Wealth-Bulletin

Merrill Lynch & Co. is involved in a dispute with an Indonesian private-banking client who is suing the Wall Street bank in Jakarta for $90 million in damages for allegedly selling shares without his knowledge.

Merrill, in turn, is suing the client, Prem Harjani, the owner of a Jakarta-based investment bank, in a Singapore court in an effort to recoup $12 million that it says Mr. Harjani failed to repay. This week, the bank won a court order freezing Mr. Harjani's assets in Singapore.

A Merrill spokesman in Hong Kong, Rob Stewart, said all of Mr. Harjani's allegations are 'without merit.' Through a lawyer, Mr. Harjani declined to comment. His lawyer said Merrill's actions in selling the shares had lost his client money.

The dispute is the latest example of the woes facing the world's big wealth managers in Asia. In the past few years, Wall Street's biggest names staffed up in Asia to provide private-banking services to the newly rich.

An Indonesian couple is seeking $8.6 million in damages from UBS AG in a Singapore court, saying they weren't aware of the risks involved in a so-called currency accumulator that went bad. In Hong Kong, a businesswoman, Joyce Tsang, is suing Goldman Sachs Group Inc. for allegedly trading accumulators for her account without her authorization. Goldman Sachs and UBS deny wrongdoing.

The disputes threaten to dent the image of private banking -- the provision of discreet, sophisticated financial services to the superwealthy -- just a few years after Asia's burgeoning rich emerged as a major business opportunity.

According to Merrill Lynch and Capgemini, there are 2.8 million people in Asia with total assets of more than $1 million. Those people had a combined wealth of $9.5 trillion at the end of 2007, a 12.5% jump from the previous year, which was higher than a global expansion rate of 9.4%.

In the past five years, private banks in Asia, excluding Japan, tripled assets under management to $600 billion, according to Calamander Group, a consultancy in Singapore.

Mr. Harjani, the Indonesian businessman, opened a trading account with Merrill Lynch in Singapore in late 2007 after being 'courted' by Merrill Lynch bankers, according to a copy of an affidavit submitted by Mr. Harjani to the Singapore High Court.

Merrill offered Mr. Harjani a credit line of $17 million with which to buy stocks, the affidavit says. In June of this year, Mr. Harjani bought $14 million shares in PT Triwira Insanlestari, an Indonesian company that makes equipment for coal miners, through Merrill Lynch. Mr. Harjani, in the affidavit, said he believed the credit line would pay for the stocks.

Merrill Lynch denies the credit line was for buying Indonesian stocks, but rather for the purchase of other shares, Mr. Stewart said.

When Mr. Harjani failed to pay for the stocks within a three-day settlement period, Merrill Lynch began to sell the shares to recoup some of its losses, according to Mr. Harjani's lawyer. But by the time Merrill Lynch did so, the Jakarta stock market had tanked as global markets plunged, and the stock was trading at a fraction of the purchase price. Merrill Lynch was left on the hook for $14 million. Mr. Harjani later repaid $2 million.

The Singapore court handling the Merrill Lynch case issued a ruling this week to freeze Mr. Harjani's assets, according to a banker familiar with the case.

Mr. Harjani is seeking damages in a separate court case in Indonesia, claiming $90 million in losses because Merrill Lynch allegedly sold the Triwira Insanlestari shares without his knowledge. Mr. Harjani's lawyers have lodged a complaint with the police in Jakarta, which names two Merrill Lynch employees for allegedly defaming Mr. Harjani's character and for fraud.

'Merrill Lynch denies the allegations,' Mr. Stewart said.