More than 800 local investors are set to lose €17 million after the failure of a Dutch bank and two Australian funds.

Investors bought bank bonds with an interest rate of 6.25 per cent that analysts believe are now worthless

The first case involves 183 investors who dished out almost €3 million in high-interest bonds of Dutch bank SNS Reaal, TVM, the state broadcaster, reported yesterday evening.

A second case concerns 631 investors who collectively placed more than €14 million in two Australian funds administered by LM Investment Management.

SNS Reaal, the fourth largest bank in the Netherlands, was nationalised by the Dutch government in February.

The state bailout cost Dutch coffers some €10 billion to prevent SNS Reaal’s collapse under the weight of property loan losses.

The bank never recovered from the 2008 global recession and Maltese investors bought bank bonds with an interest rate of 6.25 per cent that analysts believe are now worthless.

A majority of investors in the Dutch bank had acted through the Maltese financial inter­mediary company All Invest that ran into trouble last year after clients accused it of losing the life savings they had invested with it.

The Malta Financial Services Authority had found All Invest acted incorrectly and in an abusive manner when it sold complex financial products to the aggrieved clients. The case is not linked to the Dutch bank.

In 2011 All Invest was also reprimanded for breaching Malta Financial Services Authority rules that regulate promotional material.

In the case involving LM Investment Management, although investors are set to lose substantial amounts, analysts believe they may still recover some of their cash.

A majority of investors in the Australian funds did so through Maltese financial intermediary company MFSP, which also ran into trouble with the MFSA last year.

The regulator had imposed a penalty of more than €12,000 and prevented the company from selling complex products.

It also imposed a licence restriction for three years.

In both cases the MFSA is following developments.

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