The Legislative Council has passed a motion and three amendments to criticize the government for failing to monitor the sale of Lehman Brothers minibonds and other products by financial institutions and banks.
Diana Lee
Thursday, October 23, 2008
The Legislative Council has passed a motion and three amendments to criticize the government for failing to monitor the sale of Lehman Brothers minibonds and other products by financial institutions and banks.
Lawmakers also called for strengthening the protection of investors' interests and preventing any recurrence.
But banking sector legislator David Li Kwok-po said he hoped the issue would not be "politicized."
A bank is just the agent of the minibonds and selling them has been approved by the authorities, Li said.
"The banks have no obligation to conduct buyback deals with customers. They responded to market demand and were also taking risks."
Li's remarks raised the hackles of unionist Lee Cheuk-yan. "The banks abused the trust of the public," Lee said.
Meanwhile, the Hong Kong Association of Banks said the first Lehman minibond buyback exercise can be conducted in early December.
The Consumer Council said at least one complainant had sought assistance from its legal action fund to file a lawsuit.
A source said the Securities and Futures Commission expects banks to do their own review of the cases.
The source said the SFC has no plans to launch a blanket solution on compensation as it prefers banks to decide for themselves.
Meanwhile, the Monetary Authority of Singapore said it received two proposals to restructure Lehman products, a move that could help investors recoup some losses.
HSBC Institutional Trust Services (Singapore), the trustee for the minibonds, said two international financial institutions have offered to restructure the notes to allow them to run to maturity.
DBS said total customer compensation in Singapore and Hong Kong will be around HK$362 million.
http://www.thestandard.com.hk/news_print.asp?art_id=73338&sid=21122158
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