500 ACC bond cases settled in one pen stroke

Five hundred cases where customers of ACC Bank suffered heavy losses after borrowing to invest in “low-risk” tracker bonds have been settled in the Commercial Court.

The settlement was announced yesterday afternoon, following complex negotiations which lasted over 30 hours.

In one of the biggest cases in Irish legal history, multiple parties came together to sue over a financial product. It is also likely to go into the record books as one of the biggest claims ever to be settled in one pen stroke.

Counsel representing all the claimants, John Gordon SC, told Mr Justice John Cooke yesterday there was a comprehensive solution to the litigation.

He apologised to the court for the length of the negotiations, as the court had been on standby to continue hearing four test cases against ACC Bank, owned by the Dutch RaboBank Group, for the investors, who purchased various Solidworld bonds in 2003 and 2004, but who allegedly failed to secure any return on their investments.

He said the four plaintiffs accepted the claim of fraud made by them against the bank cannot be sustained and they unreservedly withdrew it. Counsel asked the judge to make an order to dismiss the claim of fraud in all four cases.

Counsel also told the court there was no claim of fraud ever advanced in relation to Financial Engineering Network and Field Financial. He asked that the cases be adjourned for mention to December 13.

Mr Justice Cooke noted the settlement and dismissed the claim of fraudulent misrepresentation claimed in the four cases.

Counsel for the bank, Hugh O’Neill SC, said ACC wanted to make it clear the claim of fraud, now withdrawn, was only made in relation to the four cases and it did not want it to be suspected that there was any acknowledgment of fraud in relation to the other cases.

The judge asked had there been an increase in the number of cases overnight.

Counsel said there had been 410 cases, but the negotiations had gone beyond that and the final settlement would encompass other cases, for a total of 500.

When the case opened, the Commercial Court was told ACC Bank marketed borrow-to-invest tracker bonds as “low-risk” to hundreds of Irish customers, despite being aware of concerns by the financial regulator, actuaries and within the bank itself about such products. While ACC was publicly saying in late 2003 that borrowing to invest in products linked to stock market performance was “not a good thing”, ACC within three months was “privately peddling it for all it was worth”.

In 2003 and 2004, an estimated €650m of geared tracker bonds were sold to more than 1,000 people who borrowed an average of €200,000 from ACC to invest in the bonds. Most investors took out loans with ACC to buy the bonds and claimed losses arising from interest repayments.

Mr Gordon, representing four investors in Solidworld5 bonds, said ACC decided to sell the bonds to high net worth individuals for a minimum €250,000 investment, which was later lowered to €100,000.