April 13 (Bloomberg) -- Citigroup Inc.’s Singapore unit was countersued by Raghavendran Rajaraman, who claimed the bank breached an agreement by prematurely selling his gold assets held as collateral and closing his trading account.
Citigroup induced and instigated Rajaraman to apply for the maximum $50 million credit facility and then violated an agreement by not giving him ample time to “regularize” his account when gold prices fell in September, he claimed in papers filed at Singapore’s High Court. A closed hearing is scheduled for today.
Rajaraman is seeking damages including bullion valued at $1.75 million he used as collateral and that the bank sold when it liquidated his account. He’s also seeking unspecified lost profits, according to the filing.
Citigroup had sued Rajaraman, a former currency options trader with the bank until 2007, in a bid to recoup trading losses the bank says he incurred after gold fell from a record high in September. Rajaraman had gold valued at $19.2 million, in addition to the bullion used as collateral, leaving a $1.03 million shortfall, according to Citigroup’s complaint.
The loss suffered was “entirely caused” by Citigroup improperly closing out his trading positions, Rajaraman said in court papers. He denied giving the bank instructions or consenting to close his positions or sell the gold, according to the countersuit.
Adam Abdur Rahman, a Singapore-based Citigroup spokesman, declined to comment. Rajaraman’s lawyer Kelvin Chia didn’t respond to an e-mail or return a call seeking comment.
Rajaraman denied the bank’s claim that he was a hedge fund manager at 3 Degrees Asset Management. He didn’t provide his current employment details, in the court filing.
Citigroup, in response to the countersuit, said Rajaraman applied to increase his credit line out of his “own volition and on his own judgment.” Rajaraman’s credit facility was raised to $20 million instead of the $50 million sought, according to the court papers.
A disclosure form signed by Rajaraman didn’t constitute an agreement or have any contractual rights, the bank said, denying that it had breached any agreement with him.
Rajaraman had also consented to the bank selling his gold assets, according to Citigroup’s filing.
Gold plunged 11 percent in September, the most since October 2008, after futures reached a record $1,923.70 an ounce on Sept. 6. Spot gold was at $1675.18 an ounce at 6:30 a.m. Singapore time.
The case is Citibank Singapore Ltd. v Raghavendran Rajaraman S826/2011 in the Singapore High Court.
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