According to the Executive Vice President of Everbank, Frank Trotter, investors in all WorldCurrency CDs (including Icelandic Krona CDs)incurred a net loss of alomst $50,000,000 over the past four years. On average, those who invested in WorldCurrency CDs and subsequently converted their investment back into US dollars during this period were almost twice as likely to lose money as realize a gain. That's a pretty poor performance for an FDIC insured "certificate of deposit", don't you think?
Meanwhile, by charging 1% commission to convert dollars into a foreign currency, and an additional 1% commission to convert the foreign currency back into US dollars, EverBank made millions from these WorldCurrency investors.
That said, since its unclear whether EverBank ever actually converted the money invested with them, at least in the case of Icelandic Krona CDs, into a foreign currency, its equally unclear what the commission they charged was meant for.
Everbank Lawsuit case notes
Tuesday, August 25, 2009
Subscribe to:
Post Comments (Atom)
2 comments:
i'd asked Everbank some questions to gauge how to determine my investment losses/expenses for tax purposes, etc.
1. Note that Everbank claims the Icelandic bank distress caused all problems, yet "The investment was not considered an offshore account since it was held with EverBank."
2. What USD amounts were deducted from the value of my investment in the form of commissions or forex transaction costs? "There will not be any deductible expenses. The entire $10,000 was
used to purchase the appropriate amount of ISK and then the
corresponding amount of ISK was converted back to USD."
3. "Since the Icelandic banking system basically collapsed, the currency no longer trades on the foreign exchange market. Given that scenario, the currency had to be sold upon the maturity date." Yet I never got a satisfactory answer as to why Everbank couldn't just have held on to the ISK deposit (even slashed interest rate to zero) until the currency market improved. Maybe because it was in a hurry to collect its commissions when converting the currency?
Everbank's self-engineered fiasco with the ISK CDs is likely to drag it though a class-action suit.
As of March 2010, proceedings were underway. See http://www.everbanklawsuit.com/CaseStatus.html
Post a Comment