Switzerland's Bank Sarasin and its Middle East unit must pay $10.45 million to members of Kuwait's wealthy Khorafi family after the financial institutions were found to have mis-sold $200 million of investment products, a Dubai court has ruled. The Dubai International Financial Centre's (DIFC) Court of First Instance decided upon the compensation this week, according to court documents published on Thursday.
This follows a court ruling in August against Bank Sarasin and its subsidiary, which has now awarded compensation of $10.45 million to three Khorafi family members. The claimants had been asking for more than $26.5 million. A judgement accompanying the award said that the defendants falsified accounts.
"It is conduct which deliberately seeks to avoid the compliance which ought to be expected of financial institutions," deputy chief justice John Chadwick said. Sarasin officials were not immediately available for comment. Bank Sarasin, which had denied that it broke any regulation or failed to meet any obligation, had said in August it was considering an appeal against the initial ruling.
In the August ruling, Sarasin and its Middle Eastern subsidiary Sarasin-Alpen (ME) Ltd were found to have sold unsuitable real estate-related investments to Khorafi family members in 2007 and 2008.
Last week, Swiss authorities searched the offices of the private bank as part of a probe led by German prosecutors into dividend stripping, an investment strategy that can be used to help clients avoid taxes, a Zurichprosecutor said.