Laiki bondholder gets day in court
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.