Business

Friday September 4, 2009

Scientist sues Deutsche Bank


SINGAPORE: Well-known Taiwanese scientist Dr Chang Tse Wen, who made his fortune developing an asthma drug, is suing Deutsche Bank in the High Court here after losing US$48mil by investing in so-called “accumulators”.

The benefits of the product were highlighted, said Chang, but the impact of the market price falling below the strike price was not. If the market price plunges, the loss is magnified.

Many Asian investors have lost money on these notorious structured products, wryly nicknamed “I kill you later.”

Chang, 62, is counter-claiming after the bank sued him for an outstanding sum from the failed investment. He claims the bank breached its legal duties and made misrepresentations to him.

Chang said he was a conservative investor with little time to manage his investments as he was busy with research. But the bank said it would offer him financial products tailored to his risk profile.

In March 2007, Johnny Wan, assistant vice-president of Deutsche Bank’s Hong Kong private wealth management unit, went to Taiwan to meet Chang.

Chang and his ex-wife Nancy co-founded Tanox in Houston and he started work on an antibody which eventually became the Xolair asthma drug. Tanox was bought by biotech giant Genentech in 2007. Chang stood to receive about US$118mil.

After selling his stake, Chang made some large donations and also opened an account with Deutsche Bank in Singapore in August 2007. — Singapore Straits Times

He claims Wan repeatedly recommended the discounted share purchase programme, or accumulator, to him. This product lets investors buy shares at a market discount. If the price rises by more than a set percentage, the contract ends and the investor takes a profit.

The benefits of the product were highlighted, says Chang but the impact of the market price falling below the strike price was not highlighted. In that situation, the investor has to buy the shares at the higher strike price. If the market price plunges, the loss is magnified.

Said Chang: “As I had neither the time nor the expertise to manage my wealth, I relied heavily on the bank’s … advice for my investment decisions.”

“Chang’s investment decisions were entirely his own,” Deutsche Bank has said. On Wednesday, it added: “The bank is pursuing a claim against the defendant for monies owed which are still unpaid to date. Allegations made by the defendant against the bank are unfounded and will be vigorously defended by the bank.” — Singapore Straits Times


For another perspective from The Straits Times, a partner of Asia News Network, click here.

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