A Court of Appeal judge has ordered Canaccord Genuity Wealth to pay out over £825,000 after it was found to have been in breach of contract with introducing broker Medsted Associates.
The case relates to charges against Collins Stewart, which was acquired by Canaccord in 2011. It was brought against Collins Stewart by now-closed Greek broker Medsted Associates in relation to dealings that took place between 2009 and 2010.
According to documents seen by Wealth Manager, the issue arose when Collins Stewart decided to do business directly with clients that were introduced to it by Medsted, without informing the broker.
The reason Collins Stewart took this action was because clients refused to do business after discovering the high level of commission charged by Medsted.
According to court documents, charges paid by clients included a commission of 0.7%, of which 0.25% was paid to Medsted, and a financing charge of 6.2%, of which 4.5% was paid to the broker.
In an earlier ruling on the case, in 2017, Justice Nigel Teare found that Collins Stewart was in breach of its contract. However, it awarded Medsted only nominal damages as he found that it was in breach of its fiduciary duty to clients, as it failed to inform clients how charges were split.
Claiming that it is entitled to substantial damages, Medsted moved to appeal the decision on six grounds.
After a hearing in December, Lord Justice Andrew Longmore found that Medsted ‘was not under a duty to the clients to disclose the exact amount of the commission it was receiving or, to the extent that Medsted was the fiduciary of its clients it was not a breach of that duty for it not to disclose the amounts of commission it was receiving’.
He upheld the appeal on two grounds and ordered for damages to be assessed. He added that Canaccord should pay 75% of Medsted’s costs.
The judge also ordered Canaccord to make an interim payment of £825,000 to Medsted by 1 March. However, this is not the total costs, and a detailed assesment is expected at a later date.
Permission to appeal was refused by the judge but Canaccord Genuity WM can directly petition the Supreme Court for the permission to appeal.
Canaccord Genuity WM said in a statement: 'We remain confident that all parties representing our organisation acted in accordance with the law. Our policy is not to comment on matters that are still before the courts.'