Investment Products related to Lehman Brothers

The Hong Kong Monetary Authority (HKMA) this morning (Monday) convened a meeting between representatives of investors who had purchased investment products related to Lehman Brothers and representatives of banks that had sold Lehman-related products and the trustees who are holding the collateral for the investments. The aim of the meeting was to facilitate communication between affected investors, the banks, the trustees and the HKMA.

At the request of the HKMA, a number of banks have now opened public telephone enquiry lines dedicated to answering questions on Lehman-Brothers-related investment products sold by them. The details of these enquiry lines may be found at the HKMA website www.hkma.gov.hk. In addition, the HKMA has asked banks to write to affected customers to explain clearly the latest situation with regard to these Lehman products. Banks have also been requested to arrange briefings for customers.

The HKMA has opened a hotline to assist any individual investors who might have complaints in relation to the sale by banks of investment products related to Lehman Brothers. The number of the hotline is 8100 2314. The hotline will be open from 9 a.m. to 6 p.m. daily from Monday to Friday, with effect from tomorrow (Tuesday). A form for complaints in writing is also available on the HKMA website.

An HKMA spokesperson said that the HKMA requires banks to comply with the Code of Conduct for Persons Licensed by and Registered with the Securities and Futures Commission in selling securities and futures products. The Code requires intermediaries to explain to the clients the products and the risks involved.

"In selling structured investment products, banks are required to comply with relevant regulations and have adequate internal controls to ensure that the suitability of products for customers is properly assessed and that there is adequate disclosure of major features and risks," the spokesperson said. "Banks are also required to assure themselves that customers understand the nature and risks of the products and have sufficient net worth to assume the risks and bear the potential losses of trading in the products," the spokesperson added.

The HKMA has established procedures for handling complaints relating to possible breaches of the Code of Conduct. The HKMA will follow up any case where relevant requirements are found to have been breached.

For further enquiries, please contact:
Thomas Chan, Senior Manager (Press), at 2878 1480 or
Hing-fung Wong, Manager (Press), at 2878 1802

Hong Kong Monetary Authority
22 September 2008