MORE THAN 200 customers have sued Singapore's DBS Bank in a bid to recover investment losses arising from the collapse of US investment bank Lehman Brothers .
Siraj Omar, a director at Premier Law, told Reuters on Friday his firm had filed a claim on behalf of 204 investors in a Singapore court. He declined to discuss the case or reveal the size of the claim, which according to the Straits Times newspaper was around S$17 million.
The investors had purchased a callable basket of credit-linked notes, called High Notes 5, from DBS Bank, a unit of DBS Group , Omar said.
A DBS spokeswoman confirmed receipt of the claim. She said the suit was without merit and that DBS planned to contest the suit, which is the first involving the bank's High Notes 5 product.
News of the lawsuit had almost no impact on shares of DBS Group, which were up 0.4 per cent on Friday morning at S$11.58 in a generally flat stock market.
Financial institutions around the world have been hit by complaints and lawsuits arising from the sale of interest-bearing structured products linked to Lehman that paid higher interest rates than regular savings deposits.
For example, a class action suit was launched in November against UBS in the United States that alleged the Swiss bank had sold Lehman-linked notes as suitable for investors seeking to protect their principal investment.
News of the suit against DBS comes three days after Singapore's central bank banned DBS and nine other firms from selling structured notes, citing various issues, such as their failure to adequately train the staff who sold such products.
According to a report released by the Monetary Authority of Singapore (MAS), DBS which received the shortest ban of six months, had sold over S$100 million worth of High Notes 5 to 1,083 investors that became worthless after Lehman's collapse.
The bank has to-date paid about S$7.6 million in compensation, the central bank's report said.
MAS said the failings identified in its investigations "do not automatically mean that the financial institutions are liable to individual investors".