The Standard:Bank wiped out my $260m

29 July 2009

An elderly woman who claims to have lost nearly HK$260 million on high-risk financial products is taking a Swiss- based investment bank to court.

Chan Wai-yee, 77, says UBS advisers talked her into buying an equity accumulator package just months before last year's market crunch.

The High Court writ filed by Chan comes less than a week after 16 Hong Kong banks agreed to buy back Lehman Brothers minibonds at 60-70 percent of their original value.

She claims she did not understand the documents she signed because they were in English, and no one from UBS informed her of the risks and nature of the investments.

The writ states that Chan was a client of Hang Seng Bank for four decades, and she opened a Prestige account there in January 2003. She was advised on investments by managers Wong Mei- lun and Shirley Cheng.

Chan says her nest egg was accumulated through hard work, and she had limited experience in stock investments. As she did not understand English, she relied on advice from Wong and Cheng.

She was only interested in low-risk investments because she wanted to preserve her capital, Chan says.

So she never went into any risky investments while her money was with Hang Seng Bank.

Then, during the market boom in mid-2007, Wong and Cheng left Hang Seng Bank to work for UBS.

Chan claims that Wong then approached her and invited her to move her assets to UBS.

She signed various documents from time to time to open an account at UBS, but never indicated to Wong, Cheng or any staff member at UBS that she was interested in changing her investment strategy.

In June 2007, Chan signed different documents, all in English, that included a client acknowledgement form, an "acceptance to be treated as a professional investor" and a "request for subscription of equity-linked notes and blocs."

Chan then transferred shares and cash from her Hang Seng account to UBS, totaling HK$260 million.

In September 2007, Chan says, Wong telephoned and persuaded her to buy a financial product known as an UBS OTC Equity Accumulator.

She claims to have been "induced" into 25 equity accumulator transactions between September 2007 and February 2008.

Last October, a total of nine equity accumulators had not been knocked out, meaning that the stock-price ceiling set in the contract with the bank had not been breached.

After taking losses of more than HK$200 million, she told UBS she wanted to terminate all investments.

As of July 23 this year, her UBS account balance was only HK$1.6 million.

Besides recovering the money, she is seeking interest, damages and costs.