HONG KONG: The Legislative Council (LegCo) subcommittee inquiring into the Lehman Brothers minibonds saga Friday decided to ignore the Hong Kong Monetary Authority (HKMA) request to keep parts of the authority's report confidential.
Subcommittee chairman Raymond Ho Chung-tai told reporters after a meeting Friday that the subcommittee disagreed with HKMA chief Joseph Yam's argument that disclosing the portion would violate public interest, the Banking Ordinance, and affect the authority's investigation.
"The chapter six (the portion in question) of the report is not targeting at any individual bank and person. It only contains some general information," he said. "We believe that disclosing the information will help the investigation. The disclosure will only create positive impact, but not negative ones. It is more appropriate to disclose."
It is expected that the concerned portion is related to the problems observed by the HKMA in 238 cases.
The problems can be classified into five categories. Half of the cases are related to the sales of the products to elderly, persons with low education, or those who invested excessively in the products. Some of the cases involved inaccurate assessment of clients' capability to bear risk, others concern lack of signatures on documents.
But the HKMA has not reached any conclusion on these cases, and the Securities and Futures Commission is still following up.
The LegCo subcommittee will have an open hearing Tuesday, which will have Yam continue his testimony.
Kam Nai-wai, a subcommittee member, said a special meeting will be held should the HKMA launch a judicial review against the disclosure.
He said disclosing the information will help investors who may have been victimized by unethical sales practices, to settle with banks.
"The public will know what the HKMA has found over the past months concerning the sales practices of banks. The public and the victims of the saga will know what constitutes bad sales practice, and know what practices are adopted by the banks," he said. "This helps us find out the truth."
Chan Kwong-yue, spokesman for the Alliance of Lehman Brothers Victims, supported disclosing the report.
"We will know more about the structural bad sales practices of banks," he said. "We will then know what kind of bad practices are recognized by the HKMA."
But Hong Kong Association of Banks chairman Peter Wong had reservations about disclosing the information.
"Clients' personal information may be contained in the report. This will affect Hong Kong's role as an international financial center because clients will not do business in Hong Kong if their information is at risk of being leaked," he said. "At this stage, we cannot see how the disclosure will help the tackling of the incident."
A spokesman of HKMA declined to comment.
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