HSBC Holdings PLC is facing a lawsuit by five Taiwanese banks, including Hua Nan Financial Holdings Co (華南金控), which claim HSBC aided deceased financier Danny Pang’s (彭日成) PEMGroup (保盛豐集團) in perpetrating fraud which caused them more than US$500 million in damages.
The Taiwanese banks said in a complaint filed on Friday in state court in Los Angeles that HSBC Bank USA lied to investors about how long the bank had serviced PEMGroup’s investments and falsely represented that PEMGroup’s prior investment products had been performing in conformity with their offering memoranda.
Hua Nan Commercial Bank (華南商業銀行) claimed US$191 million in losses; Hua Nan Investment Trust (華南永昌投信) US$48 million; Cosmos Bank Taiwan (萬泰銀行) US$45 million; EnTie Commercial Bank (安泰商業銀行) US$50 million; Bank SinoPac (永豐銀行) US$122 million; and Taichung Commercial Bank (台中商業銀行) US$70 million, according to the complaint.
The court-appointed receiver for Irvine, California-based PEMGroup sued HSBC in May, alleging the bank had helped Pang defraud Taiwanese investors.
A judge last year froze the assets of PEMGroup and appointed a receiver after the US Securities and Exchange Commission leveled accusations against Pang and his company.
Pang, 42, committed suicide in September last year. The defrauded Taiwanese investors, including eight financial institutions and about 35 wealthy individuals, had US$823 million invested with PEMGroup, the receiver said last year.
The SEC accused Pang of lying about his credentials, forging insurance documents and paying existing investors with funds raised from new ones, while claiming the returns came from investments in life insurance policies.
Diane Bergan, a spokeswoman for HSBC North America Holdings Inc, didn’t immediately respond to a voice-mail message and an e-mailed request for comment after regular business hours.
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