he Standard:SFC to tackle equity-linked notes fiasco after settling minibonds saga\

4 August 2009

The Securities and Futures Commission has vowed to speed up its investigation into sales of Lehman Brothers equity-linked notes after settling the minibond controversy.

But the watchdog's chief executive could not provide a timetable because it is negotiating with banks that sold the notes.

Martin Wheatley told lawmakers yesterday he could not say if the ELN issue would follow the minibond model, but ``a settlement is always the best outcome.''

The SFC and 16 distributing banks agreed on July 23 on a settlement proposal to pay back 60 to 70 percent of the original investments of thousands of minibond holders. But ELN investors _ and those labeled as ``professional investors'' and ``experienced investors'' _ were excluded. Banks have agreed to repay minibond investors up to HK$6.3 billion with the SFC ending its ``top-to-bottom'' investigation.

Wheatley said the SFC would let minibond holders decide if they will accept the offer, and would not resume its efforts even if half of the investors reject the deal.

``Investors could complain to the Hong Kong Monetary Authority or even go to court,'' he said.

``If there have been multiple purchases of complex financial products, then it's more difficult for them to argue that they could not have understood the complex nature of a structured product.''