Template:Misrepresentation by agent

Representations by agents and investment managers

Where your client’s obligations under the ISDA Master Agreement are stewarded by an agent — quite common for an investment manager trading on behalf of a fund — a broker might think about having the agent represent, on its own behalf, about its role as agent. It might ask the agent to do this in the ISDA. The sound of an asset manager confirming its ongoing authority to bind its principal gladdens a broker’s heart. A full-throated assertion of its own regulatory authorisation; its continued good standing with the companies office; the continued involvement of its key persons in making investment decisions — each is sure to put a jaunt in a broker’s stride. Its Imaginative counsel will doubtless dream up others.

But tarry a while. Firstly, your investment manager will sign as agent, for the client, not on its own behalf. For many this will be an article of profound faith: they will be at some pains, which they will willingly inflict on you, to avoid the barest hint they are speaking for themselves. “When an agent, as agent opens its mouth,” they will tell you, “it becomes its principal for all purposes that interest the law.”

And so it does. As far as the courts of chancery are concerned, to be an agent is to be wholly transubstantiated into the person of one’s principal. Transmogrified. It is, for all forensic intents to disappear; one’s ghostly outline may still be there, but it is a chimera: one exists only to be the earthly representation of another.

Which cast a pall over the representations you are being asked to make.

Take the one that “the principal has duly authorised the agent to act on its behalf”. For the principal to say that, through the person of the very one whose agency is in question, is some kind of Möbius loop. The very comfort you might draw from what is being said is taken away by the person who is saying it.

Even if the fact of the agency is in no doubt, the statements as to the agent’s character are off base. The agent is speaking for the principal, remember. the principal is, most likely, not authorised to provide discretionary investment advice by the FCA. He might retort, through the person of his agent:

Agent (as agent): Why would I be authorised by the FCA? I am not advising anyone. In fact, my investment manager is advising me. Why don’t you ask her?

Broker (rubbing eyes): But I am asking her. I mean you.

Agent (as agent): Who?

Broker: You! The investment manager!

Agent (as agent): Ah, but I am not me, for now, you see. I am the earthly representative of my client. In my personal capacity, I don’t exist.

Broker: But you are here, aren’t you? Can’t I just quickly ask you? Can’t you just be yourself for a moment? It won’t take a mo —

Agent (as itself): What? Here? In this ISDA? You must be joking. I told you under no circumstances will I act as principal.

Broker (Thinks for a moment. A lightbulb comes on): Aha! I've got it! All right then. Can you make representations on behalf of your principal?

Agent (as agent) (Pauses.): Why yes! Yes, I can! That’s what I’m here for. What would you like me to represent?

Broker: Could you represent that your investment manager is duly authorised by the FCA?

Agent (as agent): BUT HOW THE HELL AM I SUPPOSED TO KNOW THAT. Why don’t you ask the agent?