Monday 27 January 2020

ACC ‘Solidworld’ tracker bonds case settles in courts

Tim Healy

FIVE hundred cases in which customers of ACC sued over "low risk" investments the bank had allegedly promoted were settled at the Commercial Court today.

The investors claimed they lost money after borrowing from the bank to invest in various "Solidworld" tracker bonds in 2003 and 2004.

Four test cases brought by investors in the bonds - which allegedly did not produce any return - opened on Wednesday but were adjourned to allow for talks.

Today, John Gordon SC, on behalf of the investors, told Mr Justice John Cooke there was now a comprehensive solution to the litigation following lenghty and complex negotiations.

A contingent settlement had been executed in relation to all 500 claims against the bank, including the four cases before the court, counsel said.

His side accepted a claim of fraud made against the bank cannot be sustained and they unreservedly withdrew it.

He asked the judge to make an order to dismiss the claim of fraud in all four cases.

Hugh O'Neill SC, for ACC, said the bank wanted to make it very clear the now withdrawn claim of fraud was only made in relation to the four cases before the court. He did not want it to be suspected that there was any acknowledgement of fraud in relation to the other cases.

When the case opened on Wednesday, the court was told the bond schemes were very popular among Irish investors in 2003 and 2004 with an estimated €650m worth of geared tracker bonds sold to more than 1,000 people who borrowed an average of €200,000 from ACC to invest.

Most investors took out loans with ACC to buy the bonds and the losses the suffered arose out of interest repayments on those loans, it was claimed.

ACC Bank marketed borrow-to-invest tracker bonds as "low-risk" to hundreds of Irish customers despite being aware of concerns by the financial regulator, actuaries and within the bank itself about such products, Mr Gordon told the court on Wednesday.

While ACC was publicly saying in late 2003 that borrowing to invest in products linked to stock market performance was "not a good thing", ACC within three months was "privately peddling it for all it was worth", he said.

The bank's "own greed took over" and it "mis-sold" the bonds, counsel said.

ACC staff were told to "flatter" customers that they were regarded as high net worth persons and were being offered "exclusive entry to a private club", he said.

Investors were told there was "nothing to worry about", this was "a fantastic product" and the bank would give them the money to make the investmen

"Sales boomed and the rule book went out the window," counsel said

Most investors had a low-risk investment appetite and their complaint was ACC mis-sold the bonds as low-risk when they were in reality high-risk, he said.

Also in Business