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

The Hong Kong Monetary Authority (HKMA) announced today (Friday) that there are currently 111 Lehman-Brothers-related cases under disciplinary consideration. 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 by an HKMA spokesperson.

In addition, the HKMA has today referred to the Securities and Futures Commission (SFC) eight cases involving complaints of alleged misconduct in respect of investment products related to Lehman Brothers for it to decide whether to take further action. The eight cases, which are the twenty-ninth batch of Lehman-Brothers-related cases referred in this way, involve alleged misconduct by one licensed bank in Hong Kong. Since 17 October 2008 the HKMA has referred a total of 457 Lehman-Brothers-related cases, involving 16 banks, to the SFC for further action. 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 21 May 2009, received 20,999 complaints concerning Lehman-Brothers-related products, of which 20,834 complaints have gone through the preliminary assessment process. As a result of the assessment, the HKMA is currently investigating 6,074 cases and seeking further information on 13,594 cases. A total of 1,055 complaints have been closed as there was no sufficient prima facie evidence found after the preliminary assessment process or no sufficient grounds and evidence found after the detailed investigation (A table summarising the complaints received so far is attached). "The closure of these cases will not affect the top-down investigations being undertaken by the SFC at the bank level," the HKMA spokesperson said.

Commenting separately on voluntary settlements between banks and their customers, the HKMA spokesperson said that, according to figures collected by the HKMA from the distributing banks, up to 13 May 2009, a total of 6,736 cases involving Lehman-Brothers-related products have resulted, or will soon result, in voluntary settlement, including compensation either in part or in full, between the customers and the banks concerned. Of these voluntary settlements, 4,970 have already been concluded. Discussions about settlements are in progress in the remaining 1,766 further cases.　The spokesperson said that, 2,554 of the settlement cases involve elderly customers. This compares with a total of 3,537 complaints received by the HKMA in relation to elderly customers.

"While the HKMA welcomes settlements between banks and complainants, its investigations into allegations of mis-selling will not be closed simply because of settlements or withdrawals of complaint cases. The HKMA will, regardless of any terms of a settlement, continue its investigation into cases where evidence of mis-selling is revealed." the spokesperson added.

Annex

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

Hong Kong Monetary Authority
22 May 2009