A foreign bank with a branch in Singapore has been accused of mishandling a client's shares after it allegedly failed to follow instructions.
Telemedia Pacific Group is seeking to recover 225 million shares in Singapore-listed firm Next Generation Satellite Communications (NexGen) from Credit Agricole Suisse.
Telemedia, controlled by businessman Hady Hartanto, claims that the bank wrongfully transferred its shares to a third party.
In High Court documents, obtained by The Straits Times, Telemedia states that the shares were kept in an account it opened with the bank in November 2010.
The stock was meant to be used as security to help obtain financing for Mr Hartanto's joint investments with his then-business associate Jack Yeh.
Following an apparent falling out between the two men, the bank received an instruction from Mr Yeh about the transfer of shares in September 2011.
Mr Yeh told the bank to transfer 225 million NexGen shares from the Telemedia account to a separate account he controlled.
The bank effected the transfer in October 2011 after informing Telemedia of Mr Yeh's request.
The nub of the dispute is over who had authority over the Telemedia account with Credit Agricole Suisse.
Telemedia claims that the bank breached its duties in carrying out the transaction as Mr Hartanto is Telemedia's sole director and shareholder.
It also claims that, under the mandate given to the bank, Mr Hartanto was the only authorised signatory of the Telemedia account and it did not agree to appoint any other individual as a co-authorised signatory.
Telemedia adds that when Mr Hartanto was informed of Mr Yeh's instruction in September 2011, he immediately told the bank that Mr Yeh was not authorised to effect the share transfer.
Despite that, Telemedia says, the bank proceeded with the transfer, causing it to lose the NexGen shares and their value.
NexGen's share price has dropped from about one cent in October 2011 to yesterday's closing price of 0.2 cent.
Credit Agricole Suisse has denied the claims.
The bank says in its defence documents that the application forms signed by Mr Hartanto to open the Telemedia account expressly state that both he and Mr Yeh are authorised signatories. This means that either could operate the Telemedia account individually.
The bank also points out that neither Mr Hartanto nor Telemedia took any steps to revoke Mr Yeh's authority as an authorised signatory when informed of Mr Yeh's instruction on the transfer of shares.
Credit Agricole Suisse has served a third-party notice against Mr Yeh, stating it will make claims against him for misrepresentation or negligence if it is found liable for damages sought by Telemedia.
The hearing concluded earlier this month and judgment is pending.
Telemedia is represented by Straits Law Practice, while Credit Agricole Suisse is represented by Drew & Napier.
This article was first published on June 24, 2014.
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