Broker faces $1m payout
Perth-based stockbroker Hartley Poynton has been ordered to pay a former client $1.03 million, after a Supreme Court judge found the broker engaged in reckless share trading. Fijian businessman Rahmat Ali originally claimed $9 million in the suit, alleging that former Hartley’s broker Chris Martin had booked more than $30 million of unauthorised share trading from a $236,000 investment, in a bid to boost brokerage fees.
In the landmark judgment, Justice Smith said that the broker had engaged in reckless trading, gave negligent advice, and false and misleading representations. Mr Ali set up his account in 1997 and was told that he could achieve investment compound interest returns of between 15 and 20 per cent a week by investing in blue chip companies. By November 1998, Mr Ali discovered that not only was his discretionary account empty but in arrears from $134,000 in brokerage fees.
The outcome of the case is expected to set a new precedent on the boundaries of discretionary investment accounts and could limit the extent to which brokers can operate on behalf of clients.
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