A FINANCIAL trader claims he lost some €900,000 after a bank failed to honour an alleged 2007 "tracker" loan agreement to advance funds to him for his trading business over a 20 year period.
Paul Fogarty is suing Permanent TSB claiming it knew he needed about €100,000 last March to meet margin calls - which are required to bring up the value of an investment following a decrease below a certain level - from his broker because the bank had previously advanced funds to him to meet such margin calls.
The bank knew the broker, IG Markets, would liquidate his positions if he failed to meet margin call, he said.
When the bank failed to advance those monies between March 8 and 12 last, IG Markets sold his instruments and he suffered an immediate loss of more than €900,000.
Because his entire portfolio of equities, derivatives and other financial instruments was liquidated, he was unable to carry on his business and will suffer lost earnings, he claims. Up to March 1st 2013, he made realised profits of some €461,389 carrying on intra-day trading activity, he added.
Mr Fogarty, Foggy Hill, North Shore, Greystones, Co Wicklow, who held senior positions in Davy and Bloxham stockbrokers before beginning full-time trading on his own account, has sued PTSB for damages, including aggravated damages over alleged breach of contract, misrepresentation and defamation.
Mr Justice Peter Kelly yesterday granted an application by Denis McDonald SC, for Mr Fogarty, to fast-track the proceedings in the Commercial Court after rejecting arguments on behalf of PTSB the case fell below the €1m threshold for Commercial Court cases. The claim arose from a €1.65m alleged contract, the judge said.
Mr Fogarty said he had approached PTSB in 2007 with a view to financing the business of trading in equities, derivatives and other financial instruments on his own account. He and his wife Alison Hill had a pre-existing loan facility with PTSB secured by a mortgage on their family home in Greystones, he said.
He claims PTSB agreed to provide a €1.65m facility which, notwithstanding it was to be used for a commercial purposes, was "to all intents and purposes" a family home tracker mortgage with an interest rate of the ECB rate, plus 0.75 per cent. He claims the only security for the loan was his family home, already mortgaged to PTSB.
He said he was recently given documents which PTSB claimed had been sent to him in 2007. While those documents did not identify the purpose of the loan and stated the interest only period was for three years, he was "absolutely certain" it was agreed the loan was to continue on an interest only basis for its term.
That term was 20 years and the loan was to provide equity release to finance his business trading in financial instruments, he claims.
He alleges he could draw down such sums as he required on 24 hours notice to PTSB, it would continue to rely on its first legal charge over his family home and PTSB operated the loan agreement in those terms between June 2007 and March 2013.
In an email of February 28, 2013, he asked PTSB to advance him €100,000 for draw down, when he had some €580,000 available for draw down under the facility.
He claims PTSB wrongfully refused to advance the funds and instead treated the loan as a "pure commercial" facility of which repayment could be demanded at any time. The bank asked him to fill in a standard financial statement, a form required to be filled in by persons in mortgage arrears seeking an accommodation from a bank, as a precondition for further draw down.
He was told PTSB was no longer in the business of commercial lending, his loan was an "anomaly" and the facility would be submitted to its credit committee.
He was asked to provide certain information and did so but the bank refused to comply with its obligations under the 2007 agreement, he alleged.