It is shocking because it could happen even in famously strict Singapore.
This is why I would recommend investing money only in non-discretionary accounts where the clients are not only kept in the loop of recommended trades, but also have to approve them before they are executed. This structure fosters a high level of transparency. The only down-side is that the client must invest a little bit of his/her own time to understand and approve the transactions. And some time lost in while waiting for the client to approve. This author believes that time and effort is well worth it, as the article below demonstrates.
Business Times Article - 14 Oct 2010
Client sues SocGen over his 'missing millions' here
By GRACE LEONG
(SINGAPORE) For years, two relationship managers assured a client that his investment portfolio was doing well and that he had a balance of around $8 million in his account.
In fact, the net value of the investment account stood at only $252,652 on Aug 12 this year. The rest had been frittered away by the relationship managers at Societe Generale Bank & Trust in Singapore because of alleged unauthorised forex trades, according to a lawsuit filed at the Singapore High Court yesterday.
To cover up the losses, they fed the client with bogus statements, the lawsuit claimed.
Chan Leong Cheng, a resident of Perth, Western Australia, is now suing the French-owned private bank and the two relationship managers.
The lawsuit, filed on Mr Chan's behalf by Christopher Daniel of Advocatus Law LLP, seeks to recover nearly $8 million of the losses incurred through risky forex trades allegedly made by Jenny Liew Marn Leng, Mr Chan's relationship manager, and Lilian Ang, Ms Liew's direct supervisor.
Both Ms Liew and Ms Ang have been suspended after the losses were discovered, according to Mr Chan's lawsuit, but a Singapore-based spokeswoman for the private bank declined to comment if they are still employed with the bank.
Separately, Societe Generale SA, earlier this year, began probing 'anomalies' discovered in another client account overseen by another relationship manager in Singapore.
The bank discovered the irregularities in the account in February and immediately informed clients who may have been affected and began an internal audit, according to the bank's spokeswoman.
The bank didn't comment on the amount of client funds affected.
A spokeswoman with the Monetary Authority of Singapore, the city-state's central bank, confirmed that Societe Generale had reported the matter. But she could not immediately confirm if the bank had reported Mr Chan's complaint as well.
According to Mr Chan's suit, Ms Liew and Ms Ang, who retrieved all bank documents for him through a hold-mail arrangement, consistently removed many pages from his customer account statements including the page showing the summary of transactions carried out in his account and his net position.
Both defendants also assured Mr Chan for several years the balance in his account was about $8 million and provided bogus statements reflecting that, even though the account was almost depleted, the suit said.
The net value of Mr Chan's investment account was only $252,652 the suit said, citing an Aug 12 bank statement.
'The defendants had caused (Chan) to enter into credit facility arrangements with (Societe Generale Bank & Trust) to leverage the forex trading being carried out under his account by (Liew) and (Ang) to a disproportionately high margin, despite Chan having instructed the defendants that the assets in the account were to be managed in a moderate manner for growth and income,' the suit said.
The spokeswoman for the private bank couldn't immediately comment on the allegations.
Manjit Singh of Manjit Govind & Partners, Ms Ang's lead counsel, said: 'We have (Ang's) instructions to defend the claim vigorously and to make a counterclaim against Mr Chan.'
In May, Ms Liew confessed to Mr Chan of the massive losses in his account and suggested that he recoup his losses by buying insurance instead, the suit said.
She said she was aware that the funds were meant as reserves for Mr Chan's children and that she was 'sorry for her actions' and 'felt extremely bad.'
Ms Ang allegedly told Mr Chan that she found out about Ms Liew's conduct earlier this year but decided not to inform him, and instead made further trades on his account 'in a vain attempt to recoup the massive losses', the suit said. Not only were the defendants unable to recoup the losses, Ms Ang also decided to withhold the matter from the bank's management for fear they could lose their jobs, the suit said.
In addition, the defendants also gave Mr Chan bogus summaries of the profit and loss positions on his account for his Australian tax filing for the period from July 1, 2004 through June 30, 2009.
When Mr Chan voiced concerns about 'consequences for submitting incorrect figures to the Australian Tax Office,' the defendants requested time to compile bank statements for his tax accountants, offered to fly to Perth to explain those documents to the ATO and to bear additional professional fees incurred, the suit claimed.
Mr Chan filed suit after the private bank allegedly suggested he was negligent and offered to hold further discussions to achieve an 'amicable resolution'.
Business Times Article - 14 Oct 2010
Client sues SocGen over his 'missing millions' here
By GRACE LEONG
(SINGAPORE) For years, two relationship managers assured a client that his investment portfolio was doing well and that he had a balance of around $8 million in his account.
In fact, the net value of the investment account stood at only $252,652 on Aug 12 this year. The rest had been frittered away by the relationship managers at Societe Generale Bank & Trust in Singapore because of alleged unauthorised forex trades, according to a lawsuit filed at the Singapore High Court yesterday.
To cover up the losses, they fed the client with bogus statements, the lawsuit claimed.
Chan Leong Cheng, a resident of Perth, Western Australia, is now suing the French-owned private bank and the two relationship managers.
The lawsuit, filed on Mr Chan's behalf by Christopher Daniel of Advocatus Law LLP, seeks to recover nearly $8 million of the losses incurred through risky forex trades allegedly made by Jenny Liew Marn Leng, Mr Chan's relationship manager, and Lilian Ang, Ms Liew's direct supervisor.
Both Ms Liew and Ms Ang have been suspended after the losses were discovered, according to Mr Chan's lawsuit, but a Singapore-based spokeswoman for the private bank declined to comment if they are still employed with the bank.
Separately, Societe Generale SA, earlier this year, began probing 'anomalies' discovered in another client account overseen by another relationship manager in Singapore.
The bank discovered the irregularities in the account in February and immediately informed clients who may have been affected and began an internal audit, according to the bank's spokeswoman.
The bank didn't comment on the amount of client funds affected.
A spokeswoman with the Monetary Authority of Singapore, the city-state's central bank, confirmed that Societe Generale had reported the matter. But she could not immediately confirm if the bank had reported Mr Chan's complaint as well.
According to Mr Chan's suit, Ms Liew and Ms Ang, who retrieved all bank documents for him through a hold-mail arrangement, consistently removed many pages from his customer account statements including the page showing the summary of transactions carried out in his account and his net position.
Both defendants also assured Mr Chan for several years the balance in his account was about $8 million and provided bogus statements reflecting that, even though the account was almost depleted, the suit said.
The net value of Mr Chan's investment account was only $252,652 the suit said, citing an Aug 12 bank statement.
'The defendants had caused (Chan) to enter into credit facility arrangements with (Societe Generale Bank & Trust) to leverage the forex trading being carried out under his account by (Liew) and (Ang) to a disproportionately high margin, despite Chan having instructed the defendants that the assets in the account were to be managed in a moderate manner for growth and income,' the suit said.
The spokeswoman for the private bank couldn't immediately comment on the allegations.
Manjit Singh of Manjit Govind & Partners, Ms Ang's lead counsel, said: 'We have (Ang's) instructions to defend the claim vigorously and to make a counterclaim against Mr Chan.'
In May, Ms Liew confessed to Mr Chan of the massive losses in his account and suggested that he recoup his losses by buying insurance instead, the suit said.
She said she was aware that the funds were meant as reserves for Mr Chan's children and that she was 'sorry for her actions' and 'felt extremely bad.'
Ms Ang allegedly told Mr Chan that she found out about Ms Liew's conduct earlier this year but decided not to inform him, and instead made further trades on his account 'in a vain attempt to recoup the massive losses', the suit said. Not only were the defendants unable to recoup the losses, Ms Ang also decided to withhold the matter from the bank's management for fear they could lose their jobs, the suit said.
In addition, the defendants also gave Mr Chan bogus summaries of the profit and loss positions on his account for his Australian tax filing for the period from July 1, 2004 through June 30, 2009.
When Mr Chan voiced concerns about 'consequences for submitting incorrect figures to the Australian Tax Office,' the defendants requested time to compile bank statements for his tax accountants, offered to fly to Perth to explain those documents to the ATO and to bear additional professional fees incurred, the suit claimed.
Mr Chan filed suit after the private bank allegedly suggested he was negligent and offered to hold further discussions to achieve an 'amicable resolution'.
