Template:Misrepresentation by agent: Difference between revisions

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 *'''Due appointment, [[Authority - Representation|authority]] etc''': This goes to the [[agent]]’s [[ostensible authority]] to bind its principal. If an [[investment manager]] breaches this kind or representation, then worst case the [[broker]] ''risks''<ref>Yes; the whys and wherefores of [[ostensible authority]] are an endless delight; but we can at least say the risk is increased.</ref> ''having no claim at all against the [[fund]]'' – if it can’t make out that there was [[ostensible authority]].
 :*Now if (notwithstanding breach of this rep) the broker ''does'' still have a claim against the fund, then no harm no foul: we shouldn’t need to [[close out]] vs the fund unless/until there’s an independent [[failure to pay]], in which case rely on that. But now we have actual knowledge of the agent’s lack of authority we may find we have a second problem: that there is no ''no-one'' with ostensible authority to bind the fund, and it is drifting rudderless towards a wall. If so, see below.
-:*If we ''don’t'' then our action is necessarily against the [[agent]] in its personal capacity and against its own assets, not the [[fund]]’s. It’s a claim in [[tort]] for [[negligent misstatement]]. Put yourself in the [[fund]]’s position here. Being itself a victim of the [[agent]]’s mendacity it will feel it is sinn’d against than sinning<ref>{{sinned against}}</ref> and will not see why this should be a {{isdaprov|3(d)}} representation under the ISDA. The [[fund]] will say “well hang on: ''I'' didn’t do anything wrong here: this asset manager is taking my name in vain without my consent – so how is it that you’re purporting to  close out against ''me''?
+:*If we ''don’t'' then our action is necessarily against the [[agent]] in its personal capacity and against its own assets, not the [[fund]]’s. It’s a claim in [[tort]] for [[negligent misstatement]]. Put yourself in the [[fund]]’s position here. Being itself a victim of the [[agent]]’s mendacity it will feel it is [[more sinn’d against than sinning]] and will not see why this should be a {{isdaprov|3(d)}} representation under the {{isdama}}. The [[fund]] will say “well hang on: ''I'' didn’t do anything wrong here: this [[asset manager]] is taking my name in vain without my consent – so how is it that you’re purporting to [[close out]] against ''me''?
 *'''Loss of manager’s regulatory status, no manager, no [[good standing]] etc''': The other typical representations goes to a duly authorised [[manager]]’s continued ability to to act on the fund’s behalf: to manage positions, monitor risk tolerances and keep the ship steady. If the agent goes AWOL a [[[broker]] has some call to reduce risk against the [[fund]]. If the fund is a sports car, the [[broker]]’s ATEs are the measures it can take to prevent the car hitting a wall. As long as here is a competent agent driving the car, the broker can have some confidence the car will avoid walls by itself. If the driver is prevented from steering, the car ''will'', eventually, hit the wall. So it is fair enough for the [[broker]] to say “okay: you are out of control: unless you name a new driver, within a given period ~ ''and here you may treat yourself to a fun exchange with your counterpart about how long that period should be'' ~ we can call this an [[ATE]]”.