Tornado Alley (PROG)

[fuagf]

hap0206, AHA You say that because it is Trump's latest defense. I did not even consider saying a bank never carried out valuations themselves. Haha.

"Have you any idea how fast a bank would go out of business if this were true
>>> the properties were fraudulently presented to the banks which then valued the properties on the misrepresentation <<<
geeez -- a bank would loan 100s of $millions (or any amount) on "misrepresentations"
geez -- how stupid"

You really say some, uh dumb things. One of millions, i guess, examples from the UK

The High Court has dismissed a claim by the assignee of an investment fund against a financial advisory firm (and associated parties) for losses arising out of alleged fraudulent misrepresentations made in relation to the financial position and prospects of a business which had induced the investment fund to subscribe for £11 million in loan notes in 2011 and to later make a follow-on investment of £4.25 million: European Real Estate Debt Fund v Treon [2021] EWHC 2866 (Ch).

The decision will be of interest to financial institutions faced with fraudulent misrepresentation claims in relation to certain investments which: (i) have been brought more than 6 years after the date of the disputed investment; and (ii) seek to postpone the start of the statutory limitation period. It highlights the difficulties for claimants in pursuing fraudulent misrepresentation claims where they do not satisfy the requirements of section 32(1) Limitation Act 1980 (LA 1980), especially where it is clear that the claimant discovered the fraud or could with reasonable diligence have discovered it before the expiry of the statutory limitation period.

In the present case, the court found that the claim was statute-barred. The court highlighted that although it is well known that fraudsters cannot avoid liability for fraud by pleading that their victim failed to take reasonable care to detect the fraud, this did not necessarily mean that claims based on fraud brought outside the primary limitation period were entitled to invoke the special statutory postponement of the limitation period. If a claimant could reasonably have discovered the fraud by virtue of events and circumstances occurring before it actually suffered a loss, there was no principled rationale for allowing it the indulgence of more than the normal six years’ period to bring its claim. The court said that a reasonably diligent investor, such as one in the position of the investment fund’s adviser, in reviewing the financial information provided to it before the investment was made, would have been put sufficiently on inquiry to ask some basic questions and demand further information. The court also noted that if the investment fund’s advisers had asked the further questions it would have discovered sufficient facts to enable the investment fund to plead a statement of claim within the primary limitation period of six years.

We consider the court’s decision in more detail below.

Background

In 2011, an investment fund (the Fund) made a principal investment of £11 million in a care homes business. The Fund’s advisers then discovered in early March 2012 that the financial information about the business and its prospects that had been provided as part of the discussions leading up to the investment was false and misleading. In July 2012, in order to mitigate its losses, the Fund made a follow-on investment of £4.25 million in the business. The business went into administration in 2014 and the Fund lost the entire value of its investment.

https://www.lexology.com/library/detail.aspx?g=1fe7a9dd-8ae9-4de4-9d8f-6568bd9077c0