A Spanish court has ruled against Banco Santander SA (STD) in the first of an expected slew of lawsuits related to the EUR7 billion sale of convertible bonds to 129,000 of its clients more than four years ago.
A court in the southeastern Spanish city of Alicante annulled Santander’s sale of EUR45,000 worth of the bonds to one of its clients, court documents reviewed by Dow Jones Newswires showed. It ordered the bank to pay back the amount invested and interest on that money, subtracting the yield that the client had received on the securities since the sale.
Santander has 20 days to appeal the ruling with a higher court. A spokesman for the bank declined to reply when asked for comment by email and by telephone. In the past, Santander has said it acted correctly and that it complied with all relevant rules for the placement, which ranks as the world’s largest-ever sale of convertible bonds.
Santander has been a facing growing backlash from clients saddled with about EUR4 billion in paper losses on their investment in the risky bonds, which will automatically convert into common stock in October this year. Securities lawyers and consumer associations are rounding up hundreds of clients who say the bank failed to properly spell out the investment’s risks, and said they plan to file class-action lawsuits against the bank.
The court ruling put weight on the fact that Santander sold the bonds to Segura before the regulator had authorized the prospectus that laid out the bond’s key terms and conditions. The Wall Street Journal reported last year that Santander began selling Valores to customers as early as Sept. 6, 2007, almost two weeks before the prospectus was published.
«We have several clients in these same circumstances,» said Fernando Zunzunegui, a securities lawyer who represents about 300 bondholders. «With this precedent, we will go ahead and file lawsuits against the bank on behalf of these clients.»
En Alemán: DJ: Santander drohen Milliardenforderungen von geprellten Anlegern