Al Sulaiman v Credit Suisse Securities (Europe) Ltd & Anor

The claimant sued for damages under section 150 of the Financial Services and Markets Act 2000 and for common law negligence/contract, alleging that advisers failed to take reasonable steps to ensure she understood the risks of leveraged structured notes and failed to ensure suitability. The claimant abandoned the primary contention that the products were intrinsically unsuitable and pursued a failure-to-explain case about leverage, pledging, margin calls and the consequences of non‑compliance.

The court held that the relevant COB/COBS requirements demand reasonable steps to ensure a client understands the nature of risks and that suitability is judged by reference to client knowledge, experience, objectives and financial position. On the evidence (documents, contemporaneous file notes, transaction suitability forms and expert joint memoranda), the advisers explained leverage and collateral both in writing and orally and took reasonable steps to secure understanding.

The judge rejected the claimant’s evidence as unreliable and in parts dishonest, found the advisers’ evidence and contemporaneous documents persuasive, and further held that even if any explanatory shortcoming had occurred it did not cause the loss. The catastrophe of October 2008 was unforeseeable and, crucially, the claimant deliberately declined to provide available collateral or sell sufficient notes to meet margin calls; that decision broke causation and constituted a failure to mitigate. The claim was dismissed.

Background and relief sought. The claimant (BAS) alleged that Credit Suisse Securities (CSS) and Plurimi Capital LLP breached statutory duties under section 150 FSMA (and related common law duties) by recommending 23 structured notes on a leveraged basis without taking reasonable steps to ensure she understood the risks of leverage, the fact the notes would be pledged as collateral, the possibility and consequences of margin calls, and without ensuring suitability. She sought damages for the losses incurred when CSAG made margin calls and liquidated the pledged notes in October 2008.

Procedural posture and issues. This was a first‑instance trial in the Commercial Court. The primary issues for determination were whether the advisers took reasonable steps to ensure the claimant understood the risks of leveraged structured products (in particular pledging of notes, margin calls and consequences of non‑compliance) under COB/COBS and s150 FSMA, whether the recommendations were suitable, the credibility of the parties’ accounts of oral explanations, and causation (whether any failure caused the losses and whether the claimant failed to mitigate).

Evidence and legal framework. The court considered COB/COBS provisions and expert evidence. The experts agreed the products were suitable for a client of the claimant’s means, there was no regulatory requirement to quantify the probability or size of a margin call, leverage magnified gains and losses, and the extreme market events of September–October 2008 and CSAG’s change to LTV criteria were unforeseeable. The documentary record included term sheets, "Effect of Leverage" cash‑flow analyses, SCARP warnings, transaction suitability forms and regular file notes.

Court’s reasoning and findings. The judge found substantial contemporaneous documentary material and reliable witness evidence (notably RR’s) showing that the advisers routinely explained leverage, the use of notes as collateral, and the potential for margin calls and liquidation. Transaction Suitability Forms and email/file notes supported that explanations were given. The claimant’s evidence was found to be inconsistent, in parts dishonest and unreliable. On causation, the court held that the October 2008 market collapse and CSAG’s LTV change were unforeseeable and that the claimant deliberately refused to provide readily available collateral or to sell sufficient notes when margin calls were made. That decision broke the chain of causation and constituted a failure to mitigate, so any explanatory shortcoming could not be shown to have caused the loss. The judge dismissed the claim.

Wider context. The judgment emphasises the link between statutory COB/COBS obligations and common law duties of care, the role of contemporaneous records and client sophistication in suitability and disclosure disputes, and that unforeseeable market events and client conduct can defeat causation and recovery.

The claim is dismissed. The court found that CSS and Plurimi were not in breach of statutory, contractual or tortious duties: the advisers took reasonable steps in documents and orally to explain leverage, pledging, margin calls and consequences; the claimant’s evidence was unreliable; the October 2008 market collapse and CSAG’s LTV changes were unforeseeable; and the claimant’s deliberate refusal to provide available collateral or to sell sufficient notes broke causation and amounted to a failure to mitigate.