Citigroup Inc. had undue influence over 88-year-old Ie Seng Hoan and was negligent in its investment advice to the partly deaf client, resulting in a loss of $18.1 million, his lawyer said today.
“It knew full well of Pak Ie’s health problems, his language difficulties and his lack of financial acumen and education,” Ie’s lawyer Koh Hai Keong said in his opening statement at a Singapore High Court trial.
Ie, an Indonesian textile businessman, accused Citigroup’s Singapore unit, where he was a client since 2003, of negligent misrepresentations and hiding material facts and claimed the bank had “undue influence” on his investment decisions. He was also misled by his banker into believing he made a profit when he suffered a loss after the collapse of Lehman Brothers Holdings Inc. in Sept. 2008, according to the lawsuit.
Citigroup has denied wrongdoing and sent Ie a letter in 2007 confirming that he had extensive investing experience and had an “aggressive” risk tolerance, according to the bank’s defense filed by its lawyer Hri Kumar.
The bank acted professionally in managing the accounts of Ie and his company Zhen Yin at all times, Hong Kong-based spokesman Godwin Chellam said today.
“The litigation is wholly without merit and we will defend it vigorously in court,” Chellam said, adding it would be inappropriate to comment further.
UBS, Standard Chartered
Banks including UBS AG and Standard Chartered Plc have been sued by private banking clients in Singapore, who accused the financial institutions of inducing them into buying products based on negligent advice. Singapore’s central bank will require banks from Jan. 1 to advise inexperienced investors on the suitability of products they wish to buy.
Ie’s investments with Citigroup included accumulators, where he committed to buying the British pound within a trading band for a specified period of time, and three hedge funds, according to the lawsuit.
Ie had failed to read and understand documents that he had signed with the bank, Koh said.
The case is Zhen Yin Co. v Citibank NA S550/2009 in the Singapore High Court.