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Investment Products related to Lehman Brothers

In response to concerns among members of the public who had purchased investment products related to Lehman Brothers, a Hong Kong Monetary Authority (HKMA) spokesperson said that the HKMA had been in contact with representatives of affected investors and made arrangements for a meeting tomorrow (Monday) to facilitate communication among investors, representatives of banks that sold Lehman-related products and the trustees who are holding the collateral for the investments.

The HKMA understands that the trustee for several of the affected products will issue a notice tomorrow clarifying its role and the actions it is taking.

"The HKMA encourages banks and the trustees to be as transparent and forthcoming as possible in providing information to the affected investors," the spokesperson said. At the request of the HKMA, banks are now preparing to establish public telephone enquiry lines dedicated to answering questions on Lehman-Brothers-related investment products sold by them. The details of these enquiry lines will be announced soon and will be kept up to date on the HKMA website www.info.gov.hk/hkma.

In addition to the existing channels for contacting the HKMA, an HKMA hotline will be established shortly to assist any individual investors who might have complaints in relation to the sale by banks of investment products related to Lehman Brothers. The 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
Peggy Lo, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
21 September 2008

Last revision date: 1 August 2011
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