Thursday 19 April 2018

Lost money in mis-sold deals? Hope at last!

Manama, June 1, 2014

Anyone in Bahrain who has ever lost money on an investment product that had not been pre-approved by the Central Bank of Bahrain (CBB) could now be able to claim it following a landmark ruling by the High Civil Court.
The verdict - issued against a major regional investment house last week - affects any investor who has ever been marketed a financial product using materials that had not been pre-approved by the Central Bank of Bahrain (CBB), said a report in the Gulf Daily News (GDN), our sister publication.
If they subsequently lost money on their investment then the door is now open for them to claim that money back, according to Almoayed Chambers managing partner Aymen Almoayed, who led the case.
"This is a huge precedent," he said.
"It means that any documentation that has not been pre-approved by the CBB is effectively null and void and banks are now required to give you your money back."
Almoayed estimated that up to $900 million (BD340 million) in claims could now be brought relating to this kind of case.
"If anybody has been approached to make an investment and that investment has now lost them money - and if the booklet or materials used to market it was not stamped by the CBB - then that person can get back 100 per cent of their money," he said.
"Mostly investors do not get the CBB stamp on deals, but this is rarely noticed."
The landmark verdict, which was issued last Wednesday, directed the investment firm involved to repay the money it owed to depositors as per Article 43 of the Central Bank of Bahrain and Financial Institutions Law 2006.
"This article, entitled 'invalid agreements', explains that any deal made without the approval of the CBB remains null and void, irrespective of any undertaking the client has signed with the investor," Almoayed said.
"The depositors in this case had signed agreements in major investment deals on projects that are usually sold on condition that profits would be shared, but investments will not be returned in case of loss.
"It is an unfortunate situation in Bahrain that most people do not properly read the documentation and hence overlook such clauses."
Last week's ruling applies to all investment banks that have "trapped" depositors and mis-sold products, Almoayed said.
The largest amount owed in the case is $10 million (BD3.8 million) to an Emirati investor, while other clients include a Bahraini and an American, he added. - TradeArabia News Service

Tags: Bahrain | Court | CBB | ruling |

More Finance & Capital Market Stories

calendarCalendar of Events