
(ii) an Up Bet and the Closing Level of the Bet is lower than the Opening Level of the Bet; and
(b) we will pay you the difference between the Opening Level of the Bet and the Closing Level of the Bet multiplied by the Stake if the Bet is a:
(i) a Down Bet and the Closing Level of the Bet is lower than the Opening Level of the Bet; or
(ii) an Up Bet and the Closing Level of the Bet is higher than the Opening Level of the Bet.
Unless we agree otherwise, all sums payable by you pursuant to Term 8(9)(a) are due and payable immediately upon the Closing Level of your Bet being determined by us and will be paid in accordance with Term 15. Sums payable by us pursuant to Term 8(9)(b) will be settled in accordance with Term 15(3).
28. Previous versions of the agreement in force at any material time contained clauses that were not materially different."
29. As a result of the amendment to the opening level of each of the relevant bets the other Defendants have become liable to pay to the Claimant the amount equivalent to the difference between the actual opening level of each relevant bet and the amended opening level multiplied by the Stake. This sum is the same as the amount by which the other Defendants profited from the fraudulent trades as set out in the spreadsheets."
"… (ii) Even if the certifier admits that he has made a mistake, the court should uphold the finality of the certificate… (iii) The exception of Manifest Error should be construed in this commercial context. (iv) "Manifest" meant in ordinary language "plain and obvious". (v) the manifest error must relate to the certificate or the procedure that led to the making of the certificate; for example it would be a Manifest Error if a plain and obvious mistake of transcription had been made or a plain and obvious error had been made in testing or in sampling or in mixing the samples. (vi) in deciding whether there was a Manifest Error the court should take into account the technical knowledge that parties would have about the testing procedure."
" We had no submissions on the meaning or effect of clauses 5.5 of the Agreement and clause 1.6 of schedule 4. However, the expression "Manifest Error" in the present context is not as unambiguous as might at first seem. "manifest" may mean "apparent on the face of the document" as where the document is a certificate under clause 1.6 of schedule 4. If so, it may be difficult to see how any error could be manifest in that sense. I think, therefore, that "manifest" in this context has the wider meaning of "obvious".
 I would expect the Appointed Representative to be able to keep track of the commission payable on policies and other financial products it sold pursuant to Agreement, and on commission claw backs resulting from its clients cancelling or terminating policies. If so, it would have no difficulty in itself calculating its Commission Earnings, and from that in making the calculations set out in Schedule 4. It should therefore be able to demonstrate that any statement or certificate signed by Axa for the purposes of clause 1.6 of that schedule, if incorrect, is subject to a Manifest Error. In my view therefore clause 1.6 is a reasonable provision for the purposes of UCTA.
 For similar reasons I consider clause 5.5 to be reasonable. A failure of Axa to pay commission on a policy taken up by a client of an Appointed Representative which is brought about will be an obvious, and therefore manifest error on the part of Axa. Any incorrect calculation of commission will similarly be challengeable as subject to such error: any such calculation will be obviously wrong."
"I also agree that the conclusive evidence clauses, clause 5.5 and paragraph 1.6 of the Schedule, are reasonable, given the exception for manifest error. If there has been an error, the Defendants ought to be able to show that it is an obvious one. If they cannot, it is fair that disputes between the parties are limited. If there still remains a dispute as to whether an error is manifest or not the court would resolve it." (para 108).
IG Index's causes of action against Mr Osborn
IG Index's causes of action against Mrs Benn
Relief and quantum