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Further waves of brokerage bankruptcies

March 27th, 2015

The leading left-wing daily accuses the government of using insider information to save public assets from brokerage houses which have filed for bankruptcy. A conservative economist welcomes the government’s proposal to use the private assets of the owners of brokerages to compensate investors in case of insolvency.

On Wednesday, PM Orbán told the press that as a precautionary measure, he ordered his ministers to immediately withdraw their departments’ deposits (if they had any) from brokerage houses after the default of Buda-Cash early this month (see BudaPost March 4). A day before the interview, newspapers reported that the Ministry of Foreign Affairs and Trade withdrew its Forint deposits from Quaestor not long before the broker house filed for bankruptcy (see BudaPost March 25). Government politicians denied they had any knowledge of concrete problems at Quaestor.

Népszabadság in a front page editorial accuses the government of insider trading. The leading left-wing daily finds it unlikely that the government decided to withdraw its holdings from Quaestor right before it filed for bankruptcy just as a precautionary measure. Népszabadság suspects that the government had insider information which it withheld from small investors who now may lose some of their assets. Népszabadság also accuses the government of keeping public money in highly risky investments. The Ministry of Foreign Affairs and Trade said it had deposited only government bonds with Quaestor, as required by law rather than purchasing other riskier assets.

In Mozgástér, Gerda Bunford says moves to save public money should be praised rather than criticised. The government could hardly invite simple citizens to withdraw their investments from all brokerage houses, as that would have ruined even the sound funds. Regarding those which have already failed, they had already squandered most of the private investments on their books.

In Magyar Hírlap, Imre Boros calls for stricter regulation so that investment becomes more transparent. The conservative economist recalls that in the past twenty years, several brokerage houses have gone bankrupt. Boros welcomes the government’s plan to draft a new law which would allow authorities to use the private assets of brokerage house owners to compensate for losses their companies cause to their clients.

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