Romanian stock exchange clients lose EUR 1.2 mln in huge trader scandal
The Bucharest Stock Exchange (BVB) saw one of its largest scandals to date as clients of Harinvest brokerage house lost EUR 1.2 mln on rogues deals made by traders to cover losses, the local media reported on Dec. 17.
“Romanian stock market brokerage firm Harinvest has been fined some EUR 137,000 and closed down by the financial regulators after its clients were robbed of shares worth some EUR 1.2 mln,” Romanian news service, Romania-Insider reported.
The shares were sold off by rogue traders to cover losses on high risk structured products. A Harinvest report indicates that a company client traded on the high risk portfolio and refused to cover subsequent losses. Several company employees decided to cover the losses from other clients’ portfolios using a series of sell-out deals, false documents and covering up the whole operation so that it would not figure on Harinvest’s financial reports.
The swindle came to light after it transpired that Harinvest lacked the funds to cover a EUR 500,000 transaction. The company sold its shares on the BVB to cover the deal, however, the clients who lost all their funds may not be able to get their money back as Romania’s stock market bailout fund, the Investors’ Compensation Fund, reportedly has a threshold of EUR 20,000.