Decisions involving liability claims against fund administrators
are relatively rare in the English courts, as they are in the
courts of offshore financial centres with legal systems based on
English common law. But if any environment is likely to produce a
claim and a judgment it is the one that arose in the aftermath of
the vast Ponzi scheme operated by Bernard Madoff, which first came
to light some 11 years ago.
A Cayman Islands case involving a huge damages claim against a
fund administrator, Primeo Fund v Bank of Bermuda and HSBC
Securities, is now on its way to the Privy Council with an
appeal likely to be heard in 2020. Much of the interest in the case
relates to the findings of the Cayman Islands Court of Appeal on
the rule against the recovery of "reflective loss", which
ultimately resulted in the failure of the claims (for some US$2
billion of damages), as the loss incurred by Primeo Fund (the Fund)
was reflective of loss suffered by companies in which the
