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-[[Asset manager]]s will often proudly declare that at no time, in no circumstances, can they ever be personally liable for transactions they instruct on behalf of their clients. as a general proposition you can see what they're trying to say but it isn't quite that straightforward.
+A legal conundrum that arises in the context of bulk [[agency]] orders placed by an [[asset manager]] with a [[broker-dealer]] on behalf of several clients. Typically the [[agent]] will place the order first ''without'' naming the [[principal]]s, only to advise the [[broker]] to which [[principal]]s it should allocate the securities later in the day.
-Where the [[manager]] instructs the transaction first and allocates it to a given client later — which is usually how managers like to carry on — this puts a [[dealer]] in an invidious position in between times. For a [[dealer]] cannot reject a trade against the street once it has executed it.
+[[Agent]]s will often proudly declare that at no time, in no circumstances, can they ''ever'' be liable as a [[principal]] for transactions they instruct in this way on behalf of their clients.
-*The dealer must carry out the transaction regardless of whether the manager allocates to its client. Therefore the [[dealer]] is exposed to market risk immediately. That market risk is for the manager′s client’s account.
-*If the manager has not disclosed the client′s identity to the dealer, as its agent the manager has two options. It can either:
+This convenient outlook — I mean, they ''would'' say that, wouldn’t they? — provokes more questions that it answers: if the [[agent]] isn’t responsible for unallocated trades, then, until they’re allocated, ''who'' is? The [[broker]] doesn’t know who the [[principal]] is, so it can hardly take up matters with it directly. On the other hand, [[asset manager]]s will hotly deny any kind of personal liability, appealing to their regulatory status, meagre capitalisation, or sheer importance as a valued client in intimating that this risk ought to be the [[broker]]'s problem.
-**Disclose the [[principal]]′s identity (so the dealer can take it up with the principal directly), or
-**Perform the [[principal]]’s obligations to the dealer on the principal’s behalf, as a good agent should (whereupon the manager can settle up with its client later – this is not the dealer′s concern). This is in fact performance of an agency role, but economically (from the dealer′s perspective) it is identical to a principal obligation.<br />
+But denying principal responsibility, in the eyes of the common law, is a rather optimistic disposition. An agent who has not disclosed its principal must perform, unconditionally, on its principal’s behalf. This the agent might not characterise as a principal obligation, but against the rest of the world, it may as well be. The counterparty’s interest is to be paid; it does not care by whom. Nor, under the common law, can agent the shed that responsibility even by naming the principal: the counterparty now has a choice against whom to enforce —- though this the parties may vary by agreement.
+So much bunk — all of these reasons. The [[manager]], as [[agent]], chose not to disclose its [[principal]]. By doing so it accepted unconditional responsibility for settling its client’s transactions.