CFDs are leverage instruments. They can magnify gains. How much pain they can also inflict can be seen in an ongoing case (Maybank Kim Eng Securities versus a client and a remisier).

According to court documents, investor Wendy Lim Keng Yong entered into a series of CFD transactions through her Maybank Kim Eng remisier, who is also her husband, William Lye Hoi Fong, in July 2015.

The transactions involved 216,600 shares of Apple Inc and 105,000 shares of Baidu Inc as the underlying securities.

These shares, which are listed on NASDAQ, started falling in value in the second half of August 2015 due to a global stock market selloff.

♦ US$10 m losses in CFD account
July 2015: Wendy Lim enters into a series of CFD transactions.

Aug 2015:
Underlying shares (Apple and Baidu) fall in value.

Aug 2015:
Maybank Kim Eng closes out the CFD transactions. The CFD account has trading losses exceeding US$10 m, according to Maybank Kim Eng.

On 24 August 2015, Apple and Baidu share prices sharply dropped, and Maybank Kim Eng proceeded to close out the CFD transactions at the prevailing market prices.

As a consequence, the CFD account reflected substantial trading losses which Maybank Kim Eng claims exceeded US$10m.

The key dispute arising from these facts, according to court documents, is whether the closing out of the CFD transactions on 24 August 2015 was authorised by either or both Wendy and William.

If so, there is a secondary question as to the quantum of trading losses incurred on the CFD account.

Maybank Kim Eng claims that it acted on Wendy's and William's express instructions, and that the couple are liable for the losses incurred on the CFD account.

Therefore, taking into account certain alleged rights of set off which Maybank Kim Eng says it has against the couple and a payment of $157,189.88 made to it by Wendy on 17 September 2015, Maybank Kim Eng claims the balance sum of S$8,079,664.75 from Wendy.

Significantly, the broker claims this same amount from William under an indemnity agreement.

The couple, however, take the position that Wendy is only liable for the sum of $157,189.88 which she had already paid the broker on 17 September 2015.

They also contend that neither of them is liable for the losses arising from the closing out of the CFD transactions on 24 August 2015 as this was effected without their consent or authorisation.

For the court document, click here. 

You may also be interested in:

Share Prices

Counter NameLastChange
AEM Holdings3.080-0.030
Avi-Tech Electronics0.380-
Best World Int.1.360-
China Sunsine0.375-0.005
CNMC GoldMine0.205-
CSE Global0.430-
Eagle HTrust USD0.137-
Food Empire0.505-
Golden Energy0.174-
GSS Energy0.0680.003
ISDN Holdings0.2500.030
JB Foods0.490-
KSH Holdings0.3100.005
Moya Asia0.063-
Nordic Group0.225-
Oxley Holdings0.2400.005
REX International0.1470.007
Sing Holdings0.320-
Straco Corp.0.480-0.025
Sunningdale Tech0.945-
Sunpower Group0.450-0.005
The Trendlines0.1100.001
Tiong Seng0.152-
Uni-Asia Group0.470-
Yangzijiang Shipbldg0.935-

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 1886 guests and 2 members online

  • Lionel Lim
  • skg251