Brokerage scandal continues in Hungary

The National Bank of Hungary (MNB) suspended the brokerage licence of the Hungarian Quaestor on Tuesday, citing regulatory shortcomings, and said the firm may also have issued many more bonds than permitted under its issuance program, the Reuters news agency reported.

Quaestor is the third Hungarian brokerage firm to face regulatory action within the past two weeks. About the same time as Quaestor, another brokerage firm 'Hungária Értékpapír' was also suspended.

The series of events that shook the securities market in Hungary, began at the end of February when MNB, as a supervisory authority, suspended the operating licence of brokerage firm 'Buda-Cash Brókerház' and appointed supervisory commissioners because of suspicious cases that had come to its knowledge.The management of the company was taken over by supervisory commissioners.

MNB suspects that Buda-Cash had falsified all of its reports over the past ten years and is unable to account for substantial client funds. The damage can amount to about 100 billion forints (EUR 327m).

Investigation is under way but some experts fear that the damage at Quaestor could be even bigger than the one at Buda-Cash.