A big win for the banks

Author: | Published: 1 Sep 2007

In a landmark decision, the Federal Court of Australia has held that the law will enable an investment bank to contract out of, or modify, any fiduciary obligations owed to a client.

The June 2007 decision in ASIC v Citigroup Global Markets Australia is also relevant for financial services companies that operate on a public/private division. Liability for insider trading will be determined by the adequacy of Chinese wall arrangements. The courts require not only extensive written procedures, but also that all employees understand and apply them to a host of possible conflicts of interest and duty.

This heralds a big win for investment banks. It provides greater certainty that in Australia the courts will uphold the efficacy...