Pepperstone’s majority shareholder, which holds 60 per cent of the contracts for differences (CFDs) broker and includes its Chair, Fiona Lock, has been ordered to pay AU$96.9 million, plus interest, to Champ Private Equity after a long legal battle over the sale.
Current Pepperstone Owner vs Former Owner
Tamas Szabo, Pepperstone’s CEO, and former director Andrew Defina are also shareholders in Lock’s FX Group Holdings, which bought the majority stake in the broker from Champ in 2018.
FX Group had already paid over AU$77 million to Champ last December, according to the latest court document.
Pepperstone stressed that the legal battle is between its current and previous owners and does not involve the firm in any way or affect its operations.
"The proceedings and determination have no impact on Pepperstone's ongoing operations, clients, or trading activities," Szabo told FinanceMagnates.com. "Pepperstone continues to perform strongly, with a clear focus on client service, innovation and best-practice compliance."
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An Alleged Drafting Mistake Behind the Legal Battle
Lock worked for Champ, now rebranded as CPE Capital, when it bought a stake in Pepperstone in 2016 for AU$90 million. However, within two years, the private equity firm decided to exit the deal, and Lock decided to leave the firm and buy out the Pepperstone stake.
To finance the deal, Lock borrowed AU$150 million from Champ, which was to be repaid over five years with interest. The total amount to be paid from Pepperstone’s dividends under that agreement was AU$211.6 million.
Lock paid the entire amount, including interest, in just four years.
Then came the dispute: according to Champ, Lock also agreed to split profits above AU$25 million for four years after the loan was repaid.
However, the drafted contracts stated that Pepperstone would share profits only after it repaid the AU$211.6 million loan and not on any profits below AU$25 million.
Later, Champ claimed that its lawyers had made drafting errors in the original sale agreement and that this was not the intention of the two parties. Lock maintained that the drafted contract was accurate, as the terms appeared in a detailed share agreement.
The Australian court, however, ruled in favour of Champ last September. An appeal in this case was lodged in December and is yet to be heard.
