Citigroup Settles Trading-Losses Lawsuit With Singapore’s Oei

By Dinakar Sethuraman

Oct. 2 (Bloomberg) -- Citigroup Inc. reached a settlement with Oei Hong Leong , a Singapore businessman who sued the bank over trading losses of more than S$1 billion ($708 million).

“The terms of the settlement are confidential,” Jack Sung , a spokesman for Citi Asia Pacific, said in an e-mailed statement yesterday. Oei will be discontinuing the action, he added. Oei’s lawyer, Quek Mong Hua , confirmed the settlement in an e-mail.

Oei, ranked one of Singapore’s 40 richest people by Forbes magazine last year, sued Citigroup in May, alleging he incurred the losses after the bank provided him with conflicting reports of his margin surplus in October last year, forcing him to unwind his trades at “an adverse time.”

He told Singapore’s Straits Times newspaper in May that he lost about S$1 billion, which he had paid up in full.

Oei had claimed Citigroup failed to carry out $600 million in orders for U.S. Treasury 30-year bonds in November to cover uncovered call options he had written. Call options give the buyers the right to buy securities at a pre-agreed price on or before a specified date.

Citigroup said in a June court filing that the Singapore private banking client understood the “considerable risks” of his investments and that it hadn’t provided misleading or inaccurate information.

Investor Lawsuits

Other Asian bank clients have sued for investment losses. In July, a Hong Kong citizen sued UBS AG , alleging negligence and reckless misinterpretation in inducing her to buy so-called accumulators that resulted in losses of more than HK$200 million ($25.8 million).

Also in July, 204 investors in Singapore sued DBS Group Holdings over S$17 million in losses on securities linked to the collapsed Lehman Brothers Holdings Inc.

The Monetary Authority of Singapore banned DBS and nine other financial institutions that sold products linked to Lehman from selling structured notes for a minimum of six months to two years.

Hong Kong banks in July agreed to pay about HK$6.3 billion in compensation to investors who lost money on notes linked to Lehman, ending a 10-month dispute.

The case is Oei Hong Leong and Citibank N.A., S424/2009/T in the Singapore High Court.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net