Here are 5 myths that the banks and security firms want the public to believe. I urge the public, who are not aware about the struggle of the investors, to read about the injustice that has been done.
Many people got the mistaken impression that the Singapore authority has helped many investors to get fair compensation. This is the impression given by the headlines in the mainstream papers. But this impression does not represent the true situation.
Think again. Out of over $500 million that has been invested, the total amount of compensation was only $107 million. Just about 20% was compensated. This is far short of the compensation offered in Hong Kong and Taiwan.
Are we an honest society?
Showing posts with label Credit linked notes. Show all posts
Showing posts with label Credit linked notes. Show all posts
Sunday, September 13, 2009
Website for Minibond Investors Action Group
Visit this website to know the progress of the legal action by the Minibond Investors Action Group.
Friday, September 11, 2009
Media interview on Lehman collapse
I gave two interviews on the Lehman collapse. They will appear on:
Sunday Times - 13 Sept
Channel News Asia - Thurs 17 Sept 8.30 pm
I described the events over the past year, and the difficulties faced by investors in getting a fair settlement. Eventually, many of them remain uncompensated. I hope that most of the points are covered in the news report, and are not censured.
I shall be speaking to some foreign TV stations.
Legal action by Minibond investors
Here is a report of the legal action taken by Minibond investors, advised by Conrad Campos.
Thursday, September 10, 2009
Wednesday, September 09, 2009
Interview by Foreign TV
A few foreign TV stations wish to find a Minibond investor to be interviewed, to share his or her experience on the impact of the investment on their life, and how the distress that they suffered to get compensation. If you are willing to be interviewed, please send an email to kinlian@gmail.com. Please come forward for your story to be told.
Saturday, August 22, 2009
Turnout at 22 August Gathering
An estimated 200 people turned up at the Gathering in Hong Lim Park. This was somewhat smaller that I had expected. Someone observed that the camera at Hong Lim Park was responsible for the low attendance.
We were blessed with good weather. BBC and CNBC were present. The major newspapers and Channel NewsAsia did not cover the event, in spite of two letters of invitation.
Petition to PM on credit linked notes (9)
Petition.
Signatures as at 15 August: 734
This is the countdown to the Gathering on 22 August.
I hope that all those who signed the Petition will attend the Gathering, and encourage other people to attend as well.
Date of Gathering: 22 August 2009
Place: Speaker's Corner, Hong Lim Park
Signatures as at 15 August: 734
This is the countdown to the Gathering on 22 August.
I hope that all those who signed the Petition will attend the Gathering, and encourage other people to attend as well.
Date of Gathering: 22 August 2009
Place: Speaker's Corner, Hong Lim Park
Time: 5.00 pm
Activities:
Activities:
1. Recital of National Pledge
2. Speech by Tan Kin Lian
3. Hold placards with messages
4. Sign Petition (for those who did not sign online)
5. Talk to other investors at the Gathering
2. Speech by Tan Kin Lian
3. Hold placards with messages
4. Sign Petition (for those who did not sign online)
5. Talk to other investors at the Gathering
SCMP:Three in eight minibond buyershave taken banks' buy-back offer
22 Aug 2009
Three in eight buyers of Lehman Brothers minibonds have accepted an offer by 16 banks to buy them back in the two weeks since the offer opened, the Hong Kong Monetary Authority said yesterday. Peter Chan Kwong-yue, chairman of a group of aggrieved investors, is not surprised.
It is 11 months since the US investment bank collapsed amid the global credit crisis and many of the investors wanted a resolution, Mr Chan said. "It makes sense that the Hong Kong Monetary Authority wants to put pressure on the remaining investors to quickly take up the offer as well."
A spokesman for the authority said investors needed to "consider carefully the terms of the offer and his or her personal circumstances" in deciding whether or not to accept the offer.
The 9,219 investors who have agreed to sell their minibonds to the banks from which they bought them will get back 60 to 70 per cent of their initial investment depending on their age, and may get more depending on the residual value of the assets underlying the minibonds.
Despite their name, minibonds are not corporate bonds but complex, credit-linked derivatives whose value depends on the performance of their underlying assets.
Investors claim banks marketed them as proxy investments in well-known companies and failed to explain the investment risk.
"The HKMA is just using the fact that so many people accepted the offer to get the rest of us to accept and swiftly close the whole issue. It's outrageous," he said.
More than 20,000 investors complained about the vendor banks and brokerages to the Monetary Authority and the Securities and Futures Commission, which have begun taking action. Of 21,635 complaints the authority has received, it has dismissed 1,851, is seeking more information on 11,853 and is currently investigating 6,346.
The SFC has won a court order for Lehman Brothers Asia to hand over 17 internal documents as part of its investigations. Lehman Brothers Asia is in liquidation.
The commission issued a notice to the investment bank on October 31 requiring the surrender of the documents. But the bank refused, claiming the documents involved confidential information about dealings between lawyers and clients.
Three in eight buyers of Lehman Brothers minibonds have accepted an offer by 16 banks to buy them back in the two weeks since the offer opened, the Hong Kong Monetary Authority said yesterday. Peter Chan Kwong-yue, chairman of a group of aggrieved investors, is not surprised.
It is 11 months since the US investment bank collapsed amid the global credit crisis and many of the investors wanted a resolution, Mr Chan said. "It makes sense that the Hong Kong Monetary Authority wants to put pressure on the remaining investors to quickly take up the offer as well."
A spokesman for the authority said investors needed to "consider carefully the terms of the offer and his or her personal circumstances" in deciding whether or not to accept the offer.
The 9,219 investors who have agreed to sell their minibonds to the banks from which they bought them will get back 60 to 70 per cent of their initial investment depending on their age, and may get more depending on the residual value of the assets underlying the minibonds.
Despite their name, minibonds are not corporate bonds but complex, credit-linked derivatives whose value depends on the performance of their underlying assets.
Investors claim banks marketed them as proxy investments in well-known companies and failed to explain the investment risk.
"The HKMA is just using the fact that so many people accepted the offer to get the rest of us to accept and swiftly close the whole issue. It's outrageous," he said.
More than 20,000 investors complained about the vendor banks and brokerages to the Monetary Authority and the Securities and Futures Commission, which have begun taking action. Of 21,635 complaints the authority has received, it has dismissed 1,851, is seeking more information on 11,853 and is currently investigating 6,346.
The SFC has won a court order for Lehman Brothers Asia to hand over 17 internal documents as part of its investigations. Lehman Brothers Asia is in liquidation.
The commission issued a notice to the investment bank on October 31 requiring the surrender of the documents. But the bank refused, claiming the documents involved confidential information about dealings between lawyers and clients.
Kyodo News:H.K. regulator wins legal backing on Lehman Brothers documents
21 Aug 2009
HONG KONG, Aug. 21 -- Hong Kong's securities regulator said Friday it won a court ruling that forces Lehman Brothers Asia Ltd., a subsidiary in liquidation of the now-defunct U.S. financial firm, to hand over minibond-related documents that it had deemed ''too privileged'' for disclosure.
Some 30,000 local investors claim they were scammed into buying the Lehman Brothers financial product, believing it had a low-risk nature and some invested their life savings.
The Securities and Futures Commission has been investigating the matter and as part of the investigation it has sought documents from Lehman's liquidator since last year that it said are related to the assessment of the minibonds.
The High Court handed down a ruling Wednesday ordering Lehman to hand over the documents in question because they ''were not subject to valid claims of privilege,'' according to a statement issued by the commission.
''It is unfortunate that the SFC would not have obtained any of these documents without having to take these proceedings against Lehman Brothers,'' said Mark Steward, the commission's executive director of enforcement.
A spokesman for the commission declined to say if it has received the documents from Lehman's liquidator yet.
Along with another regulator, the Hong Kong Exchanges and Clearing Ltd., the commission has been criticized by the minibond investors for acting too slowly in the investigation.
Sixteen banks responsible for selling the minibonds agreed last month to a settlement arrangement that will buy back at least 60 percent of the product's worth from eligible investors.
The outstanding value of the minibonds was estimated at about HK$12.6 billion ($1.61 billion).
U.S. securities firm Lehman Brothers Holdings Inc. filed for bankruptcy protection last September.
HONG KONG, Aug. 21 -- Hong Kong's securities regulator said Friday it won a court ruling that forces Lehman Brothers Asia Ltd., a subsidiary in liquidation of the now-defunct U.S. financial firm, to hand over minibond-related documents that it had deemed ''too privileged'' for disclosure.
Some 30,000 local investors claim they were scammed into buying the Lehman Brothers financial product, believing it had a low-risk nature and some invested their life savings.
The Securities and Futures Commission has been investigating the matter and as part of the investigation it has sought documents from Lehman's liquidator since last year that it said are related to the assessment of the minibonds.
The High Court handed down a ruling Wednesday ordering Lehman to hand over the documents in question because they ''were not subject to valid claims of privilege,'' according to a statement issued by the commission.
''It is unfortunate that the SFC would not have obtained any of these documents without having to take these proceedings against Lehman Brothers,'' said Mark Steward, the commission's executive director of enforcement.
A spokesman for the commission declined to say if it has received the documents from Lehman's liquidator yet.
Along with another regulator, the Hong Kong Exchanges and Clearing Ltd., the commission has been criticized by the minibond investors for acting too slowly in the investigation.
Sixteen banks responsible for selling the minibonds agreed last month to a settlement arrangement that will buy back at least 60 percent of the product's worth from eligible investors.
The outstanding value of the minibonds was estimated at about HK$12.6 billion ($1.61 billion).
U.S. securities firm Lehman Brothers Holdings Inc. filed for bankruptcy protection last September.
Friday, August 14, 2009
Petition to PM on credit linked notes (7)
Petition.
Signatures as at 1 August: 650
The signing of the online petition has slowed down during the past weeks. An average of 10 people sign each day.
With the recent decision by Great Eastern Life to buy back their structured products, there is some hope of getting the banks and financial institutions to adopt the same settlement given in Hong Kong.
I urge all investors to put in a renewed effort to get more people to sign the petition and reach the target of 1,000 signatures.
Update as at 9 August: 716 signatures (average of 10 per day)
Signatures as at 1 August: 650
The signing of the online petition has slowed down during the past weeks. An average of 10 people sign each day.
With the recent decision by Great Eastern Life to buy back their structured products, there is some hope of getting the banks and financial institutions to adopt the same settlement given in Hong Kong.
I urge all investors to put in a renewed effort to get more people to sign the petition and reach the target of 1,000 signatures.
Update as at 9 August: 716 signatures (average of 10 per day)
Wednesday, August 12, 2009
Update on Gathering of 22 August (1)
1. Donations
I have received donations of $1,300. This includes a generous donation of $500 from an investor. The total is sufficient to meet the expenses of the Gathering, but not sufficient to take an advertisement on the Petition. Any balance, after deducting expenses, will be donated to FISCA (Financial Services Consumer Association). Further donations are welcomed.
2. Volunteers
5 people have volunteered to help with the ground work on 22 August. I need more volunteers. Please send an e-mail to kinlian@gmail.com. You have to report at 4 pm at the cafe outside the Hong Ling CC on 22 August.
3. Petition
730 people have signed the online Petition. We will collect more signatures at the Gathering to reach the target of 1,000 signatures.
I have received donations of $1,300. This includes a generous donation of $500 from an investor. The total is sufficient to meet the expenses of the Gathering, but not sufficient to take an advertisement on the Petition. Any balance, after deducting expenses, will be donated to FISCA (Financial Services Consumer Association). Further donations are welcomed.
2. Volunteers
5 people have volunteered to help with the ground work on 22 August. I need more volunteers. Please send an e-mail to kinlian@gmail.com. You have to report at 4 pm at the cafe outside the Hong Ling CC on 22 August.
3. Petition
730 people have signed the online Petition. We will collect more signatures at the Gathering to reach the target of 1,000 signatures.
Tuesday, August 11, 2009
Norway towns sue Citi over structured note losses
Perhaps it is time for Town Councils in Singapore to sue the distributors, following the example of the towns in Norway. Read this article.
I suggest that residents send this article to their Town Councils involved in the credit-linked notes.
Monday, August 10, 2009
Investor to share experience on BBC
BBC is doing a series of global reports on the anniversary of the Lehman collapse. They are to do an "authored report", ie someone affected by the collapse in some way, talking about their experiences.
If you are interested to be interviewed by BBC, please send an email to kinlian@gmail.com. You can request the BBC not to use your real name, but to write about your experience.
Apart from talking about how you were misled into the investment, you can also talk about the months of agony earlier with the financial institution, FIDREC and MAS.
If you are interested to be interviewed by BBC, please send an email to kinlian@gmail.com. You can request the BBC not to use your real name, but to write about your experience.
Apart from talking about how you were misled into the investment, you can also talk about the months of agony earlier with the financial institution, FIDREC and MAS.
Sunday, August 09, 2009
DBS Bank: 'definitely' no note buyback
By George Ng (HK Edition)
HONG KONG: DBS Bank (Hong Kong) Ltd will "definitely" not buy back the Constellation Notes from its clients despite the fact that other banks have agreed to buy back another structured product they sold to investors, the bank's top executive said Friday.
"We have explained very clearly the risks involved when we sold the product to investors ... we have reviewed all complaints (regarding the sales of the product) and have made proper compensation in cases that involved mis-selling," said Chief Executive Officer Amy Yip, fielding media questions at a press briefing for the group's quarterly results.
"There will be no further settlement," she said. "We definitely won't buy back the notes." Yip emphasized that the structure of the Constellation notes is very different from the so-called Lehman Brothers minibonds.
Last month, 16 banks offered to pay at least 60 cents on the dollar to investors for the minibonds guaranteed by Lehman Brothers that lost their value after the US investment bank collapsed.
Linked to the credit of a basket of companies including Lehman, the value of the Constellation notes will be reduced whenever any of the reference institutions suffers from credit events such as bankruptcy or default.
DBS said in a statement in October last year that the possibility of the 4,700 investors losing their entire investment of $241-million in the Constellation notes "is likely to materialize".
Meanwhile, Koh Boon Hui, chairman of DBS Group Holdings Ltd, parent of DBS Bank (Hong Kong) Ltd, told the same press briefing that the group will "definitely" not reduce its headcounts further.
Rather, the bank will do "necessary" recruiting in Hong Kong as business improves with the economy, Yip added.
DBS, Singapore's largest bank and one of Southeast Asia's largest banks, cut 900 jobs late last year after the global financial crisis hit the world, with half of the headcount reductions coming from its Hong Kong unit.
The DBS group yesterday reported a net profit of 552 million Singapore dollars (S$) in the second quarter, up 21 percent from the first quarter as revenue growth boosted earnings before bad-debt allowances to a record S$1.6 billion.
On a year-on-year basis, net profit fell 17 percent from S$668 million as improved operating performance was offset by higher bad-debt allowances, the group said.
DBS set aside S$466 million for bad debts, almost eight times more than a year earlier, with non-performing loan ratio rising to 2.8 percent from 1.4 percent a year ago.
Meanwhile, the bank's Hong Kong unit, DBS Bank (Hong Kong) Ltd, reported a net profit of HK$532 million for the second quarter, down 21 percent from a year ago as non-interest income dropped 20 percent to S$632 million while bad-debt provisions surged 61 percent to S$373 million.
Compared with the first quarter, net profit was up 12 percent as net interest income improved by 5 percent to $1.19 billion while bad-debt provisions declined by 17 percent.
The non-performing loan ratio of the Hong Kong unit rose sharply from 1.7 percent in December to 2.6 percent in March and then retreated to 2.4 percent in June.
http://www.chinadaily.com.cn/hkedition/2009-08/08/content_8544177.htm
HONG KONG: DBS Bank (Hong Kong) Ltd will "definitely" not buy back the Constellation Notes from its clients despite the fact that other banks have agreed to buy back another structured product they sold to investors, the bank's top executive said Friday.
"We have explained very clearly the risks involved when we sold the product to investors ... we have reviewed all complaints (regarding the sales of the product) and have made proper compensation in cases that involved mis-selling," said Chief Executive Officer Amy Yip, fielding media questions at a press briefing for the group's quarterly results.
"There will be no further settlement," she said. "We definitely won't buy back the notes." Yip emphasized that the structure of the Constellation notes is very different from the so-called Lehman Brothers minibonds.
Last month, 16 banks offered to pay at least 60 cents on the dollar to investors for the minibonds guaranteed by Lehman Brothers that lost their value after the US investment bank collapsed.
Linked to the credit of a basket of companies including Lehman, the value of the Constellation notes will be reduced whenever any of the reference institutions suffers from credit events such as bankruptcy or default.
DBS said in a statement in October last year that the possibility of the 4,700 investors losing their entire investment of $241-million in the Constellation notes "is likely to materialize".
Meanwhile, Koh Boon Hui, chairman of DBS Group Holdings Ltd, parent of DBS Bank (Hong Kong) Ltd, told the same press briefing that the group will "definitely" not reduce its headcounts further.
Rather, the bank will do "necessary" recruiting in Hong Kong as business improves with the economy, Yip added.
DBS, Singapore's largest bank and one of Southeast Asia's largest banks, cut 900 jobs late last year after the global financial crisis hit the world, with half of the headcount reductions coming from its Hong Kong unit.
The DBS group yesterday reported a net profit of 552 million Singapore dollars (S$) in the second quarter, up 21 percent from the first quarter as revenue growth boosted earnings before bad-debt allowances to a record S$1.6 billion.
On a year-on-year basis, net profit fell 17 percent from S$668 million as improved operating performance was offset by higher bad-debt allowances, the group said.
DBS set aside S$466 million for bad debts, almost eight times more than a year earlier, with non-performing loan ratio rising to 2.8 percent from 1.4 percent a year ago.
Meanwhile, the bank's Hong Kong unit, DBS Bank (Hong Kong) Ltd, reported a net profit of HK$532 million for the second quarter, down 21 percent from a year ago as non-interest income dropped 20 percent to S$632 million while bad-debt provisions surged 61 percent to S$373 million.
Compared with the first quarter, net profit was up 12 percent as net interest income improved by 5 percent to $1.19 billion while bad-debt provisions declined by 17 percent.
The non-performing loan ratio of the Hong Kong unit rose sharply from 1.7 percent in December to 2.6 percent in March and then retreated to 2.4 percent in June.
http://www.chinadaily.com.cn/hkedition/2009-08/08/content_8544177.htm
HK investors protest DBS
HONG KONG - ABOUT 100 Hong Kong investors burned by complex financial products linked to failed US investment bank Lehman Brothers protested on Sunday, demanding securities regulators help them negotiate a settlement.
Tens of thousands of retail investors in this Chinese-ruled financial hub were hit by Lehman's collapse in September.
Hong Kong securities regulators announced a settlement deal last month for one group of investors who purchased certain Lehman-linked products through local banks, but the agreement did not cover products sold by Singaporean bank DBS Group Holdings.
Sunday's protesters were demanding securities regulators step in to strike a deal for DBS clients. The demonstrators bought so-called 'Constellation' notes from DBS - financial products that are linked to the credit ratings of a group of financial institutions, including Lehman.
About 6,900 Hong Kongers bought HK$2.3 billion (S$427 million) worth of the failed investments, according to K.C. Lok, an organiser of the disgruntled investors.
'DBS lacks a conscience', 'DBS is a swindler', the protesters chanted at a park in Hong Kong's downtown Central financial district.
Lok, who bought just over HK$100,000 in the Constellation notes, accused DBS of misleading its customers into believing the financial products were conservative investments.
'Many of the investors shifted their money from timed deposits,' Mr Lok said.
DBS Hong Kong spokeswoman Glendy Chu said on Sunday that the bank had explained the risks of the products and offered compensation to investors in cases where there was evidence of questionable sales practices.
The deal announced last month would see 16 local banks returning 60 or 70 per cent of the principal to thousands of investors in a payout that amounts to HK$6.3 billion. -- AP
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_414677.html
Tens of thousands of retail investors in this Chinese-ruled financial hub were hit by Lehman's collapse in September.
Hong Kong securities regulators announced a settlement deal last month for one group of investors who purchased certain Lehman-linked products through local banks, but the agreement did not cover products sold by Singaporean bank DBS Group Holdings.
Sunday's protesters were demanding securities regulators step in to strike a deal for DBS clients. The demonstrators bought so-called 'Constellation' notes from DBS - financial products that are linked to the credit ratings of a group of financial institutions, including Lehman.
About 6,900 Hong Kongers bought HK$2.3 billion (S$427 million) worth of the failed investments, according to K.C. Lok, an organiser of the disgruntled investors.
'DBS lacks a conscience', 'DBS is a swindler', the protesters chanted at a park in Hong Kong's downtown Central financial district.
Lok, who bought just over HK$100,000 in the Constellation notes, accused DBS of misleading its customers into believing the financial products were conservative investments.
'Many of the investors shifted their money from timed deposits,' Mr Lok said.
DBS Hong Kong spokeswoman Glendy Chu said on Sunday that the bank had explained the risks of the products and offered compensation to investors in cases where there was evidence of questionable sales practices.
The deal announced last month would see 16 local banks returning 60 or 70 per cent of the principal to thousands of investors in a payout that amounts to HK$6.3 billion. -- AP
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_414677.html
Saturday, August 08, 2009
Off-loading the risky credit default swaps
I share this hypothesis. Does it look close to reality?
During the years prior to 2005, investment banks were making huge profits by issuing credit default swaps to guarantee the bonds issued by borrowers. They sold these swaps to other investors and made a good margin.
In the later years, as the economic situation becomes difficult and defaults on mortgages rises, the investment banks were saddled with swaps that they were not able to off-load to ther investors.
Some clever but dishonest banker conceived the idea of designing a structured product to hide these swaps and sell them to retail investors. They looked for countries that are wishes to be a financial hub and have a history of being pro-business and weak in consumer protection. Singapore and Hong Kong were selected.
This was the beginning of the crisis of the credit-linked notes.
Tan Kin Lian
Friday, August 07, 2009
Lehman Brothers Victim alliance in Hong Kong
The Lehman Brothers Victim alliance in Hong Kong web site has a news section that shows related Chinese and English news http://www.lbv.org.hk/content/pages/newsclip.php .
Thursday, August 06, 2009
Volunteers for 22 August Gathering
I need volunteers to help with the following duties for the Gathering on 22 August:
a) Hold up the placards
b) Collect signatures for the Petition - you will be provided with a hard backing board and signature forms
c) Distribute flyers
d) Sell my books - 50% of proceeds will go towards the expenses
If you are able to help, please send an email to kinlian@gmail.com.
a) Hold up the placards
b) Collect signatures for the Petition - you will be provided with a hard backing board and signature forms
c) Distribute flyers
d) Sell my books - 50% of proceeds will go towards the expenses
If you are able to help, please send an email to kinlian@gmail.com.
Tuesday, August 04, 2009
SCMP:Watchdog accused over Lehman probe decision
4 August 2009
Lawmakers criticised the financial regulator for suspending an investigation over the selling of non-minibond products after banks agreed a HK$6.3 billion deal to repay Lehman Brothers minibonds buyers.
Securities and Futures Commission chief executive Martin Wheatley said the commission had not only ended its top-down inquiry into minibonds, but also suspended investigation of other products from the 16 banks under the agreement.
He was speaking at a hearing of the subcommittee on the debacle surrounding the sale of Lehman Brothers financial products.
Democrat James To Kun-sun told the five-hour meeting: "It's about the minibonds agreement with the banks, but you {hellip} voluntarily suspended your statutory duty to investigate the systematic failure [over the selling] of non-minibonds products."
Another democrat, Kam Nai-wai, asked Mr Wheatley if he thought the interests of other buyers who bought Constellation Notes, a derivative similar to minibonds also issued by Lehman Brothers, or equity-linked notes had been sacrificed.
Lehman Brothers minibonds holders will receive letters before Monday from the banks who will repay them at least 60 per cent of the value of their initial investment.
Mr Wheatley said the investigation into non-minibonds products, involving about 500 cases, had been suspended because the latest deal required the banks to immediately implement improved complaints-handling procedures to resolve all complaints they received.
He said the investigation of three other banks, which were not included in the payout deal because they sold Lehman-related products apart from minibonds, continued. Investors should first turn to banks if they had complaints, and then the Hong Kong Monetary Authority.
Subcommittee chairman Raymond Ho Chung-tai said it would ask the commission to submit an original copy of the agreement, investigation findings of the 16 minibond-selling banks, as well as e-mail exchanges the commission had with the Monetary Authority and financial officials before it reached the deal.
Minibonds are not corporate bonds, but consist of high-risk credit-linked derivatives, and are marketed as a proxy investment in well-known companies. Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt last September.
Lawmakers criticised the financial regulator for suspending an investigation over the selling of non-minibond products after banks agreed a HK$6.3 billion deal to repay Lehman Brothers minibonds buyers.
Securities and Futures Commission chief executive Martin Wheatley said the commission had not only ended its top-down inquiry into minibonds, but also suspended investigation of other products from the 16 banks under the agreement.
He was speaking at a hearing of the subcommittee on the debacle surrounding the sale of Lehman Brothers financial products.
Democrat James To Kun-sun told the five-hour meeting: "It's about the minibonds agreement with the banks, but you {hellip} voluntarily suspended your statutory duty to investigate the systematic failure [over the selling] of non-minibonds products."
Another democrat, Kam Nai-wai, asked Mr Wheatley if he thought the interests of other buyers who bought Constellation Notes, a derivative similar to minibonds also issued by Lehman Brothers, or equity-linked notes had been sacrificed.
Lehman Brothers minibonds holders will receive letters before Monday from the banks who will repay them at least 60 per cent of the value of their initial investment.
Mr Wheatley said the investigation into non-minibonds products, involving about 500 cases, had been suspended because the latest deal required the banks to immediately implement improved complaints-handling procedures to resolve all complaints they received.
He said the investigation of three other banks, which were not included in the payout deal because they sold Lehman-related products apart from minibonds, continued. Investors should first turn to banks if they had complaints, and then the Hong Kong Monetary Authority.
Subcommittee chairman Raymond Ho Chung-tai said it would ask the commission to submit an original copy of the agreement, investigation findings of the 16 minibond-selling banks, as well as e-mail exchanges the commission had with the Monetary Authority and financial officials before it reached the deal.
Minibonds are not corporate bonds, but consist of high-risk credit-linked derivatives, and are marketed as a proxy investment in well-known companies. Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt last September.
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