The Australian Financial Review is reporting that the majority owners of leading Australia based Retail FX and CFDs broker Pepperstone have been ordered to pay almost A$100 million to former owner CPE Capital, following a messy legal fight over its sale nearly a decade ago.

Pepperstone sale

According to the AFR, CPE Capital (then known as Champ Private Equity) bought 60% of Pepperstone in 2016 for A$90 million from co-founders Joe Davenport and Owen Kerr, a deal on which one of its managing directors, Fiona Lock, worked. Two years later CPE wanted to exit its investment, and Lock decided to quit the private equity firm and work full-time at Pepperstone as an owner of the business.

CPE agreed to sell its stake in Pepperstone to Lock’s newly formed FX Group Holdings, which also counted Pepperstone chief executive Tamas Szabo, and former director Andrew Defina, as shareholders. The remaining 40% of Pepperstone was owned by its co-founders Joe Davenport and Owen Kerr.

Loan from CPE

The AFR stated that Fiona Lock borrowed A$150 million from CPE to fund the deal. The loan was to be repaid with interest to CPE within five years, which would tally A$211.6 million. The payments would be made via dividends from Pepperstone. Lock finalised the payout of that loan and interest within four years, by 2022, with Pepperstone continuing to grow under the new ownership team.

As part of the original deal, it was claimed that Lock had also agreed to split profits over A$25 million with CPE for four years after the loan was repaid. However, by the end of 2022, CPE and Lock’s FX Group were involved in a legal battle in the Supreme Court of NSW.

Legal battle

The AFR said that CPE was shocked to learn that Lock claimed there did not have to be any sharing of profits until Pepperstone had earned back the A$211.6 million paid to CPE, and also any profit it earned below A$25 million. It was claimed that CPE’s lawyers, King & Wood Mallesons, had made a drafting mistake in the original share sale agreement, which allowed this.

This was not the intent in the heads of the agreement between the parties, claimed CPE. However, because of the alleged drafting mistake by CPE’s lawyers in the more detailed share sale contract, Lock argued that it was.

The case dragged on until September 2025, with Justice Kelly Rees eventually ruling in CPE’s favour, deciding it was entitled to receive returns on the deal after the loan had been paid.

Ruling

Last week, Justice Rees ruled that Lock’s FX Group needed to pay CPE A$96.9 million under the terms of the deal, plus interest. Ahead of this decision, FX Group paid more than A$77 million in December.

However, an appeal was lodged by Lock and FX Group in December, which is yet to be heard.

The AFR quoted a Pepperstone spokeswoman who said the company itself was not part of the legal action, and it had no impact on operations, clients, or trading activities.

“This is a contractual dispute between current and former shareholders, relating to historical contractual matters,” the spokeswoman said.

In her September 2025 judgment, Justice Rees said the idea that CPE would agree to the profit-sharing threshold being more than A$200 million was “absurd”, and added that it made no commercial sense for CPE to lend Lock the money and allow her to offset the loan before sharing profits.

Justice Rees found that if an error was made in drafting a legal agreement but went against what the parties agreed at a topline level, it was not necessarily legally binding. She said Lock had “regarded herself as the beneficiary” of the drafting mistake, and CPE viewed her actions as “commercial treachery”.

“As a consequence, the vendors have yet to receive any ‘super returns’. Further, Lock asserted that she had always known that the share sale agreement operated in this way, albeit acknowledging that this did not accord with the heads of agreement nor what she knew the vendors’ intentions to be.”

Justice Rees said the transaction was complicated, and the case focused on a tiny subset of a much larger contract. She noted that CPE pushed the transaction at “breakneck speed” and law firm KWM worked around the clock to meet those demands.

“The multiplicity of emails and draft documents would have presented challenges to the lawyers on both sides in keeping track of comments, proposed amendments and the implications of both for the transaction at large,” Justice Rees said.