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Thousands risk losing life savings in Hungary's brokerage scandal

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Thousands risk losing life savings in Hungary's brokerage scandal
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Hungary’s National Bank is still trying to estimate the fallout from its seizure of brokerage firm Quaestor.

The company was shut down this week, the third security and investment firm to have its activities suspended within weeks.

Investigators believe it may have invested scores of billions of euros more in bonds than it was allowed to under its bond insurance programme.

Earlier this month, the central bank revoked the licence of Buda-Cash and four small banks linked to it, saying the brokerage could not account for about 340 million euros of client cash.

Thousands of people may be affected. Last week, the National Bank of Hungary also revoked the licence of a smaller brokerage: Hungária Securities.

Every brokerage in question appears to have falsified data. Buda-Cash and Quaestor are accused of doctoring their IT systems, whereas Hungária Securities is said to have used the old-fashioned “exercise book” method for its fraud.

István Binder, spokesman for National Bank of Hungary said: After the Buda-Cash case the National Bank of Hungary immediately realised that the whole market, even if it is just a small section, has to be examined very quickly. So we decided to start a range of investigations on the spot at other brokerage companies as well.”

Economic journalist András Mihálovits told euronews
that the consequences may be disastrous if those few people who have investments lose their trust and take out their money from all the brokerage companies.

“I think the consequences will be extremely serious. Basically the Hungarian investors, and there are not many of them, can lose their trust in the brokerage companies, no matter if it is a small, independent firm of a big company with a huge, international bank in its background.”