Citigroup Sues Hedge-Fund Manager Rajaraman in Singapore Over Gold Losses

Citigroup Inc. (C)’s Singapore unit sued Hong Kong-based hedge fund manager Raghavendran Rajaraman, seeking to recoup $1.03 million in trading losses the bank says he incurred after gold fell from a record high in September.

Rajaraman had $19.2 million worth of gold in his account on Sept. 23 which the bank sold, along with other collateral, on Sept. 26 “in the face of a rapidly deteriorating market,” leaving a $1 million shortfall, according to a Nov. 18 lawsuit filed with the Singapore High Court. The first closed hearing is scheduled for Jan. 27.

Gold plunged 11 percent in September, the most since October 2008, after futures reached a record $1,923.70 an ounce on Sept. 6. The bank liquidated Rajaraman’s account after it reached a so-called forced sell level and got his authorization, according to court papers. Gold for February delivery in New York was at $1601.30 an ounce at 9:55 a.m. Singapore time.

Rajaraman works with hedge fund 3 Degrees Asset Management and was a currency options trader with Citigroup in Singapore until 2007, according to the lawsuit.

He hasn’t filed his defense and didn’t return three calls to his mobile-phone. Richard Healy, Rajaraman’s lawyer at Oldham, Li & Nie, declined to comment.

“We intend to pursue the case and it’s inappropriate for us to comment further,” said Citigroup’s Singapore-based spokesman Adam Abdur Rahman.

3 Degrees Plan

Rajaraman isn’t a 3 Degrees employee, Moe Ibrahim, founder of the hedge fund, said in a phone interview. “There was a plan to launch a fund together but it never came to fruition,” Ibrahim said.

Citigroup breached its agreement by closing his account without prior notice, according to an Oct. 7 letter from Oldham, Li & Nie to the bank’s lawyers including William Ong at Allen & Gledhill LLP.

“As a direct consequence of the bank’s breach,” Rajaraman suffered a $1.7 million loss, representing his collateral, according to the letter. He incurred a further $1.03 million loss as the bank prematurely liquidated the account instead of waiting for 24 hours after the account reached the force-sell level, Rajaraman’s lawyers said in the letter.

The case is Citibank Singapore Ltd. v Raghavendran Rajaraman S826/2011 in the Singapore High Court.

To contact the reporter on this story: Andrea Tan in Singapore at

To contact the editor responsible for this story: Douglas Wong at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.