Tan Kin Lian's Blog: HK Monetary Authority refers 40 more 'mini-bonds' cases to SFC

Saturday, October 25, 2008

HK Monetary Authority refers 40 more 'mini-bonds' cases to SFC

Saturday, 25 October 2008

The Hong Kong Monetary Authority said yesterday it had referred to the Securities and Futures Commission 40 more cases of alleged mis-selling of Lehman Brothers-backed financial products by banks.

"The 40 cases, which are the second batch of Lehman-Brothers-related cases referred in this way, involved alleged misconduct by two licensed banks in Hong Kong," the city's de-facto central bank said in a statement.

It said one of the banks in question was also involved in the first batch of 24 cases it referred on October 17.

Up to Thursday, the authority said it had received 16,301 complaints by investors who said their banks had sold them "mini-bonds" backed by the collapsed US giant without having fully explained to them the risks involved.

Apart from the 64 referrals to the SFC, the authority said it had opened investigations on 285 complaints and was seeking further information on 1,942 complaints.

In light of the large number of complaints, the authority said it would have to streamline the investigation process by identifying groups of cases with common features in making referrals to the SFC.

The Hong Kong Association of Banks said in a statement Friday that individual banks had since earlier this week started the process of settling with relevant investors, particularly elderly customers with no investment experience.

The association said its special task force will be in close liaison with the Monetary Authority to explore a mediation mechanism between the banks and their investors.

Thousands of investors have held protests across the territory in the past few weeks claiming the banks mis-sold the mini-bonds as risk-free investments, and lured vulnerable citizens into using up their life-savings.

Although the banks agreed last week to adopt a government proposal for them to buy back the products from customers at their current market value, the move failed to pacify investors who said they would get back a portion of their investment.

The mini-bonds are complex financial products linked to a bundle of derivatives backed by Lehman, and their value plummeted after the investment bank collapsed in September.

http://www.macaudailytimesnews.com/index.php?option=com_content&task=view&id=18068&Itemid=34

12 comments:

Anonymous said...: Strange that HK Monetary Authority has found so many cases of mis seliing. Their FI may have lower standard. So far in Singapore, I wonder whether MAS will find any FI here for mis selling?; October 25, 2008 10:09 PM
Anonymous said...: 10:09pm,
Don't worry lah, our banks here, especially local banks are very well managed, well behaved with high integrity. They won't make risky investments and won't sell risky investments, only the "sueh" investors who bought structured products think the investments are risky. How can these things be risky, already screen and approved by the authority and are designed for defensive investors. Our banks respect the old and vulnerable to the point if they go to any branch, they will be served refreshment. Where in this world can you find such friendly and caring banks, like in paradise, man! They are so good that somehow supervision is no longer so stringent. Now investors cry foul of mis-selling, there is only little action from the people up there after a lot of bad publicity. But if the banks are in trouble, I believe public funds will be used to bail them out, quick and decisively. This is the beauty of being a bank.; October 25, 2008 10:39 PM
Anonymous said...: Hi Mr Tan,

Can you please advise If we cannot get back the reasonable amount, can we take legal action against the Finanical Advisor for Fraudulent misrepresentation, if they themselves did not purchase the product....As this can be show that they themselves did not buy the product, as they themselves did not beleive in whatever they themselves is saying and yet they are still selling the product.....; October 26, 2008 12:10 AM
Anonymous said...: i am confident that MAS will carry out its duties well given the heightened attention to the situation right now.

However i would like to hightlight that performance rating for RM and teller in banks based on the number of policy they sold to consumer is a bad example for gauging ones performance.

Serious evaluation of any existence of such policy should be taken note of as these often lead to pressure to hard selling in order to reach qouta given and perhaps mis selling.; October 26, 2008 2:53 AM
Anonymous said...: With the way they handle it, How can MAS even start reporting any cases of mis selling by FIs? Latest, they just simply said they "welcome" the FIs' action to compensate the "vulnerable" investors.
I think this will be the only significant action so far and even for the future. For the rest "wait long long" for any further MAS or FI action, unless you take your own "drastic" action.; October 26, 2008 4:21 AM
Anonymous said...: I believe Huge under cover commissions scheme must have involved in Lehmen Bros structured products across the world.
FXXX the CEO of Lehemn Bros.He should be jailed, the entire team should be jailed for wrong doing.
Obama will you do us justice?; October 26, 2008 5:44 AM
Anonymous said...: The data the MAS is from the banks complaints handling process. By the time they get it is sanitised. MAS refusing to do its job of investigating the banks and asking the banks to investigate themselves - is just another round of selling the ordinary people out. They were supposed to make sure these products were never sold in Singapore in the first place. Many countries banned these lousy products.; October 26, 2008 8:15 AM
Anonymous said...: No reg. or little reg. is worse than over reg.
This is what we are experiencing now. Whos' fault?; October 26, 2008 8:41 AM
Anonymous said...: some times, we trust Bush family and cronies too much.

Now the hide in the bush and all the stupid congress clown show time live across the world. In the first place, Why Trade secretary 'Pulson' should not have NOT bail out L. Bros. Then they should Prosecute Bankers exporting TOXIC Products across the world. It is a Crime, not an excuses... Let's all GOvt file a sue in theWORLD court. THis is a financial WAR crime. it kills many old folks entire life saving colluting with rating agency. How could we all trust the bankers and rating agancy anymore. THe entire financial world is heading for collapsing...if regulators wash the hand and SUMMIT here and there, they are trying to cover up big bros wrong doing. WTF; October 26, 2008 8:45 AM
Anonymous said...: There will be NO compensation beyond what they are already willing to offer(aka to the vulnerable group that THEY DEEM so).

They dont say it now, they wont say it later

But eventually victims will get that message.; October 26, 2008 12:28 PM
Anonymous said...: My fear is that 12:28 pm may be right given the satement made by MAS chief Heng Swee Keat in today's Straits Times. He said that there will be a group described as 'knowledgeable and experienced' who should have understood the risks of investing in these products and take responsibility for their actions. My concern is that the FIs will jump on this statement and try find loop holes to push as many of us into this category as possible and hence refuse compensation. It is crucial that we share with each other ideas to counter this to protect our interest.; October 26, 2008 2:06 PM
Anonymous said...: I am a victim of Lehman brother structured product. Recently, I received a self-explainated letter from Standard Chartered bank for this issue. They said that bank found no responsiblity for this issue from their viewpoint. I am so regretful that they haven't called me once for investigation, how can they justify such decision. There are two points the never answer me before. First of all, what those bank would get for those trading. They said that they got nothing... who knows. THen, being a public commercial bank, we trust them working honest to us. They never told us the worst scenario. The customer relation manager reiterated again and again the worst case is to hold linked stock (most of them are blue chips ). Never mentioned that those product doesn't have any collateral. Back to the point, where are those stock ?
I bought those product through telephone banking. The manager called again and again to promote such product. I made a wrong decision to trust them but they are working like druy dealer to sell bad things to public.
Normally bank is working conservatively, they have so many technocrats to work out all scenario. SO, they know the risk of this product to public but they are not interested. They just calculate the risk of their own.
Is it worth to call them a public commercial bank ? The crisis comes from lying , promise is promise. If they don't get borrower pay them back, they may hire special company to chase or blacklist the client through banking network. However, we are saving our hard-earning money over 20 years for them to make loan to others. This is core business of bank. I can't imagin HKMA still silent and let those shameful big bank to take advantage from public.

I hope the public to look at this issue with eye-open, it is not only the concern of those investor. It is the ethic issue of bank.

If we don't set a very high standard of ethic for our bank, Hong Kong will not become a real financial center in future.

After this crisis, people lost trust. Eventhough those big financials are cheating. It will be back to basic --- TRUST
From the top down with a very strict goverance from GOVERNEMENT.

If HKMA still doesn't take any action and hope to let those cases diluted through time. It is stupid. Not use this crisis to raise up the standard / fame of Hongkong banking system.; February 12, 2009 7:36 AM