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Germany

Exclusive: In Lehman Fallout, 'Old And Stupid' Investors Burned In Germany

A couple who lost 10,000 euros when Lehman Brothers went bankrupt is now suing the Haspa savings bank that sold them the Lehman-backed derivatives. As the German Federal Court nears a decision, disturbing allegations have emerged about the bank's

Exclusive: In Lehman Fallout, 'Old And Stupid' Investors Burned In Germany

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At the offices of Hamburger Sparkasse AG (Haspa), they were known as "Alte & Doofe" -- "A & D" for short -- which translates as "old and stupid." The reference was to some of the 3,700 clients who were sold Lehman-backed derivatives, known as "certificates' in Germany, by Haspa, Germany's largest sparkasse savings bank.

When Lehman went bankrupt three years ago, instead of compensating all those who sustained losses Haspa partially compensated some 1,000 investors while most received what the bank called "a small gesture" to make up for losses sustained. Token "gestures' recommended in internal memos, of which Süddeutsche Zeitung and NDR radio have obtained copies, included a bouquet of flowers or an invitation to dinner. The memos also include advice for dealing with furious clients.

Two such clients, who received neither money nor flowers, were Bernd and Brigitte Krupsky from Hamburg. They lost their 10,000-euro investment and filed a suit against Haspa. The case is now before the German Federal Court, which will make a decision on Sept. 27. This is the first time that the country's top court will rule on a suit brought by a Lehman victim -- and lay down to what extent the bank should have informed their clients about risks.

A German consumer protection group is hoping the federal court decision will establish a legal principle. All told, there are an estimated 40,000 to 50,000 Lehman victims in Germany, who lost a total of some 750 million euros in the bank's collapse.

Haspa refutes claims that it should have better informed clients about what they were getting into, or that many retirees were unaware of what they were actually buying. "They were all experienced investors," says board member and deputy spokesperson Reinhard Klein. They would have known that their investment was only covered if the backer was a German institution. Just the name "Lehman Brothers' should have been enough to indicate that it was a foreign bank, he said.

Haspa internal memos, however, contradict this. According to the documents, many Haspa employees didn't know what they were selling. Shortly after the Lehman bankruptcy, the bank's management sent an e-mail to staffers containing stock answers for clients along with explanations about the risks of "certificates' – the sort of facts that, according to Klein, all of them knew. Worse, the e-mail reads: "Total loss can happen, but at this time we view it as improbable." The e-mail was sent three days after the Lehman collapse, when the investors' money was already long gone.


Read the full story in German by Kristina Läsker

Photo - Tom T

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Society

Journalism In A Zero-Trust World: Maria Ressa Speaks After Rappler Shut Down Again

The Rappler CEO and Nobel Peace Prize winner spoke with The Wire's Arfa Khanum Sherwani about how journalists everywhere need to prepare themselves for the worst-case scenario of government-ordered closure and what they should do to face up to such a challenge.

Maria Ressa, Filipino journalist, author and Nobel Peace Prize laureate

Arfa Khanum Sherwani

HONOLULU — For someone who’s just been ordered to shut down the news website she runs, Rappler CEO Maria Ressa is remarkably cheerful about what may happen next.

In a speech she gave to a conference at the East-West Center here on challenges the media face in a “zero trust world”, Ressa said that she and her colleagues were prepared for this escalation in the Philippines government’s war on independent media and will carry on doing the work they do. “If you live in a country where the rule of law is bent to the point it’s broken, anything is possible…. So you have to be prepared.”

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