8 Nov 2008
Standard Chartered Bank admitted yesterday it had used substandard methods to sell derivatives issued by bankrupt firm Lehman Brothers to some customers.
Benjamin Hung Pi-cheng, Standard Chartered executive director and chief executive officer, said the bank had concluded an initial investigation. Although it had not found any systemic problems, there were cases where sales methods had been below the bank’s internal standards.
“The bank is willing to bear full responsibility and will handle [the cases] accordingly,” he said.
Meanwhile, Bank of China (Hong Kong) settled with two customers yesterday.
Standard Chartered customers have been complaining since September along with thousands of investors who bought Lehman-related products from other banks.
The bank sold Lehman-issued derivatives, but not minibonds, to 2,200 customers, 10 per cent of whom were elderly, Mr Hung said. It is initially dealing with customers aged 65 and over with little investment experience. Some elderly customers were financially well-educated, he said.
The bank had formed an independent group covering sales issues and would conduct individual and thorough investigations of each case. Mr Hung did not disclose the total amount invested, or what compensation, if any, had been agreed.
Elsie Ho, representing a group of Standard Chartered complainants, said so far two investors out of about 150 who registered with the group had reported settling with the bank.
She was surprised to learn that more than 2,000 customers were involved, instead of the 300 she had estimated.
The Monetary Authority referred 24 more cases to the Securities and Futures Commission yesterday, bringing the total to 96.
BOCHK settled with two customers, named only as Mr Wong and Ms Tseng. Mr Wong was seen leaving the bank smiling yesterday.
The customers were satisfied with the arrangements, said the Democratic Alliance for the Betterment and Progress of Hong Kong, which had been helping them.
The group Allied Victims of Lehman Products will hold a candle-light vigil this evening.
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