The floodgates are now open! Investor sets precedent by successfully suing the SNB over Black Thursday losses

A legal case has been won by a private individual in Austria who filed a lawsuit against the Swiss National Bank for losses incurred as a result of the Swiss National Bank’s removal of the 1.20 peg on the EURCHF pair. In this particular case, a local court in Vienna, Austria, has awarded a compensation […]

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A legal case has been won by a private individual in Austria who filed a lawsuit against the Swiss National Bank for losses incurred as a result of the Swiss National Bank’s removal of the 1.20 peg on the EURCHF pair.

In this particular case, a local court in Vienna, Austria, has awarded a compensation amount of 13,000 Euros in respect of losses in a default judgement, which was reported in German on Austrian television this week by ORF which is an Austrian news agency.

The plaintiff, who has remained anonymous, was represented by a lawyer in the name of Clemens Pichler in order to bring his case against the Swiss National Bank to recover losses that were sustained on his Swiss Franc-denominated loans as a result o the Swiss National Bank’s decision on January 15, 2015 which created a black swan event in which a day of unprecedented volatility swept through the currency markets and exposed FX brokerages to negative client balances, which in some cases resulted in their insolvency.

Mr. Pichler made a public statement on behalf of his client that his client “didn’t convert his loan before because of consistent policy comments of the SNB and that the SNB consciously spread false information to prevent conversions from francs into euros.”

It is understood that this particular lawyer is currently working on similar cases.

The Swiss National Bank did not contest this case and the passing of a judgement in favor of the plaintiff may well open the floodgates for FX brokerages and their clients to follow this path.

Approximately 20 years ago, Swiss Franc and Japanese Yen-denominated loans were very popular among Austrian homebuyers due to the lower interest rates, and by 2006, 31% of all mortgage lending in Austria was foreign currency denominated.

In 2008, the Austrian government outlawed this practice however outstaning mortgages and other secured borrowing in foreign currency still amounts to approximately 24 billion Euros which is equal to 17% of all outstanding mortgages.

The question is, will the FX brokerages whose business was affected by the Swiss National Bank’s sudden decision use this case as a very quick route to successful litigation and recovery of losses?

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