HK SFC tells issuers to review risk disclosure and product descriptions
The Hong Kong Securities and Futures Commission (SFC) has issued a circular which requires all issuers of retail investment products to review whether risk disclosure and product descriptions are adequate. The circular was issued in response to widespread concern over the marketing of structured products in the wake of Lehman Brothers bankruptcy. The SFC, which has received over 150 complaints from investors who had bought Lehman Minibonds, is currently investigating allegations of misselling.
“Recent events show that investors need to be presented with a clearer picture of product risks – they need to understand better how products will operate in extreme market conditions or in the face of bankruptcy,” says Martin Wheatley, chief executive officer at the SFC. “We are reminding issuers of retail investment products that they must exercise their duty more diligently within the current regulatory framework to disclose risks and explain their products.”
The circular, which is directed at
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