Credit Suisse Group AG lost a bid to dismiss a lawsuit by a former private wealth client who is accusing the bank’s Singapore unit of failing to explain the risks of a complex investment product.
Former stockbroker Koh Kim Teck sued the unit for $26 million, claiming it gave him too little time to raise collateral in October 2008 after he suffered losses from “knock-out discount accumulators,” derivatives that commit investors to buying securities over a certain period.
Credit Suisse called the complaint frivolous because the Singapore resident is pursuing it in his personal capacity when it was his company, Smiling Sun Ltd., that had the banking relationship, according to court papers.
Singapore High Court Assistant Registrar Paul Chan rejected Credit Suisse’s request for the case to be thrown out on that basis and ordered the Zurich-based bank to present a defense by Sept. 11 unless it appeals, according to an order filed yesterday.
Edna Lam, a Singapore-based spokeswoman at Credit Suisse, declined to comment in an e-mail. Koh’s lawyers at Shook Lin & Bok also declined to comment.
“The extraordinary profits and/or commission to be gained” made the bankers disregard their duties to provide Koh with enough information about the risks, he claimed in the lawsuit.
They advised the Malaysian citizen to consider the investment products after he received more than $20 million from selling properties in Kuala Lumpur, he said in court papers. After the investments tanked, the bank gave him four hours to put up $5.7 million in collateral and closed his account, he said.
Credit Suisse is the fourth-biggest wealth manager by assets, according to an annual ranking by Scorpio Partnership, a London-based consultancy.
The case is Koh Kim Teck v Credit Suisse AG, Singapore Branch, S942/2013. Singapore High Court.