UBS sued in HK over investor’s $26 million loss
HONG KONG — Swiss banking giant UBS AG is being sued in Hong Kong for allegedly duping a 77-year-old woman into buying highly risky derivative investments that cost her nearly $26 million in losses.
Chan Wai-yee, who was born in mainland China, filed a lawsuit Tuesday saying UBS bankers never spelled out the risk and potential losses of investing in leveraged derivative products, known as accumulators, that bet on Hong Kong stocks.
Chan, who doesn’t speak English and never finished primary school, also says the bank led her to sign several documents in English including one that made her a “professional investor” under local securities regulations.
The bank never provided her with all the documents in Chinese, the suit says. She was also granted credit facilities up to $15.4 million on her UBS account even though she had not requested it.
Chan alleges breach of professional duty and seeks unspecified damages from UBS.
Being classified as a professional investor would have exposed Chan to riskier investments, said David Webb, a well-known corporate governance activist in Hong Kong.
“Basically, the idea is that they don’t have to advise her on her investment. She’s on her own,” he said.
UBS spokeswoman Angel Yeung in Hong Kong declined to comment.
According to court documents, UBS entered Chan into 25 transactions involving accumulators between September 2007 and February 2008.
By October 2008, as the financial crisis sent global markets into a free fall, she had suffered losses of more than $200 million Hong Kong dollars ($25.8 million).
UBS told her to sell some of her stocks to settle the debt — and then charged her an unwinding fee of HK$47.3 million ($6.1 million).
Chan later agreed to pay HK$10 million ($1.29 million) in June following negotiations between the two parties, with Chan reserving the right to claim against UBS.
Chan started with HK$260 million ($33.5 million) in her account. She has declined to specify how she amassed her fortune.
(This version CORRECTS Chan paid HK$10m not bank.)