Financial Services matters Update: Brexit Update

13 Jul 2016
The Collyer Bristow LLP review of financial disputes issues
Collyer Bristow
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JULY 2016
One of the key areas likely to be affected by Brexit is the financial services industry. Although the full effects will not be known for months, if not years, the referendum result has already produced immediate concerns of FX derivative misselling claims and potential disputes arising from the suspension of trading in UK property funds.

Property Fund Suspensions

Over the past week or so several of the biggest UK property funds have closed the gates on investors attempting to withdraw their money following a sharp rise in redemption requests since the Brexit vote. This has led to a number of issues between funds and their investors. Some investors are unhappy because they are being prevented from moving their money out of the fund when they want to reduce exposure to UK Real Estate. Conversely, other investors are unhappy because, in their view, gates were not closed quickly enough to avoid the need to sell assets to pay out to those redeeming, resulting in a loss of value of their stake – avoiding such losses being the purpose of the gates sold as an “enhancement” to protect investors in times of market turmoil.

This gives rise to a number of legal questions about the contractual mechanisms relating to the suspension mechanisms, for example:
  • What can investors do to challenge the way in which the use of the gate mechanism has affected them?
  • Who decides when to close the gates and on what basis?
  • What duties are owed by the fund manager when deciding whether and when to close the gates and to whom?
  • How long should the gates remain closed and who decides when to reopen them and on what basis?
  • Have the assets been valued fairly and accurately when pricing redemptions?
  • What happens when the suspension is lifted? Can the fund revalue the assets to reflect a fire sale price and give investors the option to redeem at that level?
The aim of these newsletters is to keep you regularly informed of court decisions and other areas relating to banking and financial services disputes.
For further information please contact:
Stephen Rosen
Partner and Head of Financial Disputes
+44 (0)20 7468 7208
Email Stephen
Janine Alexander
+44 (0)20 7470 4406
Email Janine
Robin Henry
+44 (0)20 7470 4429
Email Robin
Stephen Critchley
Senior Associate
+44 (0)20 7470 4421
Email Stephen
Mary Tonkin
Senior Associate
+44 (0)20 7470 4409
Email Mary
Alexandra Ward
+44 (0)20 7470 4459
Email Alexandra
Brónagh Adams
+44 (0)20 7468 7341
Email Brónagh
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Disclaimer: The content of this newsletter is provided for general information only and does not constitute legal or other professional advice. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information contained in this newsletter.

Collyer Bristow LLP is a limited liability partnership registered in England under number OC318532, registered office 4 Bedford Row, London WC1R 4TF, and is regulated by the Solicitors Regulation Authority under number 441900. Any reference to a partner means a member of the LLP or an employee with equivalent standing and qualifications. A list of the members is available for inspection at the above address. Collyer Bristow LLP is Lexcel accredited.

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