Losses from failed bank are tough luck, court rules

Angry German investors seeking compensation for worthless securities from the insolvent US bank Lehman Brothers have had their case knocked back by a Hamburg court, which told them the loss was their “own fault.”

Losses from failed bank are tough luck, court rules
Photo: DPA

The court ruling overturned two previous rulings that had granted compensation to the investors from the Hamburg savings bank Haspa, through which the securities were bought.

The Hamburg court addressed two similar cases, one mounted by a teacher, the other by a businesswoman, each of whom bought €10,000 worth of securities from the US bank in 2006 and 2007, on the advice of Haspa.

Both lost the money when Lehman brothers went bust at the end of 2008. Many similar cases regarding the Lehmen Brothers crash are pending across Germany – indeed the exact number is not known. One Dutch subsidiary of Lehman Brothers is supposed to have sold 30,000 securities to 50,000 investors.

The Hamburg court ruled that Haspa had not breached its duty when it gave the advice to buy the securities. It disagreed with the previous rulings by lower courts that the case hinged on Haspa’s own profit margins and the information it provided about guarantees or insurance for the Lehman securities.

First, the bank did not have a duty to inform their customers purchasing financial products about the size of their profits, the court ruled.

“That would result in the profit and cost structures of banks ending up on the open market,” said lead judge Ralph Panten.

It was obvious, moreover, that a bank selling such securities was going to make a profit.

Furthermore, Haspa did not have to make a special point that the Lehman securities were not subject to German deposit guarantees, the court ruled. The investors had been aware that a total loss could happen, it said.

“You have portrayed yourselves here as rather simple,” Panten told the plaintiffs. “When you say you had not understood the product, I ask myself why you bought it.”

At the time of the transaction, the Lehman securities had been largely sound investments. The possibility of the firm’s going under seemed far-fetched.

“When everything falls apart, the money goes,” the judge said, adding that this was what had happened in the case of the securities.

Outside the court, the investors said they were disappointed and upset.

“An outrage,” one declared.

Haspa welcomed the ruling. However, the case is likely now to be appealed in the federal court.

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Why an ‘old’ man is taking on German nightclubs’ door policies in court

Bouncers at German nightclubs are legendary for their reluctance to let too many people through the door. A Munich man is now taking one club to court for turning him away based on his age.

Why an ‘old’ man is taking on German nightclubs' door policies in court
Inside a night club in Berlin. Photo: DPA

In a case that could have an impact on clubs up and down the country, 47-year-old Nils Kratzer is challenging a nightclub’s door policy in the Federal Court in Karlsruhe on Thursday, arguing that a bouncer’s decision to turn him away at the door was discriminatory.

The incident occurred when Kratzer tried to get into an open air club night on the Praterinsel, a small island on the river Isar in Munich in 2017.

“I’ve never had anyone tell me to my face that I’m too old for a festival,” Kratzer said before the hearing. “On the contrary, I’ve often gone to festivals nationwide with my friends in the past and all ages have been represented.”

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The club makes no bones about the fact that it told its bouncers to discriminate at the door, but argues that this was based on “optics” and not on age. It argues that, given that there was only space for 1,500 guests, it needed to discriminate on some grounds.

If Kratzer were to win the case, which he is basing on anti-discrimination laws introduced in 2006, it would force all German night clubs to review their door policies, as a ruling by a federal court sets a legal precedent.

But Kratzer has already failed to convince a Munich city court and a Bavarian state court of his case. At the Munich city court, he called his younger girlfriend to testify in order to establish his youthfulness.

Nils Kratzer. Photo: DPA

He also complained that Munich clubs have a culture of discrimination at their doors, saying one had turned him away for being a man, while he had also witnessed people being turned away based on their skin colour.

“Not all unequal treatment is discrimination,” argues Sandra Warden from the German Hotel and Restaurant Association. “Event organisers are free to decide whom they let in. The host’s right to decide is protected in our country.”

Warden said that clubs often discriminate based on age, such as at Ü-30 parties, ones where only people over the age of 30 are allowed to enter.

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