Deutsche Bank AG was ordered by a Singapore court to pay $49 million to former client Chang Tse Wen in a dispute over losses on investments tied to Citigroup Inc. shares.
“All the losses that Dr. Chang suffered were caused in fact and in law by” his banker and Deutsche Bank’s breach of the duty of care, High Court Justice Philip Pillai wrote in a 71-page verdict released yesterday.
Deutsche Bank sued Chang, a Taiwanese scientist who invented the Xolair asthma drug, in 2009 for $1.8 million that he failed to pay back after incurring losses on investments tied to Citigroup shares. Chang countersued, claiming the bank was negligent in its advice and made fraudulent misrepresentations, resulting in him losing $49 million.
“Deutsche Bank will appeal the court’s decision and believes it has strong grounds to do so,” Michael West, a Hong Kong-based spokesman at the German lender, said in an e-mailed statement.
Chang’s lawyer Muralidharan Pillai had argued that the scientist “entrusted his first ever windfall of monetary wealth” to the bank, which had promised tailor-made financial advice. Chang received $118 million in 2007 after Genentech Inc. acquired Tanox Inc., the company he founded, for $919 million.
The case had “unusual facts,” including a so-called pre-service agreement where the bank represented that it would advise Chang on managing his wealth, Pillai said in the ruling.
Deutsche Bank claimed presentations it made to Chang before he opened his account were “marketing pitches” and “salesman’s puffs” that weren’t actionable, Pillai said.
Chang was also given an unsolicited margin account of as much as $35 million by the bank, without an explanation of the risks involved, the judge said.
Chang was a “sophisticated man” who ignored the advice of his banker to diversify his investments from a product that committed him to buying shares of Citigroup at a set price for a specified period, Deutsche Bank’s lawyer had argued.
The case is Deutsche Bank AG v Chang Tse Wen S731/2009 in the Singapore High Court.