A meeting for investors in SNS Reaal was held at the Corinthia Hotel in Attard last Wednesday.

Dutch journalist and shareholder activist Frans Faas reported that there was “a massive interest in the meeting with over 60 persons attended which came as a pleasant surprise”.

However, Mr Faas told this paper, analysing the material gathered so far must lead to the conclusion that the damage is much larger than communicated up till now.

The number of victims “is 183 with a sum of €3 million invested but this is only the group of customers from one financial intermediate” – through HSBC Share Shop.

However, Mr Faas added, “We have discovered a few other firms that have distributed this product and we estimate the number of victimized bondholders to be over 400 with losses up to €6 million.

 

Compensation is the issue, not expropriation

At the meeting, the speakers spelled out the legal framework (Intervention Act) and argued that “the possibility of expropriation is in itself not a crime”.

However, due to international laws, “the people who are expropriated must be compensated for their losses based on the real economic value”.

The compensation offered (0) “is a disgrace,” Dr Faas said, “and based on inadequate, incomplete and wrong, if not false, information as submitted by the Dutch State”.

A crucial element in the appeal before the Enterprise Chamber is the fact that – although otherwise stated – apart from the problems with the real estate activities, SNS is a healthy bank and insurance company that generate prosperous cash flow. Nationalization was not necessary but because it is now definite the bondholders should be compensated based on the quotations on the stock exchange on 31 January.

“We expect the Enterprise Chamber to appoint experts within a few weeks who will investigate the matter thoroughly and advice the Court on a proper compensation. We expect the outcome of the whole process no later than end 2013/beginning 2014.”

Other procedures were outlined (against Dutch Central Bank, the former SNS management, European Court of Human Rights) but although initiated/prepared, they will be tabled only after the final verdict of the Enterprise Chamber (“because only then we can estimate the remaining damage”).

 

Violations of MIFID regulations ‘massive’

From the evidence gathered so far, it is obvious that all parties involved more or less breached relevant regulations especially on the so-called ‘Duty of Care’.

While the customers were under the impression that these firms offered advisory services (which based on the evidence was the case), the firms hid behind vague arguments that it was done on an execution only basis which is illustrative of the malpractice and bad business conduct of these firms.

“We have advised the victimized bondholders to file a complaint at the MFSA because the expectation gap might lead to new problems in the future.

“The foundation will file a complaint based on the deceptive patterns that emerged already after a thorough study of all the evidence,” Dr Faas concluded