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 21,658 Lehman-Brothers-related complaint cases received has been completed. These include:

• 13,078 cases which have been resolved by a settlement agreement reached under section 201 of the Securities and Futures Ordinance (Note 1);
• 2,471 cases which have been resolved through the enhanced complaint handling procedures required by the settlement agreement;
• 2,537 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;
• 2,790 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 1,835 such cases and proposed disciplinary notices or decision notices have been issued in respect of the other 955 cases (Note 2); and
• 609 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 171 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
Natalie Wu, Officer (Communications), at 2878 8246

Hong Kong Monetary Authority
25 June 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 15 June 2010, 24,773 customers have responded to the repurchase offers, of whom 24,520 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.