Obviously we don't know all the details on this but it seems to me that the firm involved may struggle to defend this.
I've had a quick read through the firms T&Cs and although the firm specify that they have the right to restrict trade size (based on margin) and to give margin calls etc their right to do this is at the firms own discretion.
The firms actions in this respect need to be 'real time' actions and cannot therefore be retrospective in nature. Even if the firm does give a margin call (which cannot be met by the client) the firm would have the right to close out the positions at the current market levels.
Given that the firm didn't act in real time and didn't become aware of the situation until after the event there are no positions left to close out and the clients profits / losses from the positions have already been crystallised.
I can understand why the firm would want to fight this - pure economics - the client's win is so large that it dwarfs the firms annual profits.
Based on what has been written I would suggest that the firm will find this very hard to defend;
Firstly, given that the client has the 'contract notes' for the trades, it will be for the firm to try and show that they shouldn't be bound by such contracts rather than the other way about. The problem which the firm has in this respect could be massive since the Financial Services & Markets Act makes it abundantly clear that contracts entered into (with regard to Spread-bets and CFDs) are legally enforceable by both parties - it therefore seems that the firm maybe trying to circumvent the legislation by using a carefully applied interpretation of their customer agreement - in the event of such a conflict it will generally be the legislation which is applied.
Secondly, the further / longer the case runs the deeper the investigations and questioning will go. This may not bode particularly well for the firm given what is being reported by the news organisations - in particular the lack of risk control in terms of client position sizing - I would respectfully suggest that it was the firm's responsibility to apply the trading limits to the client's account rather than the firm simply expecting the client to stay within a notional pre-agreed limit.
Having said all of this, I suspect that there will be further information which may not be yet public. This could of course change the outcome. But given the information which is available, I strongly suspect that the client will end up with his money simply because the firm didn't act to restrict the client's trading whilst the positions were open - the firm's own T&Cs make it clear that the firm has the option of restricting trade size but not the obligation to restrict trade size - the client is therefore free to claim that the bets are valid on the grounds that the firm didn't exercise their right to apply the margin calculations to his particular trades.
