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Sir Keith Edward Mills v Coutts & Co. Limited

Posted on 12/12/2012 · Posted in Financial Litigation

Mis-selling of AIG Enhanced Fund, loss of interest on capital

The Claimant was Sir Keith Mills, who had set up the Nectar and Air Miles loyalty schemes and was Chief Executive of the London 2012 Olympics bid. The Defendant was Coutts & Co. Limited, provider of private banking services within The Royal Bank of Scotland Group.

Sir Keith was a customer of Coutts private bank. He sold his interest in Nectar in December 2007 and invested £65million of the proceeds in the AIG Enhanced Fund (the ‘Fund’) through Coutts. When the credit crunch hit in September 2008, the Fund suffered severe liquidity problems as many investors sought to withdraw their investments from the Fund. The Fund was suspended then closed.

Sir Keith, in common with other investors in the Fund, was unable to realise his investment in the Fund and was presented in December 2008 with two options for the wind up of the Fund: he could take half of his capital immediately and re-invest the remainder in the Protected Recovery Fund until July 2012; or he could take a reduced pay out immediately (which would result in a capital loss). Sir Keith took the first option and all of his capital was returned by July 2012.

He claimed in the High Court that Coutts had given negligent advice in suggesting that he invest in the Fund and sought damages calculated on loss of opportunity during the period that the fund was illiquid. Sir Keith Mills and Coutts reached a confidential settlement agreement.

Note: Coutts was fined £6.3million in November 2011 by the FSA for mis-selling the AIG enhanced fund. The FSA took the view that Coutts had incorrectly identified the fund as a cash fund, had failed to advise customers to diversify and had failed to act appropriately when the economic situation deteriorated.  The Coutts AIG action group has been following this case most carefully

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