The English Court of Appeal has shown its readiness to cooperate with foreign regulators – in this case, the US Securities and Exchange Commission – by agreeing to freeze allegedly suspect assets.

In the case of Securities and Exchange Commission v Manterfield [2009] EWCA Civ 27, the defendants, who were involved in an international investment fund, appealed against the High Court's decision to continue a worldwide freezing order over their assets.

The SEC alleged that the defendants had fraudulently induced over 60 Taiwanese investors to invest around $34 million in the fund, of which $8 million had been misappropriated. These allegations were strenuously denied by the defendants.

First, the court found that the SEC was, in substance, seeking to return the proceeds of fraud to investors, rather than to enforce a penalty charge (in which the English courts would not have been able to assist it).

Second, the court did not insist on the SEC making a cross-undertaking in damages (usually, an English court will insist on this so that a party who suffers the draconian consequences of their assets being frozen can be sure of receiving compensation if the freezing order was not justified). Because the SEC was working to prevent fraud, the court could exercise its discretion and did not insist on such a cross-undertaking. It made no difference that the SEC and the affected investors were not British – fraud is "an international problem requiring international cooperation."

This is an interesting example of the English courts' willingness to exercise their discretion to assist in the international fight against investment fraud. Given the current economic climate there may be more such instances to come.