Compensation from broker for Russian CFD (contract for difference)

The UK Financial Ombudsman has ordered Interactive Brokers (IB) to compensate an investor that invested in a Russian CFD (contract for difference). In this case the CFD was for 10.000 Sberbank ordinary shares. Interactive Brokers refused to close the position because they could not trade the underlying Sberbank shares Interactive Brokers had bought to cover the CFD contract. From March 2022 onwards, IB raised the margin required for the position to 100%. By August 2024 the interest alone charged on the position had amounted to around USD $12,000.  The European Securities and Markets Authority (ESMA) introduced a margin close-out rule in 2018 that states that CFD providers have to close positions once the net asset value in the investor's account drops to 50% of the required margin. The Financial Ombudsman ruled that Interactive Brokers was required to stop charging interest and other charges on the CFD position once they had to close the position on the basis of the ESMA 50% margin...

Update on Russian case law regarding financial compensation from Raiffeisenbank for unlawfully rejecting a request for forced conversion

In this post we provide a third update on recent Russian court decisions.

Case 3: Raiffeisenbank was ordered to pay financial compensation for failing to execute a request for forced conversion The third case involves mr. Nesterenko that held ADR's (depositary receipts) of MTS via Interactive Brokers. Mr. Nesterenko requested Raiffeisenbank forcefully convert of his MTS ADR's. Raiffeisenbank Russia refused the request which a general statement that included various reasons why such a request can be rejected. Mr. Nesterenko considered the rejection to be unlawful and went to court to request compensation from Raiffeisenbank. The court determined that mr. Nesterenko submitted the documents that he could reasonably gather and that Raiffeisen put unreasonable conditions in place. The court also considered that Raiffeisenbank, as a professional bank, has it's own resources to verify the information that was provided. The court decided that Raiffeisenbank had to pay compensation to mr. Nesterenko and considered the share price on the Moscow Exchange, just prior to the date of filing the court case appropriate to establish damages. In addition previous dividend payments that were not received by mr. Nesterenko were added as compensation. Raiffeisen appealed the judgement. Although the appellate court reversed the decision, the court of cassation reinstated the initial court decision. The case is currently being reviewed by the Russian Supreme Court. All the case materials can be found here: https://kad.arbitr.ru/Card/50cc8fe1-3de6-4b33-a677-281d8f0913a4 Why is this case interesting? This case shows that investors may well be able to receive financial compensation from Russian custodian banks if they wrongfully rejected a request for forced conversion.