The proof of the pudding is in the eating.

Situation

The client invested on a small scale in residential property, buying, renovating and reselling homes. For his final purchase he obtained mortgage finance of €500,000 from the banking arm of a well-known insurer. After selling the property and repaying the loan, he retained a profit of approximately €800,000.

He intended to use this reserve to retire early and spend more time on his private life. He had a sound pension, a comfortable home and a holiday property in Spain. The bank continued the credit facility as a securities-backed loan at a considerably higher rate. This increased the investable amount to €1.3 million. Following a questionnaire, his risk profile was classified as ‘neutral’. The portfolio was invested almost entirely in individual shares.

When the market crashed, the portfolio declined rapidly. Because the bank lent up to 70% of the portfolio value, margin calls followed. The client could not provide additional funds, so the bank sold parts of the portfolio. In less than two years, his capital had fallen from €800,000 to €135,000.

Outcome

Our investigation showed that internal supervision of the asset managers was inadequate. Contrary to the agreement, the client paid 1.1% commission on purchases and sales instead of 0.5%. The excess was refunded.

The agreed benchmark had also been ignored. While the MSCI World Index allocated approximately 2% to Dutch shares, their average share of this portfolio was around 80%. There was hardly any diversification, and options absent from the benchmark were used extensively.

A neutral risk profile is difficult to reconcile with a fall in value of approximately 85% in two years. The bank was held liable and made a settlement offer acceptable to the client. His own responsibility was relevant too: he could have objected earlier and should not have relied blindly on a favourable outcome.

Situation

The client sold her home and, deeply in love, invested the entire proceeds in her new partner's business. Nothing about the investment was formally recorded. There was only an oral promise that the money would ‘of course’ be repaid.

She did not marry her partner, but did become an employee of his company. The business eventually failed. Under pressure from the bank, their shared home was sold below market value and her partner narrowly avoided personal bankruptcy. When mounting tension ended the relationship, the client asked for her money back. Her request was refused on the ground that the company was bankrupt.

Outcome

The issue was how the investment should be characterised in law: a private loan, gift, advance payment or undue payment? It was also necessary to establish whether recovery was possible.

The client had transferred the money directly to her partner. She had received no shares and there was no loan agreement. Numerous documents offered no clear description of the payment. Shureluck saw an opportunity in that very absence: she had dealt not with the company, but with the individual behind it. The surviving bank record proved essential.

Negotiations remained fruitless. After consulting a solicitor, proceedings were commenced. On appeal, the former partner was ordered to repay the full amount of the loan, without any deduction.

Situation

The client, a successful second-generation entrepreneur in logistics, sold his business at the age of 63 for several million euros. The bank with which he had maintained a lending relationship throughout almost his entire career advised on the sale and proposed placing the proceeds with its asset management division.

His risk profile was classified as ‘defensive’, consistent with his aim of living off the capital for the rest of his life. When stock markets rose sharply, he nevertheless wanted to participate. The bank warned in writing that trading options was highly speculative, but then facilitated his wishes. The asset manager expanded the use of option structures further and further. Within a short period almost all of the capital was lost. Attempts to recover the losses only created more losses.

Outcome

Our investigation showed serious shortcomings in the bank's governance and internal controls. How could a defensive client end up invested almost entirely in highly aggressive option structures, despite the warning and the asset management agreement?

The bank argued that this had been the client's express wish and that he should bear the consequences. It ultimately accepted, however, that the boundaries of reasonableness and fairness had been crossed. Following lengthy discussions, it made a reasonable compensation offer, which the client accepted.

Situation

A group of childhood friends jointly traded in offices, commercial units and apartments. Based on mutual trust, bookkeeping, management reporting and communication with the bank were entrusted to one of them: the ‘finance guy’.

When the property crisis began, the bank announced that it would not refinance several properties. Letters about arrears never reached the other friends because the finance guy withheld them. Several properties were sold. Concern grew when net sale proceeds were set off against arrears on other loans belonging to the finance guy.

An accountant paid by him then presented a final account: each of the other friends had to pay €180,000. A bailiff appeared and the friends felt as though they had wandered into the wrong film.

Outcome

Financial statements previously prepared by an accountant showed striking differences in the partners' equity positions. The finance guy had a substantial positive balance, while the others were allocated negative balances. He had instructed the accountant to record all interest and repayments as advances made by him, while rental income was treated as ordinary revenue. Investments, renovation costs and maintenance had also been recorded without explanation, invoices or consent.

The records also contained a current-account balance of €270,000 involving the finance guy, his companies and him personally. In a later set of accounts, this item had been reduced to zero without a clear basis.

The finance guy could not substantiate his claim and did not answer essential questions about the banking relationship. No proceedings were brought against the other friends and the threatened claim disappeared. The client is now considering recovery proceedings of his own.

Situation

The client imported seafood from South America. A wholesaler said that a shipment of 8,000 kilograms, delivered and accepted after inspection three days earlier, had to be collected again. According to the wholesaler, payment was out of the question because the quality was ‘not good’.

The client travelled there immediately but found nothing unusual. He heard comments about the shine of the eyes, loose scales and an unpleasant smell. Because fresh fish has a limited shelf life, he reluctantly agreed to a commission sale at his own risk and expense. He ultimately received 40% of the original sale value and held the wholesaler liable.

Outcome

The wholesaler refused compensation and challenged the client to litigate. During the proceedings it could not explain the objective criteria on which the shipment had been rejected. It referred to an A, B or C quality system, but did not clarify what those classifications meant or how the shipment failed to meet A quality.

The court held that the wholesaler had acted unlawfully and was fully liable for the loss. It was also ordered to pay all of the client's litigation and legal costs.

Situation

The client worked as a compliance consultant and began collaborating with two management consultants. Together they formed a company. The client was to receive 50% of the shares; the other half would go to the founders' company. Each partner would charge the same management fee once sufficient revenue was generated.

The company attracted increasingly large clients. Investigations generated interesting and lucrative follow-on assignments. The two co-founders argued that work on strategic change and implementation fell outside the collaboration and wanted to carry it out through their own network. The client maintained that those assignments arose directly from the joint company's work.

The founders could not agree. The other two approached shared clients in their own names. The client demanded performance, but was told that the arrangements had never been, or had insufficiently been, finalised. Relations and trust deteriorated rapidly.

Outcome

The client wanted to litigate over his alleged loss. Quantifying loss in such matters is treacherous. First, loss of income or capital must be established; then a causal link with the other party's conduct must also be proved.

Shureluck advised the client to accept a limited buy-out and leave the collaboration by selling his shares to the two management consultants. That is what happened.

Situation

The client became involved in a FinTech venture seeking to make mortgage processes faster and more customer-friendly. He advanced €100,000. Developers linked previously created software, whose intellectual property belonged to several founders, to new software. Within two months there was a minimum viable product and the first quotations were being issued.

Meanwhile, the three prospective shareholders had to settle their arrangements. The eldest partner wished to retire within five years and was not available full-time. The notary therefore proposed ordinary shares for the two younger partners and cumulative preference shares for the eldest. Those shares would carry a fixed dividend and could be repurchased at nominal value.

The eldest partner nevertheless demanded ordinary shares and a board seat. A family relationship created a risk of deadlock in both the board and shareholders' meeting. Tensions escalated. When intellectual-property rights in the existing software were partly withdrawn, the promising product could no longer be delivered. As the companies had not yet been incorporated, the partners were also personally liable.

Outcome

The client refused the requested board seat: a start-up requires continuous involvement that the eldest partner could not provide. Discussions about the preference shares also reached an impasse.

The collaboration was dissolved. The client withdrew and made his intellectual property available free of charge for two years. In return, he paid only a small part of the investment; the balance was borne by the other two partners. The client suffered a small but acceptable loss.

Situation

The client provided IT services to a major insurer. Budgets had been approved centrally, the work was performed satisfactorily and invoices were paid on time.

When the insurer's board disagreed over its digital strategy, all forward-looking projects were halted immediately and budgets frozen. The client was told to stop work and that the remaining invoices would not be paid. Almost three months of work risked going unpaid, and he was prevented from completing the assignment.

Outcome

After reviewing the agreement, time records and emails expressing strong appreciation for the work, we advised immediately putting the insurer in default, demanding performance and payment, and holding it liable for the loss caused by unilateral termination.

The legal department intervened before the notice of default was sent. The parties entered discussions and reached an acceptable settlement. They were also able to preserve a constructive future relationship without resentment.

Situation

The client worked as an insurance intermediary and had hundreds of customers with high-cost investment-based policies. These life insurance products combined death cover with saving or investing for purposes such as mortgage repayment or retirement. Rising risk premiums and hidden charges caused them to fall far short of their promised potential.

A new party offered to visit every customer and, at its own risk and expense, move them to a tax-advantaged investment account. The money would be placed in a fund managed by companies affiliated with that party.

The client was suspicious and asked Shureluck to analyse the risks. Conflicts of interest emerged. Investments were also being made in teak plantations and life settlements: illiquid products with a poor reputation whose value is difficult to establish and which are difficult to trade.

Outcome

The client was advised not to enter into a relationship with the party unless the conflicts of interest were resolved.

A year later, the Dutch Authority for the Financial Markets (AFM) publicly warned consumers not to deal with the party. A preliminary-relief judge initially held that the warning was unlawful and ordered the AFM to issue a correction.

Two and a half years later, the AFM announced that it had appointed an administrator. Shortly afterwards, subscriptions, purchases and redemptions of participation rights were suspended. The regulator had serious doubts about the fund's valuation. A significant part was invested in affiliated companies whose shareholders also made the fund's investment decisions. That structure created the conflicts of interest identified earlier.