Jul 12 2010 |
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Bank Sarasin-Alpen to appeal ruling
Monday, Jul 12, 2010Dubai: Bank Sarasin-Alpen Monday said it will appeal a recent ruling by the DIFC Courts upholding Kuwaiti businessman Rafed Al Khorafi and his family's claim against it for regulatory breaches.
Al Khorafi and family initiated legal action against Bank Sarasin-Alpen Middle East (BSAME) in the DIFC Courts in late 2009 for losses resulting from investments undertaken with Bank Sarasin & Co Limited, on the advice of BSAME.
The case claimed that the family lost about $75 million after Bank Sarasin-Alpen (ME) Limited and its parent recommended they invest in complex financial products instead of capital-protected instruments as they requested, according to a claim filed December 9, 2009 in the DIFC Courts.
In a recent ruling the DIFC Courts upheld the Al Khorafi family's right to pursue a claim against Bank Sarasin-Alpen (ME) Limited for regulatory breaches.
Reacting to the court ruling, BSAME said in a statement to Gulf News yesterday: "On balance we are content with the judgment made, because the court recognised the majority of issues which were raised with regard to the pleadings. However, we have decided to appeal the decisions made on the regulatory and contract claim".
The claimants allege that BSAME breached section 41 of the DIFC Law by recommending that they invested in products which were not authorised for distribution in or from the DIFC or Dubai. They also allege that BSAME failed to advise adequately as to the risks associated with such products and failed to assess whether such products were suitable for the claimants.
Risky investments
Al Khorafi and family said that they were advised to undertake risky investments which were diametrically opposed to their investment requirements.
While they intended to invest in capital-protected products that would provide income to meet interest payments on the loans and generate a surplus, the bank recommended products that didn't guarantee the capital, according to the claim.
The claimants also allege that, in advising them, two employees of BSAME were both motivated primarily by the financial benefit to BSAME, Bank Sarasin & Co Limited and themselves.
Breaches
This was achieved through the claimants undertaking investments which earned BSAME, Bank Sarasin & Co Limited and themselves fees, commissions, interest and charges and accordingly breached their duty not to place their interests ahead of the claimants.
"This ruling enables us to seek justice and hold BSAME accountable for what we believe to be serious regulatory breaches. We can now move forward and progress our claims against BSAME and its parent company Bank Sarasin & Co Limited.
"We want to hold these parties accountable for actions that have resulted in a significant monetary loss for myself and my family," Al Khorafi said in a statement.
Although the judge ruled that the claimants' alternative and subsidiary claims based on alleged misrepresentations and negligence should not proceed, Al Khorafi and family said that they are confident that these will be reinstated following the decision of the court to allow an appeal.
By Babu Das Augustine Deputy Business Editor
© Gulf News 2010. All rights reserved.
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