Investor sues DBS over option advice

Ms Suryawan alleges DBS misled her into buying options meant to protect against volatile forex markets.
Ms Suryawan alleges DBS misled her into buying options meant to protect against volatile forex markets.PHOTO: REUTERS

She claims bank misled her into buying 'useless' options to protect margin positions

SINGAPORE - A Singapore businesswoman, who lost US$6 million (S$8.4 million) in forex trades, has sued DBS Bank, seeking to restore her accounts to their levels before the bank closed out her trading positions.

Ms Florence Suryawan, 53, alleges that the bank had misled her into buying options meant to protect her against volatile forex markets.

These options, which work like insurance, turned out to be "useless" for hedging her investments.

In September 2011, the falling Australian dollar caused Ms Suryawan, who was acquiring the currency through structured products known as accumulators, to suffer massive losses.

After DBS closed out her positions, the total balance of her accounts with the bank fell from US$6.2 million to about US$410,000.

But the bank says it was not responsible, contending that Ms Suryawan was a sophisticated and experienced investor who relied on her own judgment in deciding to buy the options.

A hearing into the lawsuit started in the High Court yesterday.

Ms Suryawan has diverse business experience, from manufacturing to digital media.

A private banking customer of DBS, she accepted its offer of a margin trading facility with a limit of US$50 million in August 2008. By the end of that year, forex trading became her full-time pursuit.

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. If the price rose within a certain range, she would make a profit, but a price drop could lead to huge losses.

Between August and September 2011, as the market was volatile, she bought nine options from DBS. She said the bank's employees described them as insurance to protect her margin positions.

On Sept 22, when an employee called her about her falling margin level, she reminded him of the options and was "astonished" when he replied that the ones she bought did not protect her.

Ms Suryawan said she was dazed that the bank unwound and closed her positions after the phone call.

Her lawyer, Mr Nicholas Narayanan, argued that DBS was negligent in advising her about the options, and made false representations about the protection offered.

He also argued that DBS was not entitled to close out her positions as she did not make a valid margin call on Sept 22.

But Senior Counsel Ang Cheng Hock, for DBS, contends that she understood how the options worked and that the bank was not obliged to give investment advice.

A version of this article appeared in the print edition of The Straits Times on November 04, 2015, with the headline 'Investor sues DBS over option advice'. Print Edition | Subscribe