Camerata Prop HiRes Resize 3

Camerata Property Inc v Credit Suisse Securities (Europe) Limited

Posted on 09/03/2011 · Posted in Financial Litigation

Advice, Lehman Brothers collapse

The Claimant was Camerata Property Inc, an investment vehicle owned by a trust. The Defendant was Credit Suisse Securities (Europe) Ltd, part of the Credit Suisse group and a provider of financial services.

The Claimant and Defendant began their relationship in June 2007 and it was agreed that the Claimant would receive an advisory service. In July the Claimant purchased $12million worth of notes issued by Lehman Brothers through the Defendant. When Lehman Brothers went bankrupt in September 2008, the Claimants lost their investment. It was contended that the Defendant gave negligent advise and/or advice in breach of contract when the Claimant had sought advice on their investments in March 2008. The Claimant asserts that had the advice not been negligent it would have sold the Lehman notes before Lehman collapsed.

The court held that an exclusion clause in the terms and conditions for acts other than gross negligence would stand. In any event, there would be no negligence where the proper standard of reasonable care and skill was exercised. The court had to consider the advice given in relation to Lehman Brothers, and found that the Defendant had not been negligent in failing to give warnings given that Lehman Brothers’ collapse was not foreseeable.

The judge did accept that if the Defendant had said that there was a serous risk of default, the Claimant would have sold right away. However, the judge was of the view that there was never any reason for the Defendant to give such pessimistic advice. There was no evidence that the statements that the Defendants could have made about Lehman Brothers, such as that it had been downgraded by the rating agencies, would have induced the Claimant to sell or seek further advice.

Link: Camerata Property Inc v Credit Suisse Securities (Europe) Limited [2011] EWHC 479 (Comm)

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