The Ontario Superior Court of Justice has ruled that a trader should not be held personally liable for trading losses incurred on behalf of his former firm.
Specifically, the court ruled in favour of Joseph Tassone, who sought summary judgment against his former employer, Hampton Securities Ltd., and dismissed the firm’s claim that he be held personally liable for his trading losses.
According to the decision announced on Thursday, Tassone’s job was to buy and sell publicly traded securities in the name of Hampton, using capital supplied by Hampton, with a view to making profits arising from those trades.
When Tassone left Hampton in September 2011, he had accumulated over $500,000 in trading losses, largely due to one specific failed trade, and the firm sued Tassone for those losses.
Tassone denied liability for the losses, and counter-sued for constructive dismissal. According to the court decision, the fundamental question was whether Tassone had any liability to cover losses arising from trades carried out by him, when he left the firm.
However, the court found that there is nothing in writing supporting such a liability agreement. It also concluded that it was not an express term of the employment contract between Hampton and Tassone, nor was it implied.
“The evidence fails to persuade me that the parties agreed that, in the event of the termination of his employment, Tassone had a contractual obligation to indemnify Hampton for accumulated losses in excess of his reserve. Such a term was neither expressed in the employment contract nor can it properly be implied,” the court ruled.
As a result, the court concluded that Hampton’s claim must fail, and it dismissed that claim.
The court has yet to rule on Tassone’s counterclaim of constructive dismissal.