ACC Bank settles 500 cases with Solidworld investors
FIVE hundred cases in which customers of ACC sued over 'low-risk' investments the bank had allegedly promoted have been settled at the Commercial Court.
The investors claimed that they lost money after borrowing from ACC 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.
John Gordon SC, on behalf of the investors, told Mr Justice John Cooke yesterday that there was now a comprehensive solution to the litigation, following lengthy 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 that a claim of fraud made against the bank could not 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Hugh O'Neill SC, for ACC, said the bank wanted to make it very clear that the claim of fraud -- now withdrawn -- had only been made in relation to the four cases before the court.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, the court was told that 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.
Most investors took out loans with ACC to buy the bonds and the losses they suffered arose out of interest repayments on those loans, it was claimed.
ACC Bank marketed borrow-to-invest tracker bonds as "low-risk" to 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 earlier this week.
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.
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 that there was "nothing to worry about", the bonds were "a fantastic product" and the bank would lend them the money to make the investment.
"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.
In a statement yesterday, ACC Bank said it welcomed the fact that the court unconditionally dismissed the claims in fraud, which were made in the four cases