The French supreme court has thrown out RBC Dexia's appeal against a ruling that ordered the restitution of assets to hedge funds following the Lehman Brothers collapse.
RBC Dexia lodged the appeal after the Paris court of appeal had handed down judgment last year in the case relating to Delta Alternative Management and another hedge fund. The custodian complied with the judgment and returned the relevant assets, but appealed the decision on the grounds that immediate restitution of assets results in increased liability for the custodian bank.
Following the judgement by the supreme court, handed down last week, RBC Dexia said in a statement: “This decision imposes a much higher level of liability for the non-restitution of assets held by third parties than that which is generally in force in other EU countries.”
But Delta Alternative Management is of a different opinion. In a statement following the ruling the firm said: “Delta Alternative Management considers that the actions of the custodian RBC Dexia in this matter were exclusively opportunity-driven and were at no time founded on regulation or law.” But RBC Dexia said: “RBC Dexia was not found to have committed any fault in its obligation to monitor the funds.”
The ruling could have interesting reverberations throughout the custody industry, especially as depository liability is one of the main bones of contention in the Alternative Investment Fund Managers Directive.
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