Switzerland's Bank Sarasin Loses $200 Million Case Against Al Korafi Family

Stephen Little

27 August 2014

Bank Sarasin-Alpen, the Middle East subsidiary of Swiss-based , last Thursday lost a suit filed against it by Kuwait's prominent Al Khorafi family over the mis-selling of financial products worth $200 million.

The Dubai International Financial Centre's Court of First Instance found that Sarasin sold unsuitable investments to Al Khorafi family members in 2007 and 2008 and ordered it to pay compensation to the family, although no figure was set.

According to court documents, the Khorafi family, which includes Rafed Al Khorafi, his wife and mother, purchased structured financial products from Bank Sarasin totalling $200 million, funded by loans from Al Ahli Bank Kuwait and Bank Sarasin.

The suit against Sarasin was filed by the family in 2009, who claimed the risks of the investment were misrepresented.

Bank Sarasin said in a statement that it was considering the judgement, including an appeal.

Deputy chief justice John Chadwick said he did not take the view that Al Khorafi had “overreached” himself and that his schemes has fallen apart as a result of the financial crash in 2008.

“I am satisfied that the present is a clear case of mis-selling unsuitable investments to an unsophisticated investor, and to his equally unsophisticated wife and mother,” said Chadwick.

“It appears to have been content to allow the mis-selling to take place; in that it failed to exercise any adequate supervision over those whom it held out as its own client relationship managers. In the circumstances I think it appropriate to order that both Bank Sarasin and Sarasin-Alpen pay compensation to the claimants in respect of the losses which they have sustained,” said Chadwick.

Sarasin has 14 days to appeal, court officials said.