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Financial investment disputes
There are more and more financial derivatives in the market, but the risk structures behind them are pretty complicated for buyers and sellers. The Enlighten Law Group is capable of analyzing risk factors for our clients and defending just rights and interests in disputes.
Contrary to the steady revaluation, Renminbi Yuan(RMB) depreciated severely from 2014 to 2016. The Enlighten Law Group assisted with clients’ huge investment loss then. Normally, the exchange rate fluctuation doesn’t result in such loss for investors. It’s related to the investment instrument, Target Redemption Forward (TRF).
In short, TRF is a currency option. Investors bet on a particular currency exchange rate with banks. The betting odds multiplied by leverage, so it’s risky for investors once they lose. Since RMB rose solidly before 2014, many investors predicted the appreciation of the RMB and bought a large amount of TRF.
When the RMB devalued out of the blue, many TRF contracts stipulated that investors could not redeem and even asked for paying the deposit additionally. Some clients are not willing to pay or not able to pay, therefore they breached the agreement directly.
Due to the lack of anticipation concerning the risks of new-type of investment instruments, most investors have no experience of handling emergencies while the damage happened. Some investors put more money into it but it turned out to be a greater loss. Moreover, lots of banks had negligence in sales and client management, for example, misrepresentation of financial statements, deficiency of risk disclosure to clients, etc.
Domestic banks estimated that up to RMB 200 billion assets had been affected by fluctuations of TRF and were exposed to high risks from 2014 to 2016.
Our attorneys have represented investors to strive for their rights and interests in these cases and decreased the investment loss successfully through arbitration, litigation and financial ombudsman services. We’ve also assisted banks in handling TRF cases and acted as mediators between banks and investors to reach an agreement of compensation for damages.
Attorneys have to comprehensively deliberate bargaining chips and resources between both parties while dealing with these cases. With the progress of cases, lawyers have to initiate legal proceedings and negotiate for settlement out-of-court simultaneously.
Normally, financial institutions have absolute predominance in information and resources. But if financial institutions did not do their obligation of disclosure correctly or any situations of exaggeration or fraud, they should bear more legal liability accordingly. If there are violations of law and punishment by competent authority, they would be major weaknesses of a lawsuit.
On the side of investors, big-scale firms and substantial funds do not mean advantages in litigation. On the contrary, judges might assume that large-scale investment institutions can analyze and decide, so they should undertake higher percentages of investment risk.
Resolutions of these disputes are not limited to litigations, applying an ombudsman might be another option. The ultimate purpose is to reach a compromise for both parties. Therefore, attorneys shall provide equitable advice based on evidence, the amount involved and clients’ cost.
For the past few years, Enlighten Law Group's knowledge, experience and standard processes for handling TRF disputes have been the most recent and complete in Taiwan, and our firm also shares professional insights with people through articles.
Enlighten Law Group has been fully entrusted with and has conducted in-depth research on cases such as a structured note, futures trading, securities investment and we are experienced in these fields.