Privy Council hands down judgment in claim against redeemed investors by liquidators of Fairfield Sentry
By Claire Goldstein
The Privy Council has handed down judgment in the claim brought by the liquidators of Fairfield Sentry against a number of redeemed investors, seeking to recover the amounts paid out to them on redemption.
Fairfield was the largest feeder fund into Bernard L Madoff Investment Securities (BLMIS). BLIMIS was discovered in late 2008 to have operated the largest Ponzi scheme in history. Shortly after the existence of the Ponzi scheme was discovered, the directors of Fairfield suspended calculation of Fairfield’s net asset value per share (NAV) and suspended redemptions. On 21 July 2009, the High Court of the British Virgin Islands (BVI) placed Fairfield into liquidation.
The liquidators of Fairfield issued a large number of claims in the BVI against redeemed investors in late 2010. In these claims, the liquidators argued that redemption proceeds paid to redeemed investors should be paid back to Fairfield because they were paid out under the mistaken belief that Fairfield had invested in valuable assets when, in fact, there were in reality no assets as a result of the Ponzi scheme…
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These two cases are helpful in terms of how the court sees the inter-relationship between the new article 47 test for mistake and the pre-existing provision of the TJL at article 11.
On 24 November 2014 Guernsey’s Legislation Select Committee passed the Companies (Guernsey) Law, 2008 (Amendment) Ordinance, 2014 with immediateeffect.