Investors who lost a US portfolio in 2002 sued their adviser's Cyprus firm. The Court of Appeal held that their authority appointed the adviser personally, not the firm.
Three members of one family held a joint investment account with a United States broker, Dean Witter Reynolds, part of Morgan Stanley. Their adviser was a private banking officer at a Cyprus bank. When he moved in September 1999 to Global Capital Ltd, a Nicosia investment firm, they followed him. They paid in more than 280,000 US dollars, borrowed a further 100,000 dollars from the broker against the shares, and by March 2002 the portfolio was worth 115,353.25 dollars. The market kept falling. Margin calls in July and October 2002 forced the sale of the shares, and 16,724.38 dollars in cash was left. The investors sued Global Capital for 99,353.25 dollars, saying the firm had sold their shares without their knowledge. On 24 September 2026, almost a quarter of a century after the sales, the Court of Appeal upheld the dismissal of their claim.
They lost because of the one document that set up the relationship. It named their adviser as their agent, personally, and nothing in it made his firm responsible for managing their money.
Who the document appointed
On 25 November 1999 the investors signed a trading authorisation on the broker's letterhead. Its opening words authorised the adviser, named in capitals followed by "OF GLOBAL CAPITAL LTD", as their "agent and attorney in fact" to buy, sell and trade for them, and told the broker to follow his instructions. The investors argued that the words "of Global Capital Ltd" made the firm their agent. The courts disagreed. Read as a whole, in the ordinary meaning of its words, the document appointed the individual, and it was signed by the investors and by him as the authorised agent. It carried no signature, acceptance or stamp of the firm.
The investors' own letter to the broker of 15 December 1999 confirmed it. Their adviser had left the bank and was now working with Global Capital, they wrote, and it was their intention to maintain their relationship with him and "keep him as our Investment Advisor and Agent". The Court of Appeal agreed with the trial judge that it was clearly him they wished to keep.
Even if the firm had been the agent, nothing in the authorisation placed it under a contractual duty to manage the portfolio.
That second finding closed the claim. Without a contract obliging the firm to manage the investments, there was no breach for the firm to answer for. The firm received 30 per cent of the broker's commissions as introducing agent, but that did not turn it into the manager of the account.
The statements, the sales and the loss
The investors challenged the trial findings on three further points, and lost each.
They said they had not received the account statements. The first investor had admitted at trial that he received statements and saw the market falling, and the broker had sent the family separate codes giving online access to the account in 2000. The court treated the admission as significant, even though it rejected the rest of his evidence.
They said the firm had ordered the sales against their will. The trial court had found that in March 2002, in a call with the broker's financial adviser, the first investor disagreed with advice to sell. That did not show who instructed the sales four and seven months later. The broker's own letter of May 2003, which the investors themselves produced, said the account had never been discretionary, that decisions were approved or initiated by their assigned agent, and that it was on his instructions that the positions were sold.
They challenged the trial judge's remark that their loss came from the market and that it was their own choice not to buy back. That remark was made in passing, after the claim had already been decided, and a passing remark cannot be appealed. The Court of Appeal added, in passing too, that a fall in a portfolio's value is not in itself proof of loss caused by a breach. Evidence would have been needed linking the value of the shares on the dates of any breach to what the investors actually lost, and there was none. The appeal was dismissed with 3,900 euro costs, plus VAT.
What this means in practice
This judgment is for anyone who invests through an adviser, a bank's private banking desk or an introducing firm, and especially for anyone whose adviser moves from one institution to another.
- Find out who your agent is, in writing. The person, the firm, or both. The trading authorisation decides it, not the adviser's business card or the firm's letterhead. If you want the firm to answer for the advice, the firm must be a party to the document and sign it.
- Get the firm's duties written down. An authority to trade is not an agreement to manage. If the firm is to watch the portfolio, decide on sales or act on margin calls, that has to be a term it accepted.
- Know whether your account is discretionary. Here it was not, and the broker said so. On an advisory account, the decisions are taken by whoever holds the authority, and you remain answerable for what you approve.
- Margin borrowing can force a sale. A loan against shares in a falling market leads to margin calls, and the shares can be sold to cover them. That risk sits with the account holder.
- Read the statements and keep them. What you received and saw will be held against you, even if the rest of your evidence is not believed.
- Prove the loss, not just the fall. A claim for a lost portfolio needs evidence of the value at the date of each alleged breach, not the difference between a high point and the end.
Our commercial contracts page explains how we review the terms that set up a relationship like this one, and our litigation practice handles the dispute when it goes wrong.
Sources
This article is provided for general information purposes only and does not constitute legal advice.
Klitos Platis
Advocate, Partner
Kleanthous & Platis LLC, Nicosia · Published 3 October 2026
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