Russian retail investors file lawsuit over transfer of frozen assets

MOSCOW (Reuters) – More than 40 private investors have filed a Moscow lawsuit against three Russian banks – VTB, Alfa Bank and Rosselkhozbank – challenging the transfer of their frozen assets to other brokerages after Western sanctions were imposed last year.

The claimants say that brokerages closed operations for retail investors too quickly after Russia sent its troops into Ukraine on Feb. 24 and so deprived them of a chance to sell their now-frozen assets. The suit also contests the decision by sanctioned brokerages to move their securities to other brokerages without their consent.

A hearing is scheduled at Moscow’s Meshchansky Court on April 10.

“The class action lawsuit has been filed and accepted,” one plaintiff, Svetlana Mavrinskaya, told Reuters. She expects the total number to reach 48 once all documents have been filed.

“In addition to the transfer, we will raise the issue of the wrongful closure of securities trading (in VTB’s trading system) from March 1, 2022,” she added. “We expect justice from the court, we want to get our money back from the banks.”

Russia’s second-largest bank VTB, which came under harsh sanctions over a year ago, said the assets of around 500,000 former customers were blocked.

VTB said it had started a process while under sanctions to transfer clients with foreign securities to protect investors’ interests.

“This transfer was carried out strictly in line with existing legislation,” VTB said in a statement. “We regret that a small group of investors did not appreciate our efforts.

“But we value every client, including former ones, and in any case we are continuing to do everything in our power to defend their interests.”

VTB said it had also sought to unfreeze former client assets in Belgium and Luxembourg. Alfa Bank and Rosselkhozbank did not respond to requests for comment.