Over 2000 complaints already!

Reports show that the HKMA has already received over 2000 cases of complaints concerning the misleading and harmful promotion methods of banks concerning the Lehman Brothers Minibonds.

Obvious cases of misleading selling methods will be first investigated and more resources would be put into their investigation.

Professor K.C. Chan, SBS, JP, Secretary for Financial Services and the Treasury reminded the people with such investments that the most effective way is to report to supervisory organisations should they feel that the banks has mislead them. He stated that the commission is actively investigating and paying close attention to the development of this incident.

Finally - some actions by our government

Martin Wheatley, JP, Chief Executive Officer of Securities and Futures Commission Hong Kong said the promotion and selling methods of the Lehman Brothers Minibond is under investigation.

"Local and overseas investors have never expected that such a large organisation will go bankrupt," he said.

The commission was attacked for insufficient supervision. "Banks have the responsibility to clearly explain the risks of the products and make sure that the products suit their clients' portfolio," Mr Wheatley said. "We are collecting information on how the products were promoted and after our investigation, we would be able to make a conclusion and see if the current supervisory system has room for improvement."

Democratic party's response

10 days into the Lehman Brother's scandal...what is the democratic party's response?

Today, the Democratic Party organised a discussion with around 600 investors and suggested three tactics to cope with the situation.

Tactic 1: Litigation.

Hon. Albert Ho Chun-yan said they will begin their actions by filing a complaint to the Consumer Council on the harmful selling methods of the banks. "Elderly, retired people; Those who originally put their money in time deposits but were persuaded to invest in the minibonds; and those who were persuaded to buy the minibonds after the problems were discovered, that is around August. We will provide assistance to these people first."

Tactic 2: Pressurise the Banks.

The Party suggested that the affected people can be divided into different groups, according to the banks that they have bought the minibonds. Kam Nai-wai claimed around 1700 people sought for help from the Democratic Party with the largest proportion of them as investors of the Bank of China.

Tactic 3: Reorganise the whole incident.

Laurence L.J. Lee (Barrister) claimed that the investors should recall how they were being persuaded to purchase the minibonds.

Questions to consider:

1. Who persuaded you?

2. Did any other staff from the bank approach you?

3. Did they talk to you when you renewed your time deposit or did they call you to persude you?

To all the affected people: do consider these methods...maybe they might help you get your hard-earned money back!

Mr GREEDY...?

Many may be thinking...

Did the investors' greed lead them to this kind of situation?

Today, over 20 'victims' went to the Consumer Council to complain about the banks' selling techniques and request for compensation.

A retired couple invested HK$7.2 million of their savings and pension in minibonds sold by Lehman Brothers. They were told that there are no risks in their investment.

Now, they might lose all their money...

Do they deserve this?

Investors Profile

Name:
Mr Choi

Total amount of Investments:
HK$1.52 million

Invested in:
Mini-Bonds offered by Bank of China, Sun Hung Kai Finance and Lehman Brothers

What he said:
The advisors at my bank MISLEAD me! I never knew that the underwriter of bonds was Lehman Brothers! I used to put all my money in time deposits. They called me to promote this product and told me clearly that this is LOW RISK! They never told us that the products were sold by Lehman Brothers! I only knew when they called me a few days ago and informed me that my deposits may be TOTAL LOSS!



Mr Ho said:
Many investors are middle-aged or retired. The staff at the banks so me that the investment is very safe and even better than time deposits. That's why I invested in it! I've never heard what is Lehman Brothers and I didn't know that if the underwriter goes into bankrupt, my investments would be all GONE!

This is a - black hole...

It's already a week after the bankrupcy.

The loss of investors is like a BLACK HOLE! No one can make an estimation of how much money world-wide minibond investors have lost.

Over 100 investors went to Hong Kong Monetary Authority to talk to Securities and Futures Commission and HKMA representatives.

Investors claim they were never told by the bank that Lehman was the underwriter of the minibonds and were told that the risk of putting money is extremely low.

The Government is asked to investigate the problem.

But will they give the public a satisfying answer??

Personal Finance 101

Many might think...what is a Minibond?

The main difference between a bond and a minibond is that it requires (MUCH) less principal to buy compared to the traditional bonds (- that's what made it so attractive!)

The least amount of purchase usually ranges from ten thousand Hong Kong dollars to fifty or sixty per unit.

The distributor is usually a Cayman Island-registered company. They chop up the bonds (which only the rich people can afford!) and sell it through retail banks in Hong Kong to accumulate principal and purchase blue-chip bonds (usually the financial institutions are the trustees of these bonds).

The minibonds consists of high-risk derivatives like synthetic collateralised-debt obligations (CDOs) and credit default swaps (CDS) and were marketed as proxy investments in well-known companies such as Hutchison Whampoa and the Hong Kong and Shanghai Bank Corporation (HSBC).

In the past few years, Lehman Brothers sold over 10 billion worth of Minibonds.

This is our understanding for the time being...

Hope you get it!

Upcoming CRISIS!

The news of LEHMAN BROTHER's bankrupcy caused extreme chaos at Wall Street yesterday. US and European governments are holding meetings to prevent financial crisis.

The Hang Seng Index and Nikkei dropped 6.5% and 5% respectively.

Established in 1850, LEHMAN BROTHERS experienced the 1929 Great Depression and many financial crisis. The announcement led to many questions on whether the mortgage problems in US will be worsened?

The company was ordered to stop all its businesses at all offices and keep all assets untouched.

Lehman - BANKRUPT!

One of the oldest AND the forth-largest US-established investment bank, LEHMAN BROTHERS, announced its bankrupcy today.

The share price of the company decreased sharply after Merrill Lynch sold a large amount of its shares at an extremely low price. This has also caused the Dow Jones Industrial Index to drop by 288.55 to 11133.44 just 10 minutes after the market opened.

We wonder what consequences would be caused by this shocking news?