ACC Bank sold borrow-to-invest tracker bonds to hundreds of Irish customers despite concerns by the financial regulator, actuaries and individuals within the bank itself about such products, the Commercial Court was told today.
While publicly saying in late 2003 that borrowing to invest was not a good thing, ACC was "privately peddling it for all it was worth", the bank's own "greed" took over and it had mis-sold the bonds as low-risk, John Gordon SC said.
He was opening proceedings before Mr Justice John Cooke in what is regarded as a test case for more than 400 investors who purchased various Solidworld bonds in 2003 and 2004 and who allegedly failed to secure any return on their investments. ACC denies the claims.
On consent of both sides, the case was adjourned after lunch today until tomorrow following indications some talks were underway between lawyers.
The bond schemes were hugely popular among Irish investors in 2003 and 2004 with an estimated €650m worth of geared tracker bonds sold to more than 1,000 people who borrowed an average of €200,000 from ACC to invest in the bonds.
The vast majority of the bond investors took out loans with ACC to buy the bonds and are claiming losses arising from interest repayments on the loans.
