TYCOON Oei Hong Leong has failed to overturn a ruling that suspended a suit he filed here against Goldman Sachs to recover 3.175 billion yen (S$38 million) in investment losses.
The High Court here has ruled that the dispute should be resolved through arbitration.
Mr Siraj Omar of Premier Law told The Straits Times yesterday that Mr Oei has not appealed against the decision, or decided if he will proceed with arbitration.
Mr Oei claims a Goldman Sachs unit misled him into making leveraged currency trades involving the yen and the Brazilian real.
He contends that Singapore courts have the proper jurisdiction to decide his claims as the alleged fraudulent misrepresentations occurred here.
In September last year, he sued the bank, claiming its alleged misrepresentations cost him $38 million when global markets tanked during the year.
Goldman Sachs said the suit was without merit and proceedings should be halted in favour of arbitration.
The High Court Assistant Registrar, in a decision given in January, held that the alleged misrepresentations were made in the course of Mr Oei's private banking relationship with Goldman Sachs.
Thus, the claims should be addressed through arbitration clauses in their private wealth management client agreement.
Mr Oei appealed the decision, arguing that derivative transactions, including currency options, are governed by an International Swap Dealers Association (ISDA) Master Agreement he has with the bank. It is specifically tailored to reflect the relationship of the parties in respect of derivative transactions, he said.
High Court Justice Lee Seiu Kin, in a decision released yesterday, ruled: "If, for example, the dispute was about a default in meeting a margin call, the ISDA Master Agreement would apply.
"However, the present dispute is not about either party's performance under the ISDA Master Agreement. The (Goldman Sachs private wealth management client agreement)... has a closer connection to the present dispute because it governs the parties' bank-customer relationship."
He found that "the bank-customer relationship (between Goldman Sachs and Mr Oei) forms the substance of the present dispute". Thus, the matter should be addressed in arbitration, he ruled.
The suit alleges the bank made false representations to induce Mr Oei to enter into leveraged trades, including statements that the real is a stable currency as it is anchored to the United States dollar just as the Hong Kong dollar is pegged to the greenback.
The bank also allegedly claimed that real-yen trades were liquid and could be executed and unwound at any time, and that they behaved very like US dollar-yen trades.
Rather than falling as Mr Oei had expected, the yen strengthened against the real after US Federal Reserve chairman Ben Bernanke raised the possibility on May 22 last year that the central bank's money-printing programme would be scaled back. The news led to a flight of capital out of emerging markets.
On June 17, Mr Oei closed the trades, suffering a loss of 4.231 billion yen.
However, he received 1.055 billion yen as premiums on the trades.
That left him in the red by 3.175 billion yen - the sum being claimed.
This article was first published on July 4, 2014.
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