75pc of investor debts 'should be dissolved'

14th July 2004, Comments 0 comments

14 July 2004 , AMSTERDAM — A special commission of inquiry reported on Wednesday that to resolve a dispute between finance company Dexia and investors, 75 percent of the debts incurred by the participants of a share lease scheme should be dissolved.

14 July 2004

AMSTERDAM — A special commission of inquiry reported on Wednesday that to resolve a dispute between finance company Dexia and investors, 75 percent of the debts incurred by the participants of a share lease scheme should be dissolved.

Finance Minister Gerrit Zalm set up the commission to resolve a conflict between Dexia and investors who lost large sums of money in the banking and finance company's so-called share lease plan. The commission presented its final report on Wednesday.

But Dexia says it will only discuss a financial settlement if insurer Aegon is also prepared to bear the brunt of the costs of the commission-proposed settlement, which amounts to hundreds of millions of euros.

Dexia wanted to include Aegon in the conflict because it took over the controversial investment scheme from Aegon in 2000, Dutch public news service NOS reported.

The Dexia share lease scheme involved investors borrowing money from Dexia to invest in the stock market, but share price troubles in recent years meant that many shares failed to yield sufficient returns, leaving many investors with debts.

And the commission concluded in its final report on Wednesday that the providers of investments with loaned funds often did not examine whether clients could bear the financial risks involved.

In some cases, they also concealed the fact that the buyers were entering the stock market with loaned funds.

The commission also sharply criticised the Dutch stock market supervisory authority, AFM, for failing to adequately warn consumers about the risks of the investment scheme.

The commission's report comes after Amsterdam Court ruled earlier this month that Dexia did not mislead investors in its share lease scheme.

In the largest Dutch collective legal battle ever, investors who lost money in the scheme took legal action against Dexia in 2002.

But the court ruled on 7 July that the December 2000 advertisement used by the company to advertise one of the share lease schemes was clear enough in indicating that there were risks attached.

The court said it needed to study Dexia products individually before giving a final ruling, but gave the green light to investors and the consumer watchdog authority Consumentenbond to continue legal action.

It said any possible compensation will need to be assessed individually, but Stichting Leaseverlies (Lease Loss Foundation) − which is demanding that 92,000 investors be repaid by Dexia − said the ruling gave little hope for investors.

[Copyright Expatica News 2004]

Subject: Dutch news

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