HFW Successfully Defends IKON Against $370 Million Fraud Claim

Global, sector-focused law firm HFW has successfully defended a substantial case of alleged fraud against London-based IKON Finance Ltd and others, originally involving claims of over US$370 million in damages.

In a judgment handed down on 9 October 2018 following a 12 day High Court trial in February and March 2018, Mr Justice Knowles dismissed all the various claims made against the participating defendants in the proceedings, including IKON, bringing the more than two-year dispute to an end.

In a scornful summary of the claims, which as originally pleaded had sought over US$370 million in damages, the judge commented that the trial “has appeared to me little more than an elaborate and expensive, unmeritorious and now unsuccessful, attempt to throw off [the Claimants’] responsibility [to their investors] onto the shoulders of the [Defendants]”.

The case centred on confirmations of certain “demo” (or demonstration) account balances provided in relation to FX trading activities being carried out on platforms made available by IKON. The claimants, two private closed-end investment funds, maintained that they understood these confirmations to represent real money, rather than merely virtual money balances.

The claimants alleged that in connection with these confirmations, various of the defendants were liable for dishonest assistance in breaches of fiduciary duty and trust, for unconscionable/knowing receipt, for deceit, and for unlawful means conspiracy. The judge has ruled that the allegations “fail in every material respect”, holding that “there was no dishonesty on the part of the [relevant Defendants]”,that “there was no deceit by them”, that “nothing they did was relied on by the Claimants” , and that “they were not conspirators with [other unrepresented Defendants] or between themselves” .

Indeed, the judge noted that “the Claimants, by Mr Litinas [a key voting shareholder in each of the claimant companies, and one of the claimants’ two witnesses at the trial] especially, have themselves much to answer for to those who may have invested at one time or another” .

HFW litigation partner Brian Perrott: “In my entire career as a litigator, I don’t think I have ever read such a definitive judgment. I am extremely pleased that we prevailed in such a hard-fought piece of litigation and that our clients were rightly and completely vindicated.”

HFW acted for several IKON Group entities, including the ultimate beneficial owner of relevant IKON corporate entities, Mr Engin Yikilmazoglu.

The firm’s team was led by partner Brian Perrott and also included legal director Patrick Knox, associates Marie-Anne Boothroyd, Prashant Kukadia and Alan Kenny, and trainee Edmund Bentsi-Enchill.

HFW instructed Paul McGrath QC and James Sheehan of Essex Court Chambers. Frederick Alliott of 7 King’s Bench Walk also assisted in the run up to the trial.

The claimants were represented by Clive Freedman QC, Josephine Higgs and Philip Aspin of 7 King’s Bench Walk, instructed by DLA Piper.

HFW has one of the largest and most active disputes practices in the market, covering litigation, international arbitration and alternative forms of dispute resolution. The firm has specialist disputes teams in each of its 20 offices worldwide, and frequently handles high-value, complex, multi-party and multi-jurisdictional disputes, including fraud and asset recovery, insolvency, class actions, and enforcement actions.

The Lawyer’s Litigation Tracker revealed HFW to be the most active law firm in the English Commercial Court over the past two years and the most active firm for arbitration-related litigation. The Lawyer’s data also showed HFW to be one of the most active law firms litigating on behalf of FTSE 100 clients.