Judge raps Goldman over ‘ludicrous’ $2m legal fees

Investment bank Goldman Sachs is under fire from a high court judge over the “ludicrous” legal fees it is seeking from the executive of a Singapore firm who lost a court case against the financial giant in London.

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Judge raps Goldman over ‘ludicrous’ $2m legal fees

By Grace Leong
31 July 2014

Investment bank Goldman Sachs is under fire from a high court judge over the “ludicrous” legal fees it is seeking from the executive of a Singapore firm who lost a court case against the financial giant in London.

Former Blumont Group executive director James Hong instigated legal action against Goldman for failing to get a fair price when it force-sold his shares in three firms during last October’s penny stock crash.

Mr Hong withdrew his claim earlier this month before a trial and stepped down as executive director on July 20 for personal reasons.

Judge David Mackie of London’s Commercial Court ruled in favour of Goldman last week but denied its application for Mr Hong to make partial upfront payment of legal costs.

Judge Mackie chastised the bank’s legal team for trying to claim what he called “ludicrous” fees of £1 million (S$2.1 million) without providing evidence for the bill.

The judge reportedly told Ms Rebecca Loveridge, a lawyer representing Goldman: “You can’t come to this court suggesting a figure of £1 million without some basis of assessing it.”

But he ruled that a future fees application could be made with supporting evidence and on condition that notice is given to Mr Hong.

A Goldman spokesman in London declined to comment on whether the bulk of the costs came from disclosure of documents.

But it told The Straits Times yesterday that the £1 million figure was “an estimate only, and was the combination of costs attributed to Mr Hong’s case and an additional case combined”.

She declined to elaborate.

Mr Hong had accused Goldman of breaching its duties by “arbitrarily” selling his shares in the penny stocks Blumont Group, Asiasons Capital and LionGold Corp that it held as collateral after a margin call.

He alleged that the bank had issued a demand notice, giving him less than two hours to raise more than $60 million to cover his loan.

Mr Hong failed to meet the deadline and was deemed to have defaulted on his loan obligations.

This triggered the force-selling last October.

The bank denied the allegations and countersued for £8.8 million, alleging Mr Hong’s lawsuit was a “tactic” to delay paying the money he owed.

Mr Hong did not respond to calls and e-mail requests for comment yesterday.

Blumont issued an earnings warning last week for the second quarter and first half ended June 30. The group said it is expected to report net losses due to “fair value readjustments of its investments in transferable securities (financial assets), attributable to the recent volatility in the financial markets and global economy”.

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