WHEN the world’s fourth biggest investment bank collapsed it hit the headlines in a spectacular fashion and sent the world, including Spain, into financial turmoil.
The large scale global effect has been widely reported.
However, little is known about what happened to the private investors of generally modest sums, who, having followed the advice of their branch managers, also lost out with the collapse of Lehman Brothers.
The following are a selection of case studies obtained from court rulings:
Case One: An investor with a professional profile
In one of the most notorious cases, which went through the Marbella courts, the court actually ruled against the claimant finding Swiss Bank UBS was not to blame for the loss of €12 million, despite having recommended the buyer to acquire the soon-to-be defunct stock.
So what went wrong with this mega-rich land owner? The Marbella court found that:
• The investor had a professional profile, as opposed to a retail investor.
• UBS was not administering his funds nor providing advice, but was a mere intermediary.
• At all times, he had been properly informed to make a sound decision.
Case Two: A savvy investor addicted to email
This case was mainly decided on the basis of substantial email correspondence between Bankinter and the investor who happened to be a partner at Accenture, a multinational management consulting, technology services and outsourcing company.
Again, the courts ruled against the investor.
In this case, because:
• Lehman going bust fell between the probable and the possible, and thus was deemed an associated risk.
• The emails stated ‘I have substantial structured products with Telefonica’, ‘Iberdrola is not a stock share I am comfortable with’ and ‘in this particular moment I would be inclined to go for a three-year BBVA account’ which were not consistent with that of a curious or rudimentary investor.
Case Three: A trusting conservative investor
Conversely, many rulings have been favourable to the investor and have disputed the bank’s allegations it acted appropriately.
In this case in particular, the courts pounded Banco Espirito Santo by concluding that:
• The investor was conservative in his approach to risk-taking and always went with the advice of Banco Espirito Santo.
• In August 2007, when the investment was formalised, Lehman Brothers was already being questioned due to the advent of the subprime mortgage crisis in the USA.
• The information in the contracts was obscure, insufficient and worded in a manner that only made sense to professionals belonging to the world of complex investments.
Case Four: Retail investors deemed incapable of making informed decisions on financial investments
In a further case instigated by eight investors, who lost everything through bad advice by Bankpyme, the courts found that:
• All claimants were ‘retail investors’, and the recommended products did not fit their profile.
• As a result of the above, and their lack of comprehension, the investors could not have made an informed decision about the product.
• According to the Spanish regulator’s (CNMV) report, the whole process revealed a catalogue of bad financial practices which dismissed crucial aspects such as the profiling of clients, information about the products and lack of diversification of investment.
The rulings that have now been analysed (around 35) help conclude that the investor profile is nearly always crucial for the courts to decide who wins.
Other determining factors include compliance with banking and investment regulations, the quality of the information supplied, the content of the contracts, events occurring prior, during and after exchange, the real intentions of the parties as shown during the negotiation process and whether the bank was asked to provide investment advice or just to provide information (albeit correct, transparent and clear).
Let Antonio answer your queries
Q. I disagree with what someone wrote about me on a public forum. Can I file a denuncia?
A. Denuncias are formal complaints that are lodged with the police or the courts to inform the authorities of an event that has penal relevance, irrespective of whether one has been the victim or not.
Unfortunately, their use is abused over and over again by people who have private disputes for which civil jurisdiction is the more appropriate course of action.
If the denuncia has been filed to put pressure on someone who owes you money, the authorities will close the case.
But if the statement made is untrue, then the complainant can get into trouble.
In your case, you can only file a criminal complaint if the comments are libellous.
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