Progress of the HKMA's investigations in Lehman-Brothers-related cases

The Hong Kong Monetary Authority (HKMA) announced today (Friday) that there are another 38 Lehman-Brothers-related non-minibond cases under disciplinary consideration, bringing the total number of non-minibond cases under disciplinary consideration to 521 (after re-grouping of certain complaints involving multiple products). These are cases which have gone through detailed investigation by the HKMA.

"A number of cases are at a very advanced stage of the enforcement process. Before making a final determination in these cases, we have to go through due process to ensure fairness, including giving the subjects of investigation an opportunity to be heard," said an HKMA spokesperson.

In addition, the HKMA has today referred to the Securities and Futures Commission (SFC) 103 cases involving complaints of alleged misconduct in respect of non-minibond investment products related to Lehman Brothers for it to decide whether to take further action. The 103 cases, which are the thirty-third batch of Lehman-Brothers-related cases referred in this way, involve alleged misconduct by one licensed bank in Hong Kong. After this referral and re-grouping of certain complaints involving multiple products, the HKMA has referred a total of 244 Lehman-Brothers-related non-minibond cases to the SFC for further action since 17 October 2008. These cases have been reviewed by the HKMA, which has determined that there are sufficient grounds for referring them to the SFC to facilitate its investigations into banks.

The HKMA has, up to 27 August 2009, received 21,651 complaints concerning Lehman-Brothers-related products, of which 7,767 relate to non-minibond products. In respect of the Lehman-Brothers-related non-minibond complaints, 7,605 cases have gone through the preliminary assessment process and, as a result, the HKMA is currently investigating 2,178 cases and seeking further information on 3,625 cases. A total of 1,281 Lehman-Brothers-related non-minibond complaints have been closed as there was not sufficient prima facie evidence found after the preliminary assessment process or no sufficient grounds and evidence found after the detailed investigation. Of the minibond complaints, 12,776 cases are eligible for the Lehman-Brothers minibonds Repurchase Scheme ("the Scheme") or the voluntary offer made by the distributing banks to customers with whom they had reached settlements before the Scheme was introduced. One thousand and ninety-five minibond complaints involving customers who are not eligible for, or have indicated that they do not accept, the repurchase offer under the Scheme will continue to be handled by the HKMA if the complaints cannot be resolved by the enhanced complaint handling system introduced by the distributing banks. (A table summarising the Lehman-Brothers-related complaints received so far is attached.)

Since 7 August 2009, 16 minibond distributing banks have begun the issue of repurchase offer letters to eligible customers (about 25,000 customers) under the Scheme. Up to 26 August 2009, 14,935 customers have responded to the repurchase offers, of whom 14,806 customers or 99.1% accepted the offers.

"Eligible customers should consider carefully the terms of the offer and his or her personal circumstances before deciding whether to accept the offer from the distributing banks," added the HKMA spokesperson.

A set of questions and answers has been prepared to provide further details on the Scheme. It can be found at http://www.hkma.gov.hk/eng/other-information/lehman.shtml.

Table

For further enquiries, please contact:
Hing-fung Wong, Manager (Communications), at 2878 1802 or
Natalie Wu, Officer (Communications), at 2878 8246

Hong Kong Monetary Authority
28 August 2009