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Securities & futures Litigation & dispute resolution
Tycoon lodges case against Goldman Sachs
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Source Straits TimesDate 08 Mar 2016Author Lee Su Shyan
US commission orders banking firm to make settlement or respond to Oei
Hong Leong over 'exotic' currency trade losses
Tycoon Oei Hong Leong is pursuing his case against banking giant Goldman Sachsover "exotic" currency trades that resulted in losses of US$34 million (S$47 million).
The latest move, to lodge a complaint with the United States Commodity Trading
Futures Commission, has resulted in the commission issuing a letter on Jan 29, asking
Goldman Sachs to respond to Mr Oei's complaint. The bank can either make a
monetary settlement or respond to the complaint.
The deadline given by the commission was Feb 29. It is understood that Goldman
Sachs asked for an extension of time.
The saga dates back to 2013, when Mr Oei entered into leveraged trades with the US
bank involving the Brazilian real and the yen.
Mr Oei said that although he is a sophisticated investor, he was not familiar with the
Brazilian currency. However, he was told that the real was stable as it is anchored to
the US dollar like the Hong Kong dollar.
Goldman Sachs also allegedly said that realyen trades were liquid and could be
executed and unwound at any time, and that they behaved very like US dollaryen
trades.
Rather than falling as Mr Oei had expected, the yen strengthened against the real after
thenUS Federal Reserve chairman Ben Bernanke raised the possibility on May 22,
2013, that the central bank's moneyprinting programme would be scaled back. The
news led to a flight of capital out of emerging markets.
On June 17, Mr Oei closed the trades, suffering a loss of 4.231 billion yen. After
deducting the 1.055 billion yen received as premiums on the trades, he was left in in
the red to the tune of 3.175 billion yen. This is the equivalent of the US$34 million that
he was claiming.
Mr Oei said he would not have entered into these trades if the risks had been
highlighted correctly. He had filed suits both in Singapore's High Court and New
York's Supreme Court against the bank's parent, Goldman Sachs Group. These suits
are no longer active.
However, the US Commodity Trading Futures Commission, whose role is to foster open
and transparent markets and protect market users and their funds from fraud and
other abusive practices, has now taken up this case.
If Goldman Sachs wishes to respond, a decision will be made as to whether the case
goes to adjudication. Mr Edward Naylor, a Hong Kongbased spokesman for Goldman
Sachs, declined to comment.
Source: Straits Times © Singapore Press Holdings Ltd. Permission required for
reproduction.