VARIOUS PARTNERS in Bloxham stockbrokers are facing court claims for almost €10 million arising from allegedly negligent advice to invest in a bond which later fell by more than 97 per cent in value.
Two leading solicitors yesterday claimed they had suffered combined losses of more than €1.4 million over investment in the bond.
Their claims come after the Solicitors Mutual Defence Fund, the main insurance body for solicitors with 3,500 members, last month brought proceedings against Bloxham’s over the same bond, alleging its ability to indemnify solicitors had been affected by more than €8 million losses suffered after the bond’s value fell.
Mr Justice Peter Kelly yesterday transferred to the Commercial Court list the separate proceedings by LK Shields Solicitors and by Maurice Curran, a retired solicitor and former chairman of the Mutual Defence Fund, and his wife Noelle.
The various actions over the bond are to run together.
The judge was told that some of the Bloxham defendants are seeking indemnity on grounds they were not partners at the time of the alleged negligent advice in 2005.
In the Shields action, the firm claims its approach to risk was consistent with that of the Mutual Defence Fund of which Laurence K Shields, a partner in the firm, is currently chairman.
It is claimed Mr Shields had close contact with Bloxham’s in his capacity as chairman and relied on advice from Bloxham’s when deciding in January 2005 to invest €1 million in the same bond, which later fell by 97 per cent in value.
In the Currans’ action, Mr Curran claims that relying on advice from Bloxham’s, he and his wife had also in January 2005 invested €400,000 in the bond. It later emerged the bond was not suitable for their investment requirements and the investment had fallen by 97 per cent, he claims.
Mr Justice Kelly was told last month that Bloxham’s is suing Morgan Stanley in the UK for breach of contract relating to the bond but that claim is limited to €42.75 for every €100 invested in the bond.
In an affidavit in the Mutual Defence Fund case, Mr Shields said Bloxham’s expressly represented to the fund in January 2005 that the bond was a suitable investment issued by Dresdner Bank. The fund learned in 2008 the bond was not issued by Dresdner and was not suitable.
The fund was also unaware in 2005 there was a “call option” exercisable by Morgan Stanley, which compromised the integrity of the bond as a secure investment vehicle, he said.
