High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/8ecf3144-8c2c-11e5-a549-b89a1dfede9b.html#ixzz40luoKVOdIt was Citic’s pioneer status that led it to a troubled investment in Australian iron ore in 2006 — from which it has already suffered cost blowouts, technical problems and costly legal action involving Australian mining magnate Clive Palmer, an erstwhile partner in the project.Hong Kong’s Securities and Futures Commission is pursuing the company and its directors for allegedly misleading the market. The losses, via contracts known as Target Redemption Forward Contracts, were disclosed in October 2008, triggering a 55 per cent fall in the shares the next day.Brokers later dubbed TRFC deals “kill you later accumulators” because while bank conditions capped the upside for any contract buyer, the downside was virtually limitless. At one point, Citic estimated its total losses could reach $9bn.The deals paid Citic for every day the Aussie dollar was above a certain price, albeit with some limits. However, Citic had no such downside protection from its payouts if the rate dropped below the strike price.Although Citic bought the contracts from several counterparties, it was a 2007 email from an HSBC banker proposing the complex derivatives that sparked the initial discussion within the company, the tribunal heard on Monday.While the company disclosed the losses on October 21 2008, an unrelated circular published by the company in mid-September contained standard wording to the effect there were no other adverse material changes — days after the company said in the profits warning that executives had become aware of the problems.Emails between executives read to the tribunal on Monday revealed early caution within Citic over the contracts and a strong understanding within its finance team over the risks that they faced.But the company nonetheless turned to the deals in 2008 to gain cheaper access to the Australian dollars needed to fund the Sino Iron venture, which faced cost pressures from a booming local mining sector