SINGAPORE (Reuters) - Goldman Sachs has been sued by a Singapore businessman for allegedly giving misleading advice that cost him 3.18 billion yen ($32.22 million) in losses on currency options, according to court documents seen by Reuters.
Oei Hong Leong, ranked 32nd on Singapore’s rich list by Forbes with a net worth of $745 million, wants Goldman to compensate him for the losses as well as pay him interest and costs. Oei also wants the court to award him damages.
Goldman has rejected Oei’s claim, with a spokeswoman in Hong Kong saying, “We believe the lawsuit is without merit and we intend to vigorously contest it.”
Oei said in a statement of claim that he had on May 15 made two bets that the Brazilian currency will appreciate against the yen on the advice of a Hong Kong-based Goldman banker.
Oei, who had been betting that the U.S. dollar will rise against the Japanese currency, claimed that the Goldman banker, Mats Dewitte, had told him the real was anchored to the dollar and that by switching from the greenback, he would also benefit from higher interest rates earned on the Brazilian unit.
“Many clients are turning to EMFX/Yen plays instead of USDJPY to earn greater carry/yield ... BRL vs USD volatility is low because the central bank is anchoring BRL to USD,” Oei quoted Dewitte as saying in an email that the businessman reproduced in a claim dated September 20.
EMFX refers to emerging markets foreign exchange, while BRL and USD are the codes for the Brazilian and U.S. currencies.
But since Federal Reserve Chairman Ben Bernanke raised the prospect of ratcheting down the Fed’s economic stimulus in late May, the Brazilian real has been one of the biggest losers among emerging market currencies.
Dewitte and the law firm representing Oei declined to comment.
Oei had in 2009 sued Citigroup’s private banking arm for alleged negligence and misrepresentation after he made an estimated loss of S$1 billion ($798 million) on foreign exchange and U.S. Treasury bond transactions in 2008. That case was subsequently settled out of court.
Writing by Kevin Lim; Editing by Ryan Woo