6 Nov 2008
The Democratic Party has dropped plans to sue several banks over allegedly mis-sold derivative investments because the banks have settled with complainants.
Party chairman Albert Ho Chunyan had intended to file writs against the banks for six claimants, who had spent millions of dollars on investment products linked to collapsed investment bank Lehman Brothers. They reached settlements with the banks yesterday.
Standard Chartered said it had resolved “a few cases” since Tuesday, including at least one yesterday, and Bank of China (Hong Kong) resolved four new cases yesterday.
A 67-year-old woman with an 80year-old mother who needs money for surgery settled with Standard Chartered yesterday, Civic Party legislator Audrey Eu Yuet-mee said. The daughter had bought HK$500,000 in Lehman-related equity-linked notes.
A Standard Chartered spokeswoman said at least one case had been settled yesterday. She declined to disclose any details of the settlement or say whether the agreement was based on evidence of mis-selling, but said the bank was discussing settlements with elderly customers and those with little investment history.
Elsie Ho, a representative of the Standard Chartered complainants, said it was “ a positive step” and showed the bank was sincere. “Their senior management has always had a good attitude,” she said. “ They always responded to our requests, even if they sometimes were slow.”
Also yesterday, Bank of China (Hong Kong), which had earlier settled with two customers, reached settlements with four others. They were people in their 70s who had invested sums ranging from tens of thousands of dollars to more that HK$1 million in minibonds through the bank, a spokeswoman said.
Minibonds are not corporate bonds, but high-risk, credit-linked derivatives marketed as proxy investments in well-known companies.
DBS said payments to holders of two series of Constellation structured retail notes had been made on Friday.
The Hong Kong Monetary Authority said yesterday that banks should let customers who purchased Lehman investment products hear recordings of meetings with their agents. It said some banks had declined requests for the recordings from customers who purchased investment products from them.
“It is the view of the HKMA that as a matter of fair and responsible business practice, banks should allow customers to listen to the recordings of their telephone conversations with bank employees,” said the authority’s executive director of banking supervision, Nelson Man. He did not say, however, that customers had any right to the recordings.
The customers could be accompanied by a friend, relative or adviser or to take notes while listening to the recordings. Banks should provide investors and their advisers with information on the collateral underlying minibonds, he said.
The Securities and Futures Commission, which regulates brokerages, said investors had “no right to tape recordings unless through some compelled discovery process”, such as a lawsuit.
It said in a written reply to Ms Eu: “Usually firms that have tapes will play them for clients to resolve complaints, but this is a voluntary act and they do not always give the investors a copy of the relevant tape recording.”
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