This investor sues Citibank with help from the Legal Action Fund of the Consumer Council of Hong Kong. I hope that Singapore can offer the same service to our people.
25 Sep 2009
Citibank has become the first financial institution to be taken to court by the Consumer Council over the Lehman minibonds saga.
And the case of nurse Chan Mei-ying may open the way for an avalanche: the council is readying more than 100 other cases with potential for court action.
Chan, backed by the watchdog's legal action fund, is suing Citibank on the grounds it misrepresented the nature and risk of a financial product. She claims to have lost HK$500,000 on her investment.
In the writ filed with the District Court, Chan claims bank staff told her the product was "very similar to a fixed deposit," with a yearly interest of about 4 percent. She says she was also told any potential loss would be less than HK$100,000 even if the stock market fell by half.
A Citibank manager filled out a risk profile in 2008 on her behalf. She was classified as an "active and experienced investor" with "aggressive" investment objectives and risk tolerance.
A spokesman for the Consumer Council said it is processing 120 other cases involving Lehman products that may end up in court.
Investors in 20 cases have decided not to pursue litigation.
According to the writ issued to the Citibank Taikoo Place branch, Chan became a customer in 1998, and about a year later a Virginia Yee Chung-nga became her relationship manager. Chan became a CitiGold client in 2004, and two or three years later an Elina Lau became her CitiGold relationship manager. Chan claimed she considered Yee and Lau as her investment advisers, and both recommended investments from time to time.
In 2007, Chan said, Lau described her as a "low" to "moderate" investor in a risk assessment. But Chan claimed she was not given a copy of the document. In January last year, Lau told Chan that the term on her fixed deposit of HK$400,000 had expired and invited her to discuss her investment plan.
Chan said she met Lau the same afternoon and was persuaded to subscribe to a Lehman equity-linked note. Chan invested HK$500,000 in the paper.
Chan claimed she was not told of a high risk or the potential interest rate of the product, which could be as much as 31 percent. But she was told she would have "lost a good opportunity" if she did not subscribe before the deadline. On September 15 last year, Chan said she was shocked to discover the huge loss when Lau called to say the note was negative in value owing to the collapse of Lehman Brothers.
Chan accuses the bank of a breach of duty and is claiming damages, interest and costs.
Besides this legal action fund from the consumer council of Hong Kong, I believe the Association of Banks in Hong Kong is also paying for the Mediation fees between the Banks and Investors (ie including the legal fees incurred by the investors). Is not that better to live in Communist country?
ReplyDeleteEverything HK SFC does put Sgp MAS to shame. This also means the Govt is acting exactly like a FI as they own DBS. Good luck to the 200 odd investors who are suing DBS represented by a ex MP in a Sgp court.
ReplyDeleteWhat is the chances of success? Close to 0.
Highnote 5 and minibond group are 2 separate entities. From what we read in the news, their premise for their case are not the same. Chances of success are diferent also.
ReplyDelete"Highnote 5 and minibond group are 2 separate entities." The name is different but both are toxic products which were allowed to be sold in Sgp. FIs of both products lied and misinform as well as getting customers to shift their deposit into it. MAS ignored pleads from the victimized MB/HN5 investors because their boss is from the same team who own DBS. So how transparent, fair can the system be? The system rots. How can the HN5 or MB class suit succeed if MAS/DBS/Govt/Court are all from the same team? Semi retired judges handling HN5/MB/Pinnacle are giving out 0 to 30% compensation with most getting nothing. Why the varying compensation when the investors were told by FIs that it is low risk, as safe as fixed deposit, bonds from solid companies? Why HK SFC is helping to negotiate for a fair outcome and HK Consumer Council is suing FIs and Sgp MAS is doing nothing?
ReplyDeleteIt only goes to show HK SFC and Consumer Council understand and found that the retail investors were indeed victimized....while Sgp MAS is still waiting for the Ministers for approval to help Sgp retail investors....
So far, none of the cosumer/client organisation speak up for the credit linked notes victims in Singapore. I guess they do not want to offend the big brother. Those victims have to fight on their own. Salute to those fighters especially those committee members who work tirelessly for the benefit of their members.
ReplyDeleteIn Hong Kong, across the board settlement is only applicable for minibond investors. DBS's instructure products in Hong Kong eg constellation series etc are not included in the across the board settlement.In Singapore I guess you have to fight on your own. Join the class action! FI's are going back to investors to offer higher compensation since class action formation.
ReplyDeleteWhat kind of injustice!!!! See suits formation and start offering compensation. The FIs are just taking a gamble. If no one do anything, they save the money and move on. Is MAS so blind to such obvious tactics! Even heartlanders like us can smell from far away. What is MAS Chairman and Deputy Chairman doing?
ReplyDeleteAns: Sit on their chair and enjoy their millions. When free, go for a nation paid tour in China...