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When AI trading bots go rogue, think outside the (black) box
Chatbots have been dominating the headlines with some wildly entertaining reminders of the importance of understanding AI’s limitations. Trading bots deserve some attention too, not least because a lot of trading in financial markets is automated through software programs which could (and in some cases already do) use AI. We have seen cases where deterministic bots have concluded trades in the middle of the night at bizarre prices, or have gone shopping on the dark web and been arrested (confiscated) for doing so. This article swaps out the deterministic bots for AI bots and considers whether conventional legal principles still work.
29 June 2024Certain key issues in private credit: loan structuring, tax issues and conflict considerations
This article examines certain issues that are particularly relevant for private credit funds as opposed to traditional bank financing, including timing considerations when making debt investments, key points from a lending perspective under investment loan documentation and potential conflicts of interest.
29 June 2024Does a bank owe a “retrieval duty” to the victims of fraud?
This article considers whether there should be a “retrieval duty” on banks to recover monies transferred as a result of an alleged fraud, following the failed strike-out application in CCP Graduate School Limited v National Westminster Bank PLC [2024] EWHC 581 (KB).
29 June 2024The mysterious pari passu principle
We know that Lord Justice Snowden’s landmark judgment for a unanimous Court of Appeal in Adler earlier this year1 emphasised the presumptive importance of the pari passu principle. But what does this principle amount to? What does it require? The term “pari passu” is used in judicial and textbook writings to refer to no fewer than four different principles. Regrettably, this is a reliable recipe for confusion. Three of these principles relate to distribution of value from the insolvency estate but are very different from each other, while the fourth is a principle of conservation rather than distribution. The undifferentiated and unreflective use of the term “pari passu” for one or other of these four principles leads to mistakes of both analysis and decision. This article explains the four principles, outlines the ways in which they differ, highlights the confusion resulting from not distinguishing amongst them, and argues that the term “pari passu” should be restricted to only one of the four.
29 June 2024DIP financing in US Chapter 11 cases: how sponsors are utilising equity conversions to obtain recoveries in reorganised debtors
This article examines sponsor-provided debtor-in-possession financing that converts into equity in the reorganised debtor upon emergence from bankruptcy, including the consequences of, and recent challenges to such sponsor-led convertible financing.
29 June 2024Electronic trade documents: what is a reliable computer system? and problems in contracting for a “reliable system”: clarification and correction
Paul Marshall offers a clarification and correction to two parts of his recent article of the above title.
28 June 2024Amendments to the Payment Services Regulations to combat Authorised Push Payment Fraud
The Treasury has announced its intention to amend the Payment Services Regulations 2017 (PSR). As a means of combatting authorised push payment (APP) fraud, banks will be given the power to delay the transferring of funds where they have established that there are reasonable grounds to suspect that the payment order has been placed subsequent to fraud or dishonesty. When utilising this discretion, they must inform their customer, who can then decide whether to rescind their instruction. Although the new power may prevent many instances of fraud, it is not without its problems, and this article discusses six sets of issues.
28 June 2024Everything settled? Risks for buyers trading on the secondary debt market
Trades on the secondary debt market typically go wrong because the lender is unable to settle the trade satisfactorily. In this article Matthew Watson considers the circumstances in which a selling lender may be unable to settle a trade and the position of the buyer in that event.
28 June 2024Shortening the settlement cycle to T+1: not if but when
This article introduces the policy debate as regards a further reduction of the settlement cycle. The US has moved to T+1 in May 2024, with the UK and EU making plans to follow suit.
28 June 2024The expanding definition of contingent debts and its impact on winding-up petitions
Clive Wolman explains why there may no longer be a valid legal basis for a company to be able to restrain the presentation, advertisement or pursuit of a winding-up petition against it merely by showing that it is genuinely and substantially disputing the petition debt. Changes in UK insolvency and company legislation, reinforced by changes in accounting standards and by judicial rulings, have led to a broader definition of a “contingent” debt or liability. It now includes the contingency of a court finding that the disputed debt or liability does exist.
13 June 2024
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