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Abstract
A recent UK High Court decision highlights the importance of ensuring that brokers do not breach firm rules. In Walker Crips Stockbrokers Limited v Robert Savill the High Court held an associate broker personally liable to compensate a stockbroking firm for a shortfall of almost $5 million when its client failed to settle the cost of various shares traded on an unlisted and unregulated market. The broker had failed to require adequate collateral to meet the settlement costs. The collateral that was available was illiquid and - in the event - relatively worthless. The Court also found that the terms of an indemnity from the broker to the firm were binding even in the absence of the broker's signature on the agreement. In spite of this, the Walker Crips case highlights the risks of failure to maintain proper internal documentation.