Merrill Lynch sued over jailed manager
Two Taiwanese women are suing Merrill Lynch (Asia Pacific) Limited for unspecified damages, alleging the firm failed to prevent a now-jailed employee from defrauding them.
Huang Shu-hui and Chen Hsi-chen allege in a claim filed at the Court of First Instance that the company failed to uncover or disclose misconduct by private-wealth manager Hsu Ming-mei; failed to prevent her defrauding them; and failed to take action to recover their losses.
Bank of America Merrill Lynch declined to comment.
Hsu, a Taiwanese-American, was convicted of theft and access to a computer with dishonest intent and jailed for three and a half years in February 2011. The charges involved the accounts of various clients living in Taiwan, including Huang and Chen.
Last August, the Securities and Futures Commission fined Merrill Lynch (Asia Pacific) HK$3.5 million and reprimanded it for failing to properly handle 11 clients' complaints.
Huang and Chen claim unauthorised transactions were made, including the sale and purchase of securities, bonds and investment products, and the transfer of funds. They are demanding damages for alleged breach of trust, fiduciary duty and contract, and for alleged negligence. They are also seeking damages for what they say were misrepresentations Hsu made about their accounts' contents.
According to the SFC last August, the 11 clients complained that Hsu had made transactions, conducted loan draw-downs and transferred funds without their permission.
As of August last year, the SFC said the firm had agreed to have an independent law firm or auditor review all the client accounts Hsu had handled.
Since August, the firm is believed to have paid compensation to nine of the 11 clients who had lodged complaints. It was unclear whether it had paid any further compensation.
Swiss banking group Julius Baer said last August it had agreed, subject to approvals, to buy Merrill Lynch's international wealth management business based outside the US and Japan from Bank of America.