Laiki bond­holder gets day in court

Financial Mirror (Cyprus) - - FRONT PAGE -

In a land­mark de­ci­sion, a Ni­cosia District Court has ruled in favour of an out-of-pocket Laiki bond­holder who it ruled was duped into in­vest­ing his sav­ings into a risky scheme that was sold as fail-safe. The court ruled that the plain­tiff should re­ceive the equiv­a­lent amount to what he had lost in the bank bond in­vest­ment scheme.

It con­sid­ered the plain­tiff’s tes­ti­mony to be re­li­able, as op­posed to the ar­gu­ments put for­ward by the rep­re­sen­ta­tive of Laiki Bank.

A Laiki bank man­ager per­suaded the in­di­vid­ual to con­vert his de­posits into se­cu­ri­ties by per­suad­ing him his money was guar­an­teed with­out high­light­ing the risks that such schemes en­tail.

“The court found a breach of duty on the part of the bank, im­posed by the 2007 leg­is­la­tion when the se­cu­ri­ties were is­sued,” De­fence lawyer Ale­cos Markides said.

He clar­i­fied that the de­ci­sion is not fi­nal, as those rep­re­sent­ing the de­funct bank have a right of ap­peal within 42 days from the date of the ini­tial de­ci­sion on 8 June.

“It is a first-in­stance rul­ing and we don’t know if it will be­come fi­nal as it de­pends on the ad­min­is­tra­tor of Laiki on whether to ap­peal,” said the for­mer at­tor­ney-gen­eral.

Markides told state ra­dio yes­ter­day that his client in­vested EUR 1.8 mln in bonds is­sued by the Laiki Bank which was shut­down as part of the bailout deal to stop Cyprus go­ing bank­rupt in 2013.

It is un­clear who will pay the bond­holder if the de­ci­sion to com­pen­sate be­comes fi­nal.

Nev­er­the­less, the de­ci­sion doesn’t nec­es­sar­ily open the door for sim­i­lar cases where bonds were con­verted into equity and saw thou­sands lose their sav­ings as they claim banks miss-sold them in­vest­ment plans.

Any favourable de­ci­sion would de­pend on the cir­cum­stances of the case and whether the court be­lieves the plain­tiff’s ver­sion of events as op­posed to the bank’s, said Markides.

And sim­i­lar cases have been tan­gled up in le­gal tech­ni­cal­i­ties and pit­falls.

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