Tycoon Oei Hong Leong has claimed that banking giant Goldman Sachs International misled him into making currency trades that ended up costing him more than 3 billion yen (S$38 million) when the market tanked earlier this year.
Mr Oei's lawsuit concerns bets made on the Japanese yen. This is one of the first cases of rich investors suing private bankers after losing money in this year's turbulent market, but mirrors many similar suits taken out after the 2008 and 2009 financial crisis.
In the writ of summons filed with Singapore's High Court on Friday, Mr Oei said he bet on May 15 that the yen would fall against the Brazilian real.
On May 22, United States Federal Reserve chairman Ben Bernanke raised the possibility that the central bank's money-printing programme would be scaled back, sending global stock markets into a tailspin.
Emerging market currencies like the real slumped while safe haven ones such as the yen strengthened.
Rather than falling as Mr Oei had anticipated, the yen rose against the real. By June 13, Mr Oei had made six margin calls on his trades - essentially topping up his account so his leveraged position could remain open
. On June 17, Mr Oei closed the trades, suffering a loss of 4.231 billion yen. However, he received 1.055 billion yen as premiums on the trades which was deducted against his losses. That left him in the red by 3.175 billion yen - the sum he is claiming.
Mr Oei's court document said he had relied on claims by Goldman Sachs senior director Mats Dewitte when they met in Singapore before he started trading - statements which later turned out to be false, he said.
According to Mr Oei, Mr Dewitte had said that the real was anchored to the US dollar in the same way that the Hong Kong dollar is pegged to the greenback.
Mr Oei was also supposedly told that real-yen trades were liquid and could be executed any time, and that they behaved very similarly to US dollar-yen trades. But the statements were false, Mr Oei said; the real was not anchored to the US dollar, and the real was much less liquid than the greenback. This meant that the real-yen trades were more difficult and costly to unwind compared to US dollar-yen trades.
Mr Dewitte either ought to have known that his statements were false, or he was "reckless" in making those statements, said Mr Oei. This was "done with the intention and purpose of inducing Mr Oei to trade in leveraged foreign exchange trading", the court document added.
Mr Oei also alleges that Goldman Sachs contravened part of the Securities and Futures Act. A Goldman Sachs spokesman said: "We believe the lawsuit is without merit and we intend to vigorously contest it."
In 2009, Mr Oei sued Citigroup's private banking arm for alleged negligence and misrepresentation after an estimated loss of $1 billion on foreign exchange and US Treasury bond transactions in 2008. The case was settled out of court.
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