Constitutional Court partially invalidates Quaestor top-up fund law

Issues

Hungaryʼs Constitutional Court has invalidated some parts of a special fund established to compensate investors of failed brokerage Quaestor over an existing insurance threshold, but said compensation could still comply with the basic law, state news agency MTI reported today.

The court said the law on the top-up fund discriminated against some investors eligible for the compensation, placed disproportionate ownership restrictions on investment service providers involved in the compensation, and provided insufficient time for preparation, MTI reported.

Quaestor investors were already eligible for compensation from the Investor Protection Fund (Beva), of up to €20,000, but lawmakers approved legislation that effectively raised the threshold to about €100,000, while leaving Beva members to cover the difference.

The Hungarian Banking Association has opposed the bailout fund, saying it unfairly penalizes banks by making them pay for fraud committed by others.

Beva earlier estimated the top-up fund would reach almost HUF 100 bln.

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