Retiree, 92, takes banks to court after loss of US$18m
A 92-year-old retired businessman is seeking damages from two banks over a loss of more than US$18 million he allegedly suffered on investments made on his behalf between 2004 and last year.
In a writ filed in the High Court on Thursday, Clark Chang Chih-hwa - who made his fortune making straw hats and shoes in Taiwan - is seeking compensation from Shanghai Commercial Bank and The Bank of East Asia (BEA).
The writ alleges that Chang's personal investment adviser, Daniel Chan Kwok-hung, who had worked for both banks, was guilty of misconduct for a series of acts, including misrepresentation and making unauthorised transactions that led to the substantial loss.
Among other allegations, it says Chan unwisely invested in high-risk products, including equity-linked notes and foreign exchange accumulators and decumulators.
The writ states that Chang, who retired in 2000 and who is also known as Zhang Zhatzewai, had assets of US$23 million, mostly accumulated from his investments in low-risk equities and fixed-rate deposits.
In 2005, he suffered a stroke and needed surgery to remove a blood clot in his brain. He had since been in poor health.
Able to understand simple English but not 'complex and technical information', he met Chan in New York in the 1980s when the latter was an account manager with Shanghai Commercial Bank. In the 1990s, Chan began to manage Chang's personal funds, including US$15 million generated from the sale of his factory and land in Taiwan.
Chan moved to Hong Kong in about 2003 and became senior manager of the bank's wealth management department. From 2003 to 2004, Chang's funds were moved back to Hong Kong and Chan helped him to trade in equities.
The writ says Chan made numerous investment decisions without seeking Chang's approval and in April 2004 began to invest in equity-linked notes without advising Chang of the high risk.
Between 2004 and 2006, Chan built up a principal sum of US$88.13 million by trading in the notes but, according to Chang, did not tell him the entire amount was at risk.
The writ also states that after Chan joined BEA in March 2007, he started to invest on Chang's behalf in accumulators and decumulators by way of margin financing. 'Between late 2007 and early 2008, global stock markets were experiencing volatility and significant declines, and therefore it was inappropriate for Chan to be advising Chang to invest in high-risk structured instruments,' it says.
In October last year, after Chan had left the bank, Chang was told by another BEA staff member, Michelle Wong, that the total value of all his investments had dropped and he had suffered 'a significant net loss' in the accumulator and decumulator contracts. He liquidated the BEA account the same month.
