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The better way

If any crimes were committed in the preferred shares case, they must not go unpunished

Judge Fernando Andreu has decided to open a separate investigation as an offshoot of the Bankia case in order to get to the bottom of the design, implementation, issuing, marketing and handling of preferred shares. These sophisticated investment products were sold to unsophisticated investors, and have left many savers — in particular pensioners — facing massive losses.

The move, which comes in response to a lawsuit filed by political party UPyD, marks a decisive legal step in the attempt to clarify this large-scale financial scandal, in which several banks are implicated. These include the regional savings banks Caja Madrid and Bancaja, which were later merged with other regional lenders and relaunched under the Bankia brand.

Setting up an arbitration plan so that the 300,000 or so smaller investors who bought into these preferred shares could recover all or part of the capital they had invested was the correct move, and that plan has already been put in place. But there is clearly a need to investigate whether actual crimes were committed in the sale of these financial products, which were sold to small investors as if they were simple, safe bank deposits. If such criminal conduct existed, it must not go unpunished. And an investigation of this sort is what Judge Andreu’s decision now promises.

As the anti-corruption prosecutor’s office argues, the speediest judicial route to take will be via civil action; but the judge has rightly warned that it is also necessary to avoid impunity. Judicial agreements, payments and arbitration are not enough to compensate the anguish of thousands of families who have seen their savings shrink or almost vanish owing to the punishable conduct of lenders that lied about the nature of the products they were offering. Any correct closure of the preferred shares case cannot disregard the criminal responsibilities that may be applicable to the way the banks behaved. There can be no other route, in either judicial or political terms.

The list of the offenses that will be investigated by the judge illustrates the gravity of the case: fraud, misappropriation, false advertising, fraudulent and disloyal administration and price fixing. The evidence that appears in the judge’s writ looks sufficiently clear to warrant the investigation.

However, a criminal investigation such as the one that is starting now is costly in terms of time and patience. Spain’s justice system may pride itself on due process, but not on speed. A lengthy and conflictive investigation seems to be in the offing. The judge has ruled out the idea of summoning the ex-governor of the Bank of Spain, Miguel Ángel Fernández Ordoñez, and the ex-president of the National Securities Commission, Julio Segura. Yet it is obvious that, apart from determining whether the conduct of the banks involved was oriented toward deceiving investors, the investigation has to decide whether the conduct of these regulatory institutions was correct, according to the duties incumbent on them, or whether insufficient publicity was given to warnings about the “complex” character of the preferential shares and their unsuitability for small, highly conservative investors. It is not enough to apply the letter of the law; at times, and this may be one of them, it is necessary to intervene to prevent irreparable harm being done.

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