4 November, AtoZForex.com, Lagos — In recent times, many mega banks have dealt with numerous lawsuits regarding their FX market activities, mostly in connection with the global probe into the manipulation of the $5 trillion market.
A client has sued The Development Bank of Singapore over a different kind of affair. The bank faces a suit from a Singapore businesswoman, Ms. Florence Suryawan. Ms Florence lost about US$6 million (S$8.4 million) in FX trades, which she has attributed to bad advice from her bank. She is now seeking for a replenishment of her accounts to the levels it was before her trading positions were closed out, following allegations that the bank had misled her into buying options which were supposed to be meant to protect her against volatility in the Forex markets.
Unfortunately, she learnt that these options, which were supposed to work like insurance, turned out to be "useless" for hedging her investments.
The story
In September 2011, the plunge in value of the Australian dollar resulted in huge losses for Ms. Suryawan, who was accumulating the currency through the structured products known as accumulators, sold to her by DBS bank. Her account balance dropped from US$6.2 million to about US$410,000, after the closure of her open positions.
The bank has denied responsibility for her losses, contending that Ms. Suryawan was a sophisticated and experienced investor who relied on her own judgment in deciding to buy the options.
Ms. Suryaman was sold the product in August 2008, being a private banking customer of DBS. This offered her margin trading facility with a limit of US$50 million. She must have been fascinated by her new discovery of the market’s promises, as Forex trading became her full-time pursuit by the end of the year.
Later in 2010, she started investing in accumulators, "buying" the Australian dollar at regular intervals below the prevailing market price for a fixed period of time. According to her, she believed these were meant to serve as insurance to protect her margin positions, based on how the bank's employees described them.
The reality only hit her when an employee called her about her falling margin level in September 22.
Ongoing DBS lawsuit
Her lawyer, Mr Nicholas Narayanan, argues that “DBS was negligent in advising her about the options, and made false representations about the protection offered.”
While senior counsel Ang Cheng Hock, for DBS, argues that she understood how the options worked and that the bank was not obliged to give investment advice.
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