In an interesting judgment handed down on 21st June 2012, in the
case of Kwok Wai Hing v HSBC Private Bank (Suisse) SA, HCCL 7 of
2010, the Court of First Instance in Hong Kong has dismissed
another apparently wealthy investor's claim against a financial
institution. Several years after the 2008 financial credit crisis,
several cases are now going to trial in the High Court of Hong Kong
and they have their roots in the bull market excesses leading up to
the financial crisis. In the Kwok Wai Hing case, the claim relates
to substantial alleged losses apparently arising out of a large
number of so called risky "forward accumulator" and other
high-risk structured products.
As we alluded to in our e-bulletin on 12 January 2012,
concerning the case of Hobbins v Royal Skandia Life Assurance Ltd
& Anor  1 HKLRD 977 (in which this firm acted and which
was decided by the same judge), claims by wealthy and sophisticated
but disappointed "adult" investors are likely to receive
relatively short shrift in the Hong Kong courts. Successful claims
by individual investors in Hong Kong are not that common; Field v
Barber Asia Ltd  3 HKLRD 871 being a rare example.
Several lessons can be drawn from these cases, including the
recent Kwok Wai Hing case. They include:
(i) investors bear a heavy onus to check that they understand
the investments they enter into and the documents pertaining
thereto. If an investor (otherwise free from undue influence or
duress) does not understand an investment she/he should not enter
into it. Otherwise, as the judge notes in the Kwok Wai Hing case,
the investor will only have her/himself to blame;
(ii) in cases involving investors such as Ms Kwok (referred to
in passing by the judge as not giving him the impression that she
was the "helpless housewife" she might want to portray in
court) and Mr Hobbins (referred to by the judge as "far from
being a babe in the woods in matters of financial
investment"), and in the absence of egregious conduct on the
part of a financial institution or financial adviser, the courts in
Hong Kong are usually reluctant to go behind the contractual and
related investment documents. Such documents include, for example,
the account opening form, the risk disclosure statement, the
product's terms and conditions, the client agreement, the
(iii) the relevant documents are put in place as much for the
financial institution's protection as the investor's. Such
documents will seek to limit the scope of the institution's or
adviser's duty and the amount of any liability.
We will write more about these and related developments in due
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During a recent appearance on BBC, Cayman Finance CEO Jude Scott
highlighted the Cayman Islands' dedication to upholding the
standards and expectations of a premier financial jurisdiction
through transparency and a strong compliance culture.
Gibraltar implemented Protected Cell Company legislation in 2001 and was the first European jurisdiction to do so. Since then Malta has implemented a PCC Act and the UK itself has introduced its own regime for Open Ended Investment Funds.
Any copies of records provided by the firm must be provided in an unencrypted form so that they can be easily analysed when requested by the client, competent authority, or other competent third party.
Investment funds with high net worth individuals as investors will need to have a client agreement with their high net worth investors.
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