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Barclays loses landmark case against FSA over third party losses
by Daniel Grote on Feb 28, 2013 at 10:48
Barclays has lost its landmark bid in the Supreme Court to force the Financial Services Authority (FSA) to cover the losses it has incurred as a result of a boiler room scam.
Barclays ran six bank accounts for Sinaloa Gold, a boiler room operated that gathered more than £1 million from victims.
In December 2010 the FSA obtained £127,000 from Sinaloa through a freezing order. In imposing an injunction, the FSA undertook to cover both costs and losses incurred by third parties, such as Barclays. However, it then applied to have the commitment to cover losses removed. That application was refused in the High Court, but granted after that decision was appealed.
Barclays had appealed in the Supreme Court, but lost the case.
Shane Gleghorn, head of commercial disputes at law firm Taylor Wessing, said the decision opened the door to a more litigious regulator.
'This important judgement will give the City regulator more confidence to pursue those suspected of wrongdoing because the FSA will be cushioned from potential legal claims by third parties for damages suffered as a consequence of complying with the freezing injunction,' he said.
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