US couple sue bank after claiming bond lost half its value

ANGLO Irish Bank is being sued by a couple in California who claim they were enticed by officials of a subsidiary of the bank into buying bonds which have since lost over half their value.

Kal and Imelda Brar are suing the bank over a $4 million (€3.1m) leveraged “with profit bond” investment they made through an Isle of Man trust operated by the bank.

The couple are seeking the return of their investment plus unlimited punitive damages.

The case is set to go to trial in Los Angeles in November and could lead to other similar cases against the bank in the United States, according to the couple’s American attorney.

The Brars claim the investment was misrepresented to them by Anglo representatives at meetings in 1999 and 2000, when they approved the bank’s plan to boost their investment with borrowings from another Anglo subsidiary, a bank also located in the Isle of Man.

The bank is being sued for intentional misrepresentation, fraudulent concealment, securities fraud, negligent misrepresentation and breach of fiduciary duty. According to a transcript of the case, representatives of Anglo Irish Bank subsidiary went to the US on several occasions and succeed in garnering millions of dollars in investments from California residents for the bank and the trust company.

The couple claim that the bank’s representatives made misrepresentations in or omissions from statements made to them in California for the purpose of soliciting business. The case is being taken against Anglo Irish Bank Corporation plc, Anglo Irish Bank Corporation (Isle of Man) plc, Anglo Irish Trust company Limited and two executives of the company.

The Brars moved $4m from their family trust into the Isle of Man trust which had been set up expressly to borrow from Anglo Irish to invest in the bonds. The Brars say they were told their money was “absolutely guaranteed” as long as they did not withdraw it for five years, but now they claim to have suffered $2m (€1.56m) in losses.

Anglo Irish Bank tried to have the case thrown out on jurisdictional grounds, but this was rejected by the Los Angeles Superior Court last August on the basis that Anglo executives had conducted business with at least 10 other investors in California in 1999 and 2000.

Anglo Irish Bank did not respond to the allegation, while a spokesperson for the Irish financial regulator said it did not comment on cases subject to legal proceedings.