If the noteholders take legal action against the issuers and/or distributors of the credit linked notes and win the case, it is possible to get the contracts rescinded and the noteholders will receive a full refund of the invested money.
I heve spoken to several lawyers. They advised that the noteholders have a good case against the issuers and/or distributors on the following grounds:
1) There are possible misrepresentations, omissions and inconsistencies in the prospectus and pricing documents. Under the principle of "contract of adhesion", these inconsistencies will be interpreted against the financial institutions as they provided the legal wordings to the contracts.
2) The documents require more than 1 day to read and understand, even for an educated and financially savvy person. How is it possible for the securities to be sold over the counter to an ordinary layman withon one hour?
3) The actual risks of these securities clearly do not fit the risk profile of the people that are marketed to. This is sufficient grounds for the contracts to be rescinded.
I will be talking to two or three senior lawyers to go through the legal documents and the above arguments. If we find sufficient evidence, we can get the written opionion from a Queens Counsel or other suitable experts. This will strengthen the case and help to get the noteholders to join a class action.
I will find someone to fund the cost of the expert legal opinion, so that the noteholders do not need to wrry about this matter now. If the case proceed, those joining the class action can reimburse this cost.
I am still keen to avoid a costly legal battle and have a negotiated settlement with the financial institutions. I hope that they will come forward to offer a fair compensation to the notebolders, so that this matter does not need to be taken to the courts.
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