Chinese billionaire Guo Wengui sues UBS for $500 million in a London court. The Swiss bank's failed bid to throw out the case potentially sets a dangerous precedent.
Major Swiss bank UBS has been sued by Chinese billionaire entrepreneur and regime critic Guo Wengui for $500 million US dollars in London. The bank had hoped the lawsuit would be rejected, as had been the case in other countries on jurisdictional grounds.
Sara Cockerill, a high court justice, reasoned otherwise, saying that the case can go ahead. Her ruling is based on ostensible misstatements involving the London branch, according to «Bloomberg» (paywall) and other media.
Reading the Small Print
The starting point for the whole matter was a margin call that UBS made on Haitong shares, a Chinese brokerage, that were pledged as collateral on a related loan, forcing them to be sold at distressed levels when the broker's shares fell in the Hong Kong market in 2015.
The Chinese tycoon denied this, saying the agreement he signed did not mention the possibility of margin calls. Neither the bank or the accuser have disclosed anything to the news agency.
Unknown Risks
The London court decision should be ringing alarm bells at the headquarters of all major global banks. The ruling potentially means that any jurisdiction could potentially review all types of internal cooperation and work that form a small or large part of that bank's value chain.
