4 Dec 2008
Yvonne Tsui, Eva Wu and Dennis Eng
A fisherman is suing the Bank of China for the return of HK$800,000 he invested with Lehman Brothers, alleging he was deceived because he is illiterate.
Lai Kam-fook, who filed a writ in the District Court on Tuesday, is taking legal action after he was told in September that his money was affected by the collapse of the American bank.
The writ alleges he and his wife were advised by a staff member at the bank’s Aberdeen branch in August 2004 to make a risk-free, five-year deposit with a higher interest rate. It says he had deposited HK$800,000.
It alleges Mr Lai had never received or read any documentation from the bank.
“Because the staff member, surnamed Leung, told me it was a fiveyear deposit, I believed her. I did not read anything. It is useless to have read anything because I am illiterate anyway,” Mr Lai stated in the writ.
“To conclude, the total sum I had invested is HK$800,000. My allegation is: the bank cheated me because I am illiterate.”
However, HSBC Hong Kong received a cease-and-desist order last week from Weil, Gotshal & Manges, Lehman’s bankruptcy counsel. This notice means the minibonds cannot be liquidated, which would be necessary to go ahead with a buy-back. Democrat Kam Nai-wai, however, said the best option remained the banks buying back the bonds.
As an alternative, six lawmakers suggested that a redemption fund of HK$20 billion, including HK$10 billion from the government, be established.
However, the Secretary for Financial Services and the Treasury, Chan Ka-keung, said public funds should not be used to compensate investors’ losses.
Minibonds are not corporate bonds, but consist of high-risk, credit-linked derivatives that were marketed as proxy investments in well-known companies.
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