By Gabriel Chen

FRENCH bank Credit Industriel et Commercial (CIC) is suing a former client for about $6.4 million after he allegedly failed to pay for shares acquired under investments known as accumulators.

The case against Mr Teo Wai Cheong, which began at the High Court yesterday, is the first of its kind in Singapore and holds the reputation of accumulators up to public scrutiny in open court.

The structured products - nicknamed by investors 'I kill you later' - have come to the fore since the global financial crisis resulted in many losing millions of dollars on them.

The dispute between CIC and Mr Teo hinges on whether the 45-year-old gave instructions to his CIC relationship manager, Ms Ng Su Ming, to purchase accumulators.

The court heard yesterday that Ms Ng sent an SMS to Mr Teo on Oct 2, 2007, asking him if she could 'establish' more accumulators for him.

At the time, Mr Teo, a business development manager at Celestica Electronics, had conducted 14 accumulator transactions via his account with CIC.

Some six seconds after the SMS was sent, he telephoned Ms Ng and was said to have given her instructions to enter into four China Energy accumulator transactions. The next day, he spoke to her, allegedly authorising her to enter into further trades - one more China Energy accumulator and one Sembcorp Marine accumulator.

But Mr Teo denies this version of events and maintains he gave her no instructions to establish these accumulators.

The court heard claims by Mr Teo that he told Ms Ng to limit his exposure under the accumulators to $1 million and to restrict the share counters to blue chips. The counsel for CIC, Drew and Napier director Manoj Sandrasegara, challenged this saying that there was 'no specific technical definition of what constituted 'blue chip''.

Mr Sandrasegara added that Mr Teo's allegation that he told Ms Ng to restrict the share counters to blue chips was 'irrelevant' because he did not deny he previously instructed her to set up two other China Energy accumulators. 'Therefore, he was clearly willing to invest in China Energy shares, whether or not China Energy was a 'blue chip' share counter,' he said.

CIC maintains that it does not have any direct evidence, such as taped conversations between the parties, of the contents of the alleged telephone conversations on Oct 2 and Oct 3. Ms Ng has not been able to provide any record of SMS activity from her telephone, given that in November or December 2007 she changed her handset.

According to Mr Teo's lawyer, senior counsel C.R. Rajah, CIC is 'heavily relying' on telephone bill records, which show the two telephone conversations between Ms Ng and Mr Teo.

Mr Rajah said that the bank has sought to rely on the term sheets and contract notes normally sent to Mr Teo 14 days after the trade dates, arguing that at the time Mr Teo failed to raise any objections to them. 'The defendant never signed any of the term sheets,' he added.

This article was first published in The Straits Times.