Free Spin

Betfair co-founder Mark Davies filed a claim last month for close to £4.5million. The merits of the case are not for me to comment on, (although I will later), but one comment on the Betfair forum amused me. The author, viva el presidente!, likened Davies' situation with that of a Betfair client who experiences an unplanned outage having just taken a position and who is then unable to close out as it heads south.

While the value of money is relative, I would think that seeing £4 million evaporate has got to hurt.

Speechly Bircham is facing a claim worth more than £4m from Betfair founder Mark Davies and his wife Miranda for alleged negligence and/or breach of retainer for advice the firm gave them when they tried to sell their shares in the company.

In a claim lodged in the Queen's Bench division of the High Court last month (16 August), the couple, who are trustees of the Giselle Davies Family Trust and the Davies Family Trust, which both hold stakes in online gambling company Betfair, argue that that the losses caused by Speechly's advice stands at around £4.48m.

According to the writ, the couple instructed Speechly private client partner Charles Hutton that they wanted to sell their shares when Betfair went public in October last year, with the intention of selling when shares reached at least £13 each.

When the company listed on 22 October, shares were trading at £15.50, at which point Davies was told that selling was not possible because the shares had not been registered properly.

With share prices continuing to fall, the Trusts have not sold the shares, with the price per share standing at £6.08 at the time the claim was issued.

The form states: "Neither trust has sold the Betfair shares given the loss that each would thereby sustain. Insofar as may be necessary the claimants will say that the defendant is liable for the totality of the losses sustained because the defendant's breach of retainer/negligence placed the trusts in a position where they were unable to sell at the price that was available."

The pair are claiming damages and interest. Carter-Ruck litigation lawyer Rebecca Toman is advising the Davies on the claim. Mark Davies resigned from Betfair in July 2010.

Speechly declined to comment.

Why it would be Speechly Bircham's responsibility to check that the shares in question had been properly registered, I'm not sure, but there is likely more to this case than immediately apparent.

Something similar, although on a 'slightly' smaller scale happened to me several years ago, in 2000, when I deposited funds in a new share / options trading account.

When I was told everything was set, I bought shares in four companies, which almost immediately headed south. A couple of days later, I received a phone call telling me that they needed a new cheque, as they had (I forget the precise details) endorsed it incorrectly or something. Whatever it was, it was their error. Oh, and could I bring it over to them that afternoon or they would have to close my positions. "Well no, I am at work right now" I told them, but if they would like to send a courier to pick it up, that would be fine. No, they wouldn't do that, so they closed my position for a loss, and took the hit themselves, as I had done nothing wrong. I did receive a lawyerly letter asking for repayment, but when I produced my supporting evidence, (always keep records), they dropped the case. Only a cynic would suggest that, had the shares in question all increased in value, I would have taken a break from work and run it over to them without question.