In the U.K., broker-dealers and other regulated firms must segregate “client money” from the firm’s own funds, and hold such money in trust, to ensure that such money is available for distribution to hedge funds and other clients if the regulated firm fails.  The U.K.’s Financial Services Authority defines “client money” as “any money that a firm receives from or holds for, or on behalf of, a client in the course of, or in connection with its MiFID business.”  When a brokerage firm enters insolvency in the U.K., clients are entitled to prompt distribution of their pro rata share of the client money held by the regulated firm, determined as of the date an administrator is appointed for the firm – an event that is deemed by applicable regulations to be a “primary pooling event” (PPE).  However, until recently, it was not clear how administrators should value client positions that are open upon the occurrence of a PPE.  The U.K. High Court of Justice recently issued a ruling that clarifies how open client positions are to be valued in determining client money entitlements.  This article describes the U.K.’s “client money” regime to protect clients of regulated firms; summarizes the court’s decision and analysis in the ruling; and provides insight from partners at Sidley Austin LLP on the implications of the court’s decision for clients of regulated firms.  See also “How Can Hedge Funds Get Their Money Out of Lehman Brothers International Europe?,” Hedge Fund Law Report, Vol. 2, No. 31 (Aug. 5, 2009).