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Thursday, Apr 09, 2015
Selina Lum
The Straits Times
GLOBAL Yellow Pages chief executive Stanley Tan, who suffered investment losses of $25.4 million over two days during the 2008 financial crisis, has taken Swiss banking giant UBS to court.
He is seeking more than $130 million in damages, including the losses he suffered and the loss of opportunity to profit from the shares he had in his UBS account.
Mr Tan had used the account to invest in accumulators - complex derivatives which have been dubbed "I kill you later" after many suffered losses from them during the global financial crisis.
Mr Tan, represented by Mr Ng Lip Chih, alleged that UBS had not obtained his instructions or given him notice before unwinding his accumulators.
But UBS, represented by Senior Counsel Hri Kumar Nair, contended that Mr Tan had instructed the bank to unwind his accumulators.
And even if he had not agreed to it, the bank was entitled to do so under the account agreement without notice and consent.
A four-week hearing into Mr Tan's suit started yesterday in the High Court.
Mr Tan had set up an account with UBS in 2006 and authorised one Mr Yeo Cheng Boon to help him in his investments.
Between October 2007 and August 2008, he bought accumulators - with underlying shares in, among others, City Developments, DBS Group Holdings and Singapore Press Holdings - on a margin trading basis.
Accumulators are structured products in which investors buy shares or currency at regular intervals at a price below the prevailing market value for a predetermined period of time, usually a year.
They make a profit if the market price rises within a certain range, but if it falls steeply, losses can be huge.
UBS asserted that Mr Tan had been trying to cover the shortfall in his account as the markets spiralled downwards in 2008.
By Oct 22, 2008, the shortfall stood at $41 million and UBS was compelled to send him a margin call letter to either deposit collateral or close out the investments.
Over the next two days, UBS unwound the accumulators and continued to sell the shares in Mr Tan's account until Nov 11 when he asked it to stop and asked for time to repay his liabilities.
Mr Tan fully repaid the $25.4 million around April 2011.
Mr Tan contends that UBS unwound the accumulators without prior notice or authorisation.
But UBS says that Mr Yeo had instructed Mr Tan's relationship manager Amy Tee on Oct 22 to liquidate his portfolio as he wanted to crystallise his liabilities and work on repayment, rather than face continuous margin calls to top up the account.
It made sense for Mr Tan to unwind the accumulators as it was the required margin on them that caused the major shortfall in his account, contends UBS.
Mr Tan disputes this, arguing that he had every intention to salvage his account and it was inconceivable that he would agree to liquidate his entire portfolio.
He argues that he would have been able to top up the account to cover the shortfall and would have held on to the shares he had accumulated.
[email protected]
THE FIGURES
$25.4m
The losses suffered by Mr Stanley Tan
$130m
The amount in damages Mr Tan is suing UBS for
$41m
The shortfall in Mr Tan's account on Oct 22, 2008, prompting UBS to unwind the accumulators
http://business.asiaone.com/print/n...-pages-chief-sues-ubs-over-254-million-losses
Selina Lum
The Straits Times
GLOBAL Yellow Pages chief executive Stanley Tan, who suffered investment losses of $25.4 million over two days during the 2008 financial crisis, has taken Swiss banking giant UBS to court.
He is seeking more than $130 million in damages, including the losses he suffered and the loss of opportunity to profit from the shares he had in his UBS account.
Mr Tan had used the account to invest in accumulators - complex derivatives which have been dubbed "I kill you later" after many suffered losses from them during the global financial crisis.
Mr Tan, represented by Mr Ng Lip Chih, alleged that UBS had not obtained his instructions or given him notice before unwinding his accumulators.
But UBS, represented by Senior Counsel Hri Kumar Nair, contended that Mr Tan had instructed the bank to unwind his accumulators.
And even if he had not agreed to it, the bank was entitled to do so under the account agreement without notice and consent.
A four-week hearing into Mr Tan's suit started yesterday in the High Court.
Mr Tan had set up an account with UBS in 2006 and authorised one Mr Yeo Cheng Boon to help him in his investments.
Between October 2007 and August 2008, he bought accumulators - with underlying shares in, among others, City Developments, DBS Group Holdings and Singapore Press Holdings - on a margin trading basis.
Accumulators are structured products in which investors buy shares or currency at regular intervals at a price below the prevailing market value for a predetermined period of time, usually a year.
They make a profit if the market price rises within a certain range, but if it falls steeply, losses can be huge.
UBS asserted that Mr Tan had been trying to cover the shortfall in his account as the markets spiralled downwards in 2008.
By Oct 22, 2008, the shortfall stood at $41 million and UBS was compelled to send him a margin call letter to either deposit collateral or close out the investments.
Over the next two days, UBS unwound the accumulators and continued to sell the shares in Mr Tan's account until Nov 11 when he asked it to stop and asked for time to repay his liabilities.
Mr Tan fully repaid the $25.4 million around April 2011.
Mr Tan contends that UBS unwound the accumulators without prior notice or authorisation.
But UBS says that Mr Yeo had instructed Mr Tan's relationship manager Amy Tee on Oct 22 to liquidate his portfolio as he wanted to crystallise his liabilities and work on repayment, rather than face continuous margin calls to top up the account.
It made sense for Mr Tan to unwind the accumulators as it was the required margin on them that caused the major shortfall in his account, contends UBS.
Mr Tan disputes this, arguing that he had every intention to salvage his account and it was inconceivable that he would agree to liquidate his entire portfolio.
He argues that he would have been able to top up the account to cover the shortfall and would have held on to the shares he had accumulated.
[email protected]
THE FIGURES
$25.4m
The losses suffered by Mr Stanley Tan
$130m
The amount in damages Mr Tan is suing UBS for
$41m
The shortfall in Mr Tan's account on Oct 22, 2008, prompting UBS to unwind the accumulators
http://business.asiaone.com/print/n...-pages-chief-sues-ubs-over-254-million-losses
