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Lehman Brothers certificates
In the wake of the global financial crisis, several German banks were accused of deliberately targeting unsophisticated older clients to sell them supposedly safe certificates in Lehman Brothers.
Investment advisers marketed the Lehman certificates aggressively, luring people out of their safe but low-yielding saving deposits. Advisers were accused of targeting investors who they dismissively referred to as “OD customers” – or “old and dumb” investors who could be easily persuaded into purchasing certificates from the American investment bank, without fully understanding the risks involved. Many of the investors into these products lost their savings in the financial storm that followed the Lehman Brothers bankruptcy in September 2008.
In 2009, the bank Frankfurter Sparkasse admitted that it gave wrong advice to investors who had bought Lehman certificates and who lost their savings when the bank went under. Frankfurter Sparkasse admitted that it had sold Lehman certificates to 5,000 of its customers for a total investment amount of about €75 million – securities which the financial institution touted as absolutely safe, but which became completely worthless after Lehman’s bankruptcy. In one case, a bank advisor sold a customer a Lehman certificate for about €93,000 as late as 21 August 2008, only a few weeks prior to the Lehman Brothers bankruptcy in September of that year. By 2011, Frankfurt Sparkasse had reached an agreement about compensation with approximately 95% of the investors in Lehman certificates. In February 2009, Hamburger Sparkasse Savings bank also announced that it had compensated 1,000 of a total of 3,700 investors affected by the collapse of Lehman brothers.