Citigroup, MF Global, Gupta, UBS, Chevron in Court News

Author: Spencer Ogden
Date posted05/Jan/2012
Author: Spencer Ogden

Citigroup Inc. (C)’s Singapore unit sued Hong Kong-based hedge fund manager Raghavendran Rajaraman, seeking to recoup $1.03 million in trading losses the bank says he incurred after gold fell from a record high in September.

Rajaraman had $19.2 million worth of gold in his account on Sept. 23 which the bank sold, along with other collateral, on Sept. 26 “in the face of a rapidly deteriorating market,”leaving a $1 million shortfall, according to a Nov. 18 lawsuit filed with the Singapore High Court. The first closed hearing is scheduled for Jan. 27.

Gold plunged 11 percent in September, the most since October 2008, after futures reached a record $1,923.70 an ounce on Sept. 6. The bank liquidated Rajaraman’s account after it reached a so-called forced sell level and got his authorization, according to court papers. Gold for February delivery in New York was at $1,601.30 an ounce at 9:55 a.m. Singapore time.

Rajaraman works with hedge fund 3 Degrees Asset Management and was a currency options trader with Citigroup in Singapore until 2007, according to the lawsuit.

He hasn’t filed his defense and didn’t return three calls to his mobile-phone. Richard Healy, Rajaraman’s lawyer at Oldham, Li & Nie, declined to comment.

“We intend to pursue the case and it’s inappropriate for us to comment further,” said Citigroup’s Singapore-based spokesman Adam Abdur Rahman.

Citigroup breached its agreement by closing his account without prior notice, according to an Oct. 7 letter from Oldham, Li & Nie to the bank’s lawyers including William Ong at Allen & Gledhill LLP.

“As a direct consequence of the bank’s breach,” Rajaraman suffered a $1.7 million loss, representing his collateral, according to the letter. He incurred a further $1.03 million loss as the bank prematurely liquidated the account instead of waiting for 24 hours after the account reached the force-sell level, Rajaraman’s lawyers said in the letter.

The case is Citibank Singapore Ltd. v Raghavendran Rajaraman S826/2011 in the Singapore High Court.

Life Partners Sued by SEC for Fraud in Life Settlement Deals

Life Partners Holdings Inc. (LPHI) and three top executives are facing U.S. regulatory claims that they defrauded shareholders by systematically understating risk related to the firm’s purchases of life insurance policies.

Jan. 3 the Securities and Exchange Commission said Chairman and Chief Executive Officer Brian D. Pardo, President and General Counsel R. Scott Peden and Chief Financial Officer David M. Martin participated in a scheme that misled investors about the firm’s profit potential.

“The senior-most executives at Life Partners concealed significant risks to the business, manipulated financial statements with improper accounting, and knowingly profited from their misconduct by executing insider trades based on information that was not available to the public,” David Woodcock, director of the SEC’s Fort Worth Regional Office, said in a statement Jan. 3.

The company, which buys rights to death benefits from policyholders in exchange for lump-sum payments, knowingly underestimated life expectancies used in transactions from 2007 to 2011, the SEC said in its statement. Pardo sold $11.5 million of stock and Peden sold shares valued at $300,000 while privy to inside information, the agency said.

“It is very disappointing that the SEC has chosen to pursue litigation over issues that we believe have no merit and financial presentation issues that we do not believe are material,” Pardo, who owns more than 50 percent of the firm’s shares, said in a statement. “We intend to vigorously defend ourselves against these meritless claims.”

Calls to the company seeking further comment Jan. 3 and yesterday weren’t returned. Peden didn’t respond to a telephone message left at a residential listing under his name in Woodway, Texas. A listing couldn’t be found for Martin.

For more, click here.

Quanta Sues AMD Over Microchips for Notebook Computers

Quanta Computer Inc. (2382), the world’s largest contract maker of notebook computers, sued Advanced Micro Devices Inc. (AMD) for breach of contract, alleging the chipmaker sold defective products.

AMD and its ATI Technologies Inc. unit sold chips that didn’t meet heat tolerances and were unfit for particular purposes, Taoyuan, Taiwan-based Quanta claimed Jan. 3 in a federal court filing in San Jose, California. The chips were used in notebooks Quanta made for NEC Corp. (6701) and caused the computers to malfunction, according to the filing.

“Quanta has suffered significant injury to prospective revenue and profits,” the company said in the complaint. Quanta is seeking a jury trial and damages, according to court papers.

“AMD disputes the allegations in Quanta’s complaint and believes they are without merit,” Sunnyvale, California-based AMD’s spokesman, Michael Silverman, said in an e-mailed message.

“AMD is aware of no other customer reports of the alleged issues with the AMD chip that Quanta used, which AMD no longer sells,” Silverman said. “In fact, Quanta has itself acknowledged to AMD that it used the identical chip in large volumes in a different computer platform that it manufactured for NEC without such issues.”

The case is Quanta v. Advanced Micro Devices, 12-cv-12, U.S. District Court, Northern District of California (San Jose).

For the latest new suits news, click here. For copies of recent civil complaints, click here.