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

The Hong Kong Monetary Authority (HKMA) announced today (Friday) that investigation of over 99% of a total of 21,603 Lehman-Brothers-related complaint cases received has been completed. These include:

• 13,075 cases which have been resolved by a settlement agreement reached under section 201 of the Securities and Futures Ordinance (Note 1);
• 2,212 cases which have been resolved through the enhanced complaint handling procedures required by the settlement agreement;
• 2,561 cases which were closed because insufficient prima facie evidence of misconduct was found after assessment or no sufficient grounds and evidence were found after investigation;
• 2,783 cases (including minibond cases) which are under disciplinary consideration after detailed investigation by the HKMA, of which proposed disciplinary notices are being prepared in respect of 1,837 such cases and proposed disciplinary notices or decision notices have been issued in respect of the other 946 cases (Note 2); and
• 775 cases in respect of which investigation work has been completed and are going through the decision process to decide whether there are sufficient grounds for disciplinary actions or whether the cases should be closed because of insufficient evidence or lack of disciplinary grounds.

Investigation work is underway for the remaining 196 cases.

(A table summarising the progress of the disciplinary and complaint-resolution work in respect of Lehman-Brothers-related complaints is attached.)

Table

For further enquiries, please contact:
Alice Lo, Communications Chief, at 2878 1480 or
Yokee Wong, Manager (Communications), at 2878 1213

Hong Kong Monetary Authority
7 May 2010

Notes:

1. On 22 July 2009, the SFC, the HKMA and 16 distributing banks reached an agreement under section 201 of the SFO in relation to the repurchase of Lehman Brothers Minibonds from eligible customers and the HKMA has informed the distributing banks that, since the agreement contains detailed arrangements for settlement of claims and the implementation of robust systems for selling unlisted structured investment products and dealing with related customer complaints in future, it is not the intention of the HKMA to take any enforcement action in relation to Minibond cases that involve eligible customers who accept the repurchase offer. Since 7 August 2009, 16 distributing banks have begun issuing repurchase offer letters to eligible customers (about 25,000 customers) under the Lehman-Brothers Minibonds Repurchase Scheme announced on 22 July 2009. Up to 30 April 2010, 24,761 customers have responded to the repurchase offers, of whom 24,509 customers or 99.0% have accepted the offers.
2. These are cases in respect of which (a) proposed disciplinary notices have been issued and representations were pending, (b) representations have been received and are being reviewed, or (c) disciplinary decision notices have been issued and the persons concerned have been given 21 days to consider whether to appeal to the Securities and Futures Appeals Tribunal.