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2012-12-19
Implications for SNORAS bond holders after 7 December 2012 ruling by the Vilnius Regional Court
On 7 December 2012, the Vilnius Regional Court ruled against a request made by a SNORAS bond holder (the plaintiff) to annul bond subscription agreements and to treat the amounts subject to insurance payments in accordance with the Law on Insurance of Deposits and Obligations to Investors and through the Deposit Insurance Scheme.

The plaintiff advised the Court that he thought that SNORAS had acted dishonestly, that he had been misled by the bank and therefore thought that bond subscription transactions were covered by the Deposit Insurance Scheme.

Despite these claims, the Court agreed that given the plaintiff had invested funds in the products hoping for a greater monetary return, he knew and understood the essential conditions of the concluded transactions and the associated risks.

The court stated that if the bond subscription agreements did not indicate that bonds were covered by the deposit insurance scheme, the plaintiff himself should have read the agreement carefully before entering into transaction. It was the responsibility of the plaintiff to understand and take note of the legal requirements before signing the documents and entering into the transaction. This was not undertaken by the plaintiff and he must therefore accept the consequences of accpeting the terms of the transaction.

The Court also concluded that the Bank had adhered to the strict standards when selling financial products, and had provided clients and potential clients with all of the necessary information in relation to the service being offered, therefore meeting all the obligations of a financial institution. The bank had tried to collect the requested information about the plaintiff’s investment experience, but that the plaintiff refused to provide such information.

This rulling is subject to appeal.

What does this mean for bondholders?

SNORAS adhered to the strict standards when selling such financial products and did not mislead customers.

Bond subscription agreements are a legally binding document and so anyone entering into such an agreement should have read everything carefully before signing it.

Bonds are not covered by the Deposit Insurance Scheme and so bond holders remain 4th ranking creditors.

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AB Bank SNORAS
7 A.Vivulskio Str. LT-03221 Vilnius
Phone: + 370 5  239 2239
Fax: + 370 5  232 7300
E-mail: info@snoras.com
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