Interest Rate Swap Scam

Interest Rate Swap Scam

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I have a client who was scammed into taking an interest rate swap by one of the banks.  This has left the balance sheet looking very insolvent.

Under the going concern note I am proposing to be very blunt and saying  

"The company has been a victim of the interest rate swap scam.  They have a claim against the bank in question of approximately £300,000 which would restore their solvency"

Would the team suggest I tone the language down ?  Or should it be much more explicit.

John

Replies (4)

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By frustratedwithhmrc
08th Jul 2012 09:57

I sympathize, but would stick to the facts

If you are intending to place this as a formal note in the accounts, which you are filing at companies house then this will be a matter of public record.

In such circumstances and given the potentially litigious nature of large corporate institutions I would stick only to the facts that you know and can prove.

This should exclude hearsay from your client about meetings with the bank at which you were not present. Stick to what you have and what you can prove in writing.

If there is a dispute over a £300,000 interest rate contract, which if settled in your clients favour would of materially change the overall financial position of the company then say so.

Regardless of the strength of feeling against the bank held by yourself and the client you must set this aside when preparing the accounts which should be based on a neutral perspective. This is not a newspaper article or website opinion that you are writing, the accounts are an official document required by statute.

If you want a formal opinion (which will be more forthright than mine), then ask your Professional Indemnity Insurance provider for advice, they will probably provide a free legal advice line for such matters. However I suspect they will tell you the same thing as I have.

Protecting your clients interests is one thing, but ill-advisedly putting your own professional reputation at risk through a charge of libel is quite another.

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David Winch
By David Winch
08th Jul 2012 10:18

Stick to the facts

I would suggest you avoid emotive words such as "victim" and "scam".  You are implying that the bank has acted unfairly and in bad faith towards your client - and even that the bank has acted dishonestly.  You could find yourself subject to a complaint to your professional body and an action for libel if you are unable to prove these allegations.

I would suggest that you simply refer to your client actively pursuing a legal claim against a third party the outcome of which is uncertain and is not reflected in the accounts of the company, but which may result in a future receipt sufficient to restore the company to solvency.

David

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By 3569787
03rd May 2016 17:31

Signed a contract

.

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By jstuckey
09th Jul 2012 13:06

Replies

Many thanks to all who have replied.

You are correct.  I must not let my feelings about banks colour the true fact which was that my client was persuaded to sign a contract which was never in his best interests.

The FSA have an understanding with the banks about these swaps and feel that refunds are due to unsophisticated borrowers of which my client is one.

I will persue this with the bank in question, and hope a refund can be claimed.

 

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