SINGAPORE (May 23): Saxo Bank, a Danish broker bank stung by losses on Switzerland’s surprise revaluation of the Swiss franc, sued 12 currency-trading clients in Singapore in the latest lawsuits stemming from January’s exchange-rate turmoil.
The customers are liable for their losing trades, Saxo’s Singapore unit said in lawsuits last month, seeking US$7.62 million in total.
The clients countersued, saying their losses were caused by Saxo Capital Markets’ arbitrary and retrospective repricing of trades, according to a joint complaint filed in the Singapore High Court.
Saxo was left with a capital hole after losing as much as US$107 million when the Swiss National Bank abandoned its exchange-rate cap on the franc in January.
The Singapore cases may soon be followed by others, as brokers and clients attempt to recoup losses from the Swiss move, which sent shockwaves across global markets.
Another forex broker Swissquote Group Holding said this month it planned to take legal action against clients who haven’t repaid borrowed money they lost.
Kasper Elbjorn, a Copenhagen-based Saxo Bank spokesman declined to comment on the lawsuits, as did Shem Khoo, a lawyer representing the group of investors in Singapore.
A closed hearing is scheduled for June 2.
Saxo closed some client trades after shortfalls in their accounts and continued filling orders even as the market froze after the Jan 15 free float of the franc.
The broker warned that the “exceptional market movement” in franc trades could be revised to a worse rate, according to e-mails reproduced in Singapore court papers.
Faulty prices
The Singapore clients claimed Saxo wrongfully deducted funds from their accounts and sold assets after the price revisions, which didn’t reflect market rates.
They’re asking the court to declare that Saxo shouldn’t have retroactively repriced the trades. They’re also seeking damages for the alleged breach.
Saxo said it was contractually allowed to correct “faulty” prices.
It has told the Danish regulator it was trying to avoid being sued when it continued accepting Swiss franc orders after the franc float.
The Swiss franc soared as much as 41 percent against the euro on Jan 15 in one of the biggest moves among major currencies since the collapse of the Bretton Woods system in 1971.
Marc Buerki, chief executive of Gland, Switzerland-based Swissquote, said in a May 15 interview that the company has been in touch with about two-thirds of the 420 clients who lost money on Jan 15 to discuss repayment and expects to take action against the remaining third.
Citibank sued a two man foreign-exchange trading team in Manhattan in March seeking to recoup US$25 million.
Saxo had already been threatened with litigation by customers over its repricing of the franc trades.