ACC files motion in High Court to halt test case on bonds
It faces 300 lawsuits from SolidWorld investors
Published 04/07/2011 | 05:00
ACC Bank, which is facing more than 300 lawsuits from disgruntled Irish investors who purchased its SolidWorld bond products, is seeking to prevent further actions being taken against it.
The Irish Independent has learned that the Dutch-owned bank has filed a motion in the High Court in Dublin seeking to halt a test case which could lead to many further actions.
ACC's borrow-to-invest SolidWorld Bond schemes were hugely popular among Irish investors in 2003 and 2004. An estimated €650m worth of the geared tracker bonds were sold here to more than 1,000 investors who borrowed an average of €200,000 from ACC to invest in the bonds.
Hundreds of investors, whose capital was guaranteed, have now turned to the courts because of the poor performance of the bonds and the costs of servicing their borrowings to invest in them which, they claim, have led to losses because of interest payments and bank commission fees.
The tranche of litigation is one of the largest multi-party actions to come before the courts in relation to financial products. In recent weeks ACC filed a motion in the Central Office of the High Court seeking to dismiss the lead investor action on the grounds that the proceedings are statute barred.
The investor borrowed €500,000 in the SolidWorld Bond 4 in early October 2003, having borrowed the entire sum invested from ACC. But he did not initiate legal proceedings until June 2010.
This has led to an application by the bank to strike out his -- and by extension -- other claims on the grounds that the statutory six-year period for bringing an action has expired.
ACC has denied in legal papers that it mis-sold the product and further claims that the proceedings are out of time in any event. It will tell the High Court later this month that any possible causes of action would have accrued to the plaintiff on the date on which the investment was made, rather than when the losses were realised, and is therefore statute barred. It will also insist that the relationship between the bank and investors was an arm's length commercial one.
Brokers and investment intermediaries who sold the ACC bonds have been joined as co-defendants in many of the actions, and more than a dozen investors have made formal complaints to the Financial Services Ombudsman.
However, it is understood that those complaints against ACC, which is owned by Rabobank, have not been upheld by the ombudsman.