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Third brokerage house goes bankrupt in 8 days

March 12th, 2015

Analysts are urging measures to bolster supervision over financial institutions after the collapse of Quaestor, Hungary’s biggest brokerage house, the third such case in just over a week. They fear that citizens will lose their already waning confidence in banks, which would severely impair the economy.

In Magyar Nemzet, Csaba Erdősi agrees that those responsible for fraudulent fund management should be brought to justice, but feels it equally important for the authorities to put new and more rigorous solutions in place to supervise brokerage firms. After Buda-Cash (see BudaPost, March 4) and Hungária, Quaestor was the third brokerage house to be declared bankrupt within eight days and placed under National Bank management. All three appear to be guilty of irregularities, at least, and in some cases wholesale fraud in order to cover up their losses and also in order to transfer money to safe havens before the crash. Erdősi warns that public trust in financial institutions should not be allowed to fade away and the National Bank should therefore introduce spectacular measures to reassure ordinary investors.

In Népszabadság, Ervin Tamás criticises both left and right for trying to use the bankruptcy cases for political purposes, with the government side calling the Buda-Cash bankruptcy “another socialist brokerage scandal”, while the left blaming the president who vetoed a law and thus opened a few days’ window for Buda-Cash to perform operations which deepened its crisis. Tamás finds it appalling that instead of working on solutions which might restore public trust in financial institutions, political groupings compete with each other in destroying public confidence in order to score petty political points.