Swiss Affiliate Bank in Middle East Responsible for Financial Mis-selling Fails to Comply With Court Ruling

Feb 03, 2016, 05:44 ET from Hamdan Al Shamsi Lawyers & Legal Consultants

DUBAI, UAE, February 3, 2016 /PRNewswire/ --

One of two defendants in the biggest ever financial mis-selling case in the GCC region, Bank Sarasin-Alpen (ME) Limited, the former Middle East affiliate of co-defendant Swiss Private Bank J. Safra Sarasin, has failed to meet the requirement of the Court of the Dubai International Financial Centre (DIFC) to deposit the sum of US $35,028,474.00 (its share of US $70 million damages) by 1st February 2016 pending the two banks' appeal against record damages awarded against them.

In November 2015 the DIFC Court determined that the two banks should pay the Al Khorafi family more than US $70 million to cover financial losses resulting from the sale of US $200 million structured investment products between late 2007 and early 2008. Bank J. Safra Sarasin immediately paid its share of the damages into court pending the hearing of its appeal against the award of damages. However, Bank Sarasin-Alpen (ME) Limited did not pay its share and sought a stay of the order to pay the damages which was denied on 18 January 2016.  Bank Sarasin-Alpen (ME) Limited was ordered to make a similar payment into Court by 1 February 2016 and has failed to do so.

This latest development in a long-running legal battle between a wealthy Kuwaiti businessman and the notoriously secretive private investment banking industry, in theory, exposes Bank Sarasin-Alpen (ME) Limited to the possibility of further proceedings and throws the appeal against damages, which is expected to be heard by the DIFC Court of Appeal in March 2016, in doubt.

The claimant will now seek to enforce the next step in securing the sum through the DIFC Court.

According to Hamdan Al Shamsi Lawyers & Legal Consultants, the firm acting for the Al Khorafi family, the case is being closely observed by the international banking world as setting a precedent within a region where Middle Eastern investors meet Western financial institutions responsible for managing their investments into overseas markets. This is not the first time questions have been raised about the powers of financial regulators and the governance of investment banks internationally. In April 2015, the DFSA ordered a record fine of US $8.4 million against Deutsche Bank's Dubai branch (DBDIFC) for inadequate controls over money laundering, the scale of the penalty reflecting "serious contraventions . . . including misleading the DFSA" following an investigation that was protracted by DBDIFC's failure to cooperate with the regulatory body.

Notes to Editors: 

Full details of the DIFC Court judgements can be found on the official website here:

SOURCE Hamdan Al Shamsi Lawyers & Legal Consultants