Fugitive Chinese tycoon Guo Wengui sues UBS for US$500 million over deal gone awry
- He claims the bank pressured him into borrowing money tied to the purchase of shares in brokerage Haitong Securities
- Businessman says his investment was wiped out when UBS forced the sale of the stock during a market rout
Guo, who has lived in exile in New York for more than five years, sued UBS in London, saying the bank pressured him into agreeing to borrow money tied to the purchase of shares in Chinese brokerage Haitong Securities. Guo said UBS forced the sale of the stock amid a market rout and a 45 per cent plunge in Haitong’s Hong Kong-traded shares in 2015, wiping out his investment.
UBS said in a statement it “strongly disagrees with the claim and will vigorously defend itself”.
It is not the first time Guo has brought such a lawsuit, after failing to get the claim heard in New York. He said he was not initially aware that UBS had inserted margin call agreements into the contracts.
UBS advised Guo to structure the deal through an intermediary to avoid breaching thresholds that would require him to disclose his holding, he said in a legal filing. He agreed that the shares in Haitong would be first acquired by a Chinese state-backed investment fund. But after dumping the stock, the firm passed on the loss to Guo.
The fugitive tycoon has used social media to hurl allegations at Chinese government leaders from afar. He has linked up with Bannon, saying he likes the former adviser to President Donald Trump because he takes seriously Guo’s allegations that China seeks to create turmoil in the US.
Bannon was on Guo’s yacht off the coast of Connecticut when he was arrested in August and charged with conspiring to siphon hundreds of thousands of dollars from a campaign to raise funds for a wall on the US’ southern border.
UBS had internal policies not to make margin calls to “highly valued customers” such as Guo if prices tied to the loan moved in the short term, a lawyer for the businessman said in the filing. In another high-profile financing transaction, involving Chinese insurer Ping An Insurance Group, UBS had also agreed not to make margin calls, the lawyer said.