The judge considered that Bankinter should have warned investors of the difficulties Lehman Brothers was experiencing prior to their declaration of bankruptcy on September 15, 2008. According to the ruling, they are held liable for having misgauged the “risk of insolvency for Lehman, the issuer …and, as they adopted a wait-and-see attitude and opted for market calm over their obligation to inform their investors en masse (with the intention, perhaps, of avoiding an abrupt mass flight), they must assume responsibility for injury and damages”.
The compensation in the Lehman case is relatively low since damages are valuated according to the stock price on the date bankruptcy was declared. However, the judgement acknowledges the investors’ rights to recover 100% of their investments in the Icelandic banks Landsbanki and Kaupthing, and imputed bad faith to Bankinter since the majority of investments were made over the phone and the information pamphlets were confusing and, according to the judgement, consumers could “be tricked into thinking they were acquiring innocuous fixed-income products”. The importance of the ruling lies in the fact that it opens the door to other affected individuals not a party to the original proceeding to claim the same rights in a new one.
For further information, please contact Carlos Anglada: [email protected]