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Credit Suisse fends off legal claim over £45m structured product losses

by Rachael Revesz on Feb 11, 2013 at 11:24

Credit Suisse fends off legal claim over £45m structured product losses

Credit Suisse has fended off an appeal in the High Court over a client’s investment in structured products that led to a €69.4 million (£44.1 million) loss. 

Judges Patten and Rix ruled against an appeal by Soheir Ahmed Zaki, the widow of investor Mohamed Magdy Zeid, against an October 2011 verdict in favour of Credit Suisse.

They found in favour of Credit Suisse despite the earlier ruling’s finding that the investment bank’s processes ‘lacked the rigour and care which [Financial Services Authority] conduct of business rules required’.

‘The question of process did not ultimately determine the issue of suitability,’ said Rix, in referencing the earlier judgment. ‘Regulatory failures in obtaining information might support a case of unsuitability, but they were not sufficient proof of it.’

Rix rules that the degree of leverage involved in the investments, which ranged between 75% and 80% for some, was ‘aggressive’, but not unsuitable, as Zeid understood leverage risks and was able to bear them due to his strong and liquid financial position.

Meanwhile, in a separate case Credit Suisse is set to return to the courts in another dispute over its structured product advice. Judge Teare has ruled against the investment bank’s application for summary judgment against an appeal by Camerata, an investment vehicle owned by Charalambos Ventouris, a member of the Greek shipowning family, over advice to invest €13.7 million in structured products.

Camerata has alleged three structured products it was advised to buy were mis-sold as they were too risky, given Ventouris’ claimed risk aversion.

Judge Teare has allowed Ventouris’ claim to proceed in court, although the judge stated it was unlikely the claim would win.

Ventouris previously claimed against Credit Suisse for advice to invest $12 million in a Lehman Brothers structured product. The claim was dismissed earlier in 2012 as the judge ruled that it had not been obvious to Siakotos-Konstantinidis that Ventouris was strongly adverse to risk, making the product unsuitable.

5 comments so far. Why not have your say?

Michael Brown

Feb 11, 2013 at 11:56

Another claims culture request.

From the information propvided it seems that the investment was known to the investor and now it has gone wrong it is not the investors fault.

Shipping magnate with all that money in one investment?

A few more cases like this and the FSCS bill could well reduce due to these inane complaints.

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Hickky

Feb 11, 2013 at 12:07

So Structured Capital at Risk products (SCARPS) were thought by a greek shipping magnate to be risk free. What part of the phrase 'Capital at Risk' did he not understand?

Mind you Greek shipping was exempt from paying Greek tax, so Ventouris must have thought the rules did not apply to him.

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Bob Donaldson

Feb 11, 2013 at 13:43

'Camerata has alleged three structured products it was advised to buy were mis-sold as they were too risky, given Ventouris’ claimed risk aversion'

What planet was this guy living on. Whilst this is an exceptionally large case, this same mentality can be applied to many small investors. They go into many investments with their eyes wide open but when it goes wrong, the invoke the old 'I was risk averse clause'.

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l'ifa passeport en provenance de France

Feb 11, 2013 at 13:49

is that the greek shipping co arc cru invested in ?

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Hickky

Feb 11, 2013 at 14:04

@L'ifa

i was wondering that as well! Perhaps he is risk averse as he needed the money to pay back all those poor investors in Arch Cru! You never know, we may just have added something new to the defense case.

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