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Yearning for Justice and Peace

Deutsche Bank v Chang Tse Wen trial in Singapore

 

“Dr Chang Tse Wen ("Dr. Chang"), was an investor who first met a representative from Deutsche Bank AG ("DB"), in March 2007.”

It brought chills to Dr. Chang, when he read the first sentence of the judgment from the Court of Appeal of Singapore (Appeal Court) quoted above. He feared where the rest of the grounds of decision were heading to and how the Appeal Court judges would selectively use the facts.

Dr. Chang had spent his life as a biomedical scientist and had very little investment experience before he met Mr. Wan Fan Ting Johnny. Dr. Chang had made almost all of his money from his anti-IgE antibody invention. The invention led to the development of Xolair, which had finally been successfully commercialized by two pharmaceutical companies for the treatment of severe asthma while Dr. Chang continued with his biomedical research.

Mr. Wan was not merely a regular representative from DB; he was a “one of a kind” manager from DB’s Private Wealth Management group (DBPWM). Dr. Chang first met Mr. Wan at Standard Chartered Bank in Hong Kong in December 2006, and the High Court of Singapore (High Court) had determined that from then on Mr. Wan had carried out a series of unethical and deceitful acts to target and lure Dr. Chang as a customer of DBPWM.

In the 20-day trial at the High Court held from 26 October till 23 November 2010 and on 15 April 2011, Mr. Wan and Dr. Chang testified and were cross-examined, respectively, by their opponent’s attorneys and Justice Pillai for most of the trial time. The court examined how Dr. Chang engaged in the fervent purchase of bank shares and the financial derivative products on bank shares (Discounted Share Purchase Programs or DSPP) in 2007-8 and how Mr. Wan targeted and lured Dr. Chang to open an account at DB and then sold him DSPP products on bank shares.The High Court outlined Mr.Wan’s misrepresentation of DBPWM’s services, sale to Dr. Chang of risky products intended only for professional investors, fabrication of important internal documents, and other violations of common regulatory codes in Hong Kong and Taiwan. (Mr. Wan is currently under an arrest warrant of a Taiwan court in a criminal lawsuit against him for fraud.) The court also examined DB’s and Mr.Wan’s failure to comply with the obligation of discovery. Full transcripts of the trial were produced. Justice Pillai ruled after the trial in favor of Dr. Chang (High Court's Grounds of Decision delivered on 11 December 2012). The High Court’s judgment called for DB to repay to Dr. Chang all the money he had lost in his DB account, about US$49 million, plus interest and part of his legal fees.

In the hearing before the Appeal Court held on 21 May 2013, Mr. Wan and Dr. Chang were not present. Three Judges of Appeal questioned DB’s and Mr.Wan’s attorneys and Dr. Chang’s attorneys for about four and a half hours. No transcript of the hearing was prepared. The Appeal Court overturned the High Court’s decision (Appeal Court’s Grounds of Decision issued on 19 September 2013). The Appeal Court's judgment calls for Dr. Chang to pay the deficit in his DB account, about US$1.8 million, plus interest and part of the legal fees that DB and Mr. Wan had spent.

Dr. Chang’s quest for justice, fighting against a global banking giant, required a huge amount of money, taking much of what he had left from his financial ruin. The lawsuits involved many thousands of documents, teams of attorneys and consultants for each side, and took almost five years to conclude. His lead attorney regretfully said to him, “Unfortunately, it is the end of the road.” At this point, Dr. Chang feels terribly shaken, very tired, and helpless. He has passed 66 years and is ready to retire. He yearns for justice and hopes that he can live the rest of his life in peace.

Dr. Chang questions the fairness of the Singapore Appeal Court’s judgment, because it refers to solid evidence and facts (which were established at the High Court) superficially and selectively. For example, it mentioned three times that Dr. Chang purchased bank shares and DSPP products in his other accounts (which were examined in depth at the High Court), but it disregarded the facts that Dr. Chang had very little investment experience before meeting Mr. Wan and that Mr. Wan persistently and repeatedly recommended DSPP products and bank shares, including recommending DSPP products in the two face-to-face meetings in Taipei. The judgment does not say a word about DB’s and Mr.Wan’s failure to comply with the legal requirement of discovery. It does not say a word about the fact that Mr. Wan was caught lying many times in the witness stand and was an evasive and unreliable witness. It ignores the fact that DB concealed huge profits behind Dr. Chang’s back by adding hefty surcharges to the DSPP contract unwinding fees. It also does not find fault at all in the many unethical and tricky acts and serious violations of regulatory codes the High Court found that Mr. Wan had committed, including extensive fabrication of important internal bank documents (e.g. “Know Your Client (KYC)" form) pertaining to Dr. Chang’s account. These serious offences were not addressed in the Appeal Court’s judgment. Instead, the Appeal Court has kindly given supportive advice to banks to clean up their acts in the conclusion of the final judgment:

”Cleaning up the paperwork and communicating in clear terms with customers after the initial discussions to identify with precision just what is and is not provided might well be a worthwhile exercise for banks to undertake. This could perhaps have obviated the present litigation.”

While this summary statement indicates that the Appeal Court finds that DB should bear at least part of the responsibility in Dr. Chang’s misfortune, it overturns the High Court’s judgment completely. With the judgment of Singapore's Appeal Court completely disregarding the wrongful actions of DB and its representative, Mr. Wan, Dr. Chang feels victimized by DB for a second time. Dr. Chang achieved success over his life-long scientific career in biomedical research by trusting the people working with him. With this same trusting character nurtured in his research career, he trusted Mr. Wan fully as an advisor and a friend and, as a result, lost almost his entire fortune in one year.

This website has been created to make the trial in the High Court and Appeal Court of Singapore transparent to the international community. Dr. Chang and many people who are concerned with the fairness of the final verdict of this trial believe that openness and transparency, especially regarding those facts established in the High Court, will help safeguard fairness. If a trial is just and fair, the court and the parties on both sides of the trial should have no qualms about full transparency of information pertaining to the trial. In order to start a meaningful international dialogue, the judgments from the two courts, the transcripts of the 20-day trial at the High Court, a few documents that belonged to Dr. Chang, and the closing submissions which Dr. Chang's attorneys prepared on his behalf are provided. Those in the legal profession probably can obtain other documents of the trial directly from the Singapore courts.

Many investors have already expressed concerns that the Appeal Court’s decision will reverse the trend of enhancing investor protection. Dr. Chang has spent much of his life as a teacher and hopes, along with many concerned people who know of this trial, that investors around the world, especially those living in countries where bank regulatory systems have not been well established, can learn from Dr. Chang’s dreadful encounter with DB and painful investment experience with Mr. Wan. This website will provide a forum for interested visitors to this website to express and exchange ideas and discuss how we all together can help to improve the protection of individual investors.

 

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expandBasic facts of the trial
expandDocuments
expandThe conclusions of judgments from the High Court and from the Appeal Court
expandDr. Chang's background and lack of investment experience
expandDB and Mr. Wan did not comply with the legal requirement of discovery
expandMr. Wan's series of unethical, deceitful and illegal acts to target and lure Dr. Chang
expandThe misleading DBPWM PowerPoint presentation (ppt) used by Mr. Wan in the March 2007 meeting
expandMr. Wan's persistent recommendations on DSPP and bank shares
expandDr. Chang was profoundly convinced by Mr. Wan's persuasive advice.
expandExtensive fictitious untruths in important bank forms pertaining to Dr. Chang's account
expandDB concealed huge Profits by adding hefty "surcharges" on DSPP unwinding fees
expandHow did Dr. Chang's asset in his DB account evaporate and a deficit be created?
expandJustice Pillai called Mr. Wan an evasive and unreliable witness
The Forum for visitors’ discussion (to go to Forum)

 

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Several concerned people have collaborated in constructing this website and raised the following topics for discussion. Visitors to this website are encouraged to raise other pertinent topics.

  1. Does the Appeal Court ignore major facts in overturning the judgment from the High Court? Is it legally or morally acceptable to ignore essentially all major facts established by the High Court? Is the judgment from the Appeal Court fair?

  2. Would transparency of the Appeal Court hearing be a way to safeguard fairness, like the transparency of the trial and the availability of the trial records of the High Court?

  3. The DB's main witness’ complete lack of credibility and his providing multitudes of false testimony are not of a concern in the Appeal Court’s judgment. Is this judgment out of the norm?

  4. Does the rulings by the Singapore courts encourage a trend of relaxation of regulatory supervision on bank operation?

  5. The “know your client (KYC)” requirement is well adopted worldwide in bank managers’ handling clients’ investment needs. For example, the DSPP products cannot be sold to U.S.A. citizens. Are investors better protected from risky financial products in the U.S. and in European countries (like UK and Germany)? Can international banks adopt the same standard in Southeastern Asian countries?

  6. What can financial regulatory agencies in Hong Kong and Singapore do to guard against bank managers from selling risky financial derivative products to naïve investors in their own and in other countries?

  7. What can be done to protect naïve investors from unscrupulous bankers who use all kinds of marketing antics and persuasion (including lies) to sell unsuitable products to their customers?

  8. What other right of recourse do gullible bank customers have against bank managers who have sold them unsuitable, highly risky products? To resort to legal means will require a tremendous amount of financial and other resources, which ordinary people mostly do not possess.
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Articles in popular media
 
1. In Wealth Biweekly, Vol. 438, November 21, 2013 (Taiwan). Author 朱美宙
2. In Money Monthly, January 2014 (Taiwan). Author 許瀞文