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Bank compensates fund investor for his loss
By Xu Fang |
December 28, 2010, Tuesday
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Online Edition
Online Edition
AN overseas bank has agreed to pay 325,000 yuan (US$49,020) in compensation to a financial product buyer to cover his loss caused by its account manager after mediation by a local appeal court.
Judges of the Shanghai No. 1 Intermediate People's Court said banks should tell investors potential risks of their financial products so that investors can make decision after careful consideration.
An investor, surnamed Yu, opened an investment account in the overseas bank, which was not identified by the court, in October 2008 and an account manager, surnamed Lu, was appointed to provide service to Yu.
The fund Yu invested in kept losing from the second half of 2008 and his account value dropped to 1.24 million yuan from the original 1.9 million yuan.
Yu wanted to quit but Lu, eager to keep a good performance record, stopped him and signed a pledge that he would lose no more money.
That pledge wasn't kept, however. When Yu redeemed the fund on October 28, 2008, only about 880,000 yuan was left in the account. He had lost 350,000 yuan more after Lu signed the promise.
Yu then sued the bank and Lu for 350,000 yuan in compensation. He was supported in the first court hearing. Judges said Lu's personal promise directly caused more loss to Yu.
Since Lu was appointed by the bank to offer the service, the bank should bear the compensation.
The bank appealed and during the second court hearing both sides reached an agreement that the bank would pay 325,000 yuan in compensation.
"Banks and their clerks should protect interests of investors and help them evaluate the risks when financial products are losing money," said Song Hang, chief judge of the financial court of the Shanghai No. 1 Intermediate People's Court.
"Besides, contracts used by overseas banks are usually too complicated for clients to understand because they are translated directly from the English versions."
The court and eight district courts it governs have handled 80 disputes concerning financial products since last year.
In some cases, the banks didn't explain their contracts well and exaggerated high returns. In other cases, the investors knew nothing about the risks of financial products, judges said.
Judges of the Shanghai No. 1 Intermediate People's Court said banks should tell investors potential risks of their financial products so that investors can make decision after careful consideration.
An investor, surnamed Yu, opened an investment account in the overseas bank, which was not identified by the court, in October 2008 and an account manager, surnamed Lu, was appointed to provide service to Yu.
The fund Yu invested in kept losing from the second half of 2008 and his account value dropped to 1.24 million yuan from the original 1.9 million yuan.
Yu wanted to quit but Lu, eager to keep a good performance record, stopped him and signed a pledge that he would lose no more money.
That pledge wasn't kept, however. When Yu redeemed the fund on October 28, 2008, only about 880,000 yuan was left in the account. He had lost 350,000 yuan more after Lu signed the promise.
Yu then sued the bank and Lu for 350,000 yuan in compensation. He was supported in the first court hearing. Judges said Lu's personal promise directly caused more loss to Yu.
Since Lu was appointed by the bank to offer the service, the bank should bear the compensation.
The bank appealed and during the second court hearing both sides reached an agreement that the bank would pay 325,000 yuan in compensation.
"Banks and their clerks should protect interests of investors and help them evaluate the risks when financial products are losing money," said Song Hang, chief judge of the financial court of the Shanghai No. 1 Intermediate People's Court.
"Besides, contracts used by overseas banks are usually too complicated for clients to understand because they are translated directly from the English versions."
The court and eight district courts it governs have handled 80 disputes concerning financial products since last year.
In some cases, the banks didn't explain their contracts well and exaggerated high returns. In other cases, the investors knew nothing about the risks of financial products, judges said.
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