Expert Evidence – Trading fraud cases
I have been involved in several cases where “investors” have pledged and sent money to an individuals or individual who, it is said, will place the money on a series of trades, using an online platform, in the hope of making trading losses and returning the original funds to the investors, plus the profit. I have not seen one that ends well.
Often, the trader loses either some, most, or all of the amounts “invested”. Secondly, not all of the money is always invested, some disappears, hence the case for fraud.
But, it is not always as it seems. Firstly, the “investments” are unlikely to be classified as investment under FSMA/Regulated Activities Order. Additionally, the trader is not usually authorised to manage Investments.
However, what if the trader is using “leveraged” trades? Here, relatively small amounts of money placed in trades can produce very large profits (and, sadly, losses). But, unless there is a specific agreement that all money received by the trader will be used to trade, it is extremely difficult to ascertain what money went where, and where it was promised to go.
Analysis of the types of trades is essential, but who knows how to do that? Who has the relevant experience? The answer is, mainly bank traders. If it is the crown prosecuting, there is generally insufficient expertise to determine what went there. This is where expertise is required, to look at the money flows, to calculate losses on the trades independently, and to opine on whether there was fraud, or just misfortune.
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