MNB still probing staff, management at failed brokerages


The oversight on fraud cases uncovered at three independent Hungarian brokerages earlier this year were concluded, however, the National Bank of Hungary (MNB), in its capacity as financial market watchdog, is still scrutinizing the staff and management at all three, central bank director Richárd Végh said at a conference organized by the Society of Hungarian Economists yesterday.

Végh said that damages to investors caused by the fraud at the Quaestor brokerage is in excess of HUF 150 bln, while damages at Buda-Cash reached HUF 100 bln and those at Hungária Értékpapir were "in the billions of forints". Between 1996 and the broker scandal of early 2015, a total of 14 investment companies failed, resulting in combined damages of HUF 4.3 bln, he added.

Among the recommendations the MNB is making to prevent a repeat of similar scandals, is to introduce sub-accounts for investment company clients at clearing house KELER, where all client accounts are currently combined, Végh said. He noted that Quaestor was able to sell unsanctioned bonds by falsifying the records of client accounts.

Another new regulatory control will be the introduction of regular reporting on investment company clientsʼ data, Végh said.

The MNB has found no fraud at other investment companies, however, reviews are still underway, he said.

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