A timely reminder

Author: | Published: 1 Sep 2007

As the services provided by financial institutions become more diversified and global, so the prospects increase of conflicts of interest and financial institutions falling foul of their fiduciary duties to clients. The picture becomes further clouded as financial institutions increasingly seek to contractually exclude or limit liability that might arise out of these duties.

Helpfully, a recent judgment of the Federal Court of Australia provides a timely reminder of the common law fiduciary duties owed by financial institutions, particularly in the context of proprietary trading.

In Australian Securities and Investment Commission (ASIC) v Citigroup Global Markets (No 4), delivered by the Federal Court on June 28 2007, the plaintiff's allegations raised questions about the way in which financial institutions conduct proprietary trading, but the judgment is of wider interest. The Court considered:

The fiduciary duties owed by financial institutions to their clients. The importance of being aware of those duties and...