HKMA investigates misconduct on Lehman Bros investments

HONG KONG - The Hong Kong Monetary Authority (HKMA) has referred 17 new cases of alleged misconduct regarding investment products relating to Lehman Brothers to the Securities and Futures Commission (SFC). This is the fifth batch of Lehman-related cases sent by the HKMA to the SFC for a decision whether to take further action, and involves alleged misconduct by two Hong Kong banks.

Since October 17, the HKMA has referred 113 cases of alleged Lehman-related abuses to the SFC, involving seven banks. As of November 13, the HKMA had received 16,697 complaints relating to Lehman-related products. Aside from the 113 already passed on to the SFC, the HKMA has opened 1,388 investigations and is seeking further information on 4,134 complaints.

The HKMA had announced on November 5 that some Hong Kong banks had declined requests from customers to provide telephone recordings of conversations between staff and consumers sold investment products. The regulator stated it was "a matter of fair and responsible business practice" for banks to provide recordings and better service for customers. It added that investors in Lehman 'minibonds' and their financial advisers would probably have a particular interest in reviewing information regarding the underlying collaterals of these bonds.