Madoff victim claims US$1.17m from StanChart over investment losses
A son of philanthropist Li Fook-hing is claiming US$1.17 million from Standard Chartered International (USA) over losses incurred in Wall Street financier Bernard Madoff's billion-dollar fraud, a court heard yesterday.
John Li Kwok-heem, cousin of former chief justice Andrew Li Kwok-nang and banker David Li Kwok-po, alleged that the bank failed to perform due diligence before it recommended him in 2005 to invest in an equity fund.
The Fairfield Sentry fund was part of the assets of an investment firm, Fairfield Greenwich Group, used by Madoff to defraud investors of US$1.7 billion.
The value of Li's portfolio shrank from US$1.47 million to just US$1,601 in the month authorities in the United States froze Madoff's assets and the New York federal court appointed a receiver to oversee the assets of Fairfield Greenwich.
Johnny Mok SC, for Li, told the Court of First Instance that the bank conducted insufficient due diligence to ascertain whether the fund was authentic. The bank had relied on an audit report about the fund prepared by accounting firm PricewaterhouseCoopers, Mok said.
Court documents stated that Li opened an account with the bank in November 2000. The following month, the bank advised him to invest in a market-neutral US equity fund. He accepted the recommendation despite being unfamiliar with it.
In August 2005, a private banking officer, Amy Chau, recommended that Li invest in a fund operated by Fairfield Sentry, and he bought about US$1.17 million worth of shares.
In December 2008, the bank notified him that the value of his portfolio had dropped to US$1,601.
The hearing continues before Mr Justice Louis Chan Kong-yiu.