Couple lose $20m suit against UBS for 'unauthorised trades'

This is their second loss in 2 months - $21m suit against another bank was rejected earlier

An Indonesian couple have failed in their $20 million High Court claim against a bank for alleged unauthorised transactions, their second loss in two months after an earlier $21 million suit against another bank was dismissed.

Mr Lucas,who goes by only one name, and his wife, Madam Lenny Halim Liem, were the beneficial owners of Asia-American Investments Group, which had sued UBS AG (Singapore Branch) and adviser Amy Tee.

The firm claimed the bank had purchased accumulators in various shares, including Bank of China, Singapore Petroleum Corporation and Keppel Corp, for their account over eight months from March 2007 without their prior approval.

The accumulator, or discounted share purchase programme, is a financial product that lets investors buy shares at a market discount.

If the price rises by more than a certain percentage, the contract ends and the investor takes a profit. But if the market price falls below the discount price, the investor would be required to continue buying at the same price, which would now be at a premium above the market price.

The company, through lawyer Peter Gabriel and two others, argued that the bank had breached a warranty in their contract by not getting prior approval for the transactions from the authorised representatives, Mr Lucas and Madam Lenny.

But the bank, defended by a team of lawyers led by Senior Counsel Cavinder Bull, countered, among other things, that it had a mandate to act on the investor's oral instructions, regardless of any subsequent written confirmation.

Client adviser Amy Tee had testified that due to the time sensitivity of the market, written instructions were not expected when executing such trades.

High Court Justice Quentin Loh found the couple had failed to make out their case that when they opened the account in May 2006, Ms Tee had told them she would act only on their prior written approval.

"On the contrary, the evidence shows otherwise," added Justice Loh in judgment grounds issued last week, finding the accumulator deals to be authorised.

The judge found Madam Lenny's evidence to be unreliable and self-serving.

Mr Lucas was even more unreliable in his evidence, said Justice Loh, noting he was an experienced trial lawyer.

The couple were also authorised signatories of First Asia Capital Investments, which in April had failed in a $21 million suit against Societe Generale Bank & Trust.

Both were among the last lawsuits from the 2008 financial crisis fallout involving losses from share accumulator deals.

A version of this article appeared in the print edition of The Straits Times on June 20, 2017, with the headline 'Couple lose $20m suit against UBS for 'unauthorised trades''. Print Edition | Subscribe