Friday, October 31, 2008

Breaking News : HK govt to sue banks over minibonds.

"....the government has promised that it will give us unlimited financial support once we have identified cases with good grounds" - Hong Kong's Consumer Council

Hong Kong watchdog may sue banks over Lehman minibond sales
31 October 2008 1343 hrs
HONG KONG - Hong Kong's Consumer Council said Friday it was considering suing banks which allegedly mis-sold minibonds backed by failed US investment bank Lehman Brothers as risk-free investments. The 50 cases the council was considering backing mostly concerned vulnerable elderly people who said their banks had not fully explained to them the risks involved when selling them the minibonds, a spokeswoman for the council said. The complainants in the cases, which involved 14 banks, had invested between 100,000 and two million Hong Kong dollars in the controversial financial products. "We will continue our vetting to identify representative cases for legal action," the spokeswoman told AFP. "We now have 16 million dollars in our legal action fund. But the government has promised that it will give us unlimited financial support once we have identified cases with good grounds," she said. Johannes Chan, chairman of the council's legal action fund, told the South China Morning Post that their focus on elderly and poorly educated investors would give them a higher chance of success in court. "It's easier to establish that their trust has been abused or that they have been misled than (to make the same case for), say, someone who has a university education and has invested for years." Despite their name, the minibonds are complex financial products linked to a bundle of derivatives backed by Lehman, and their value plummeted after the investment bank collapsed in September. The council said in a statement that it had received 3,638 complaints and 1,388 enquiries from investors. Meanwhile, more than 100 investors protested outside the Hong Kong Monetary Authority, the city's de facto central bank, before marching to individual banks to demand a full refund of their investment Friday morning. Individual banks, including the Bank of China (Hong Kong), have started to negotiate compensation deals with customers. But many of the cases remained left out as gathering evidence to prove mis-selling could be difficult. All the banks have agreed to adopt a government proposal for them to buy back the products from customers at their current market value but the move failed to pacify investors who said they would only get back a portion of their investment. - AFP


Anonymous said...

HK Consumer Council is the equivalent of SG's toothless tiger, PAP lapdog bogus 'consumer association' CASE.

HKCC serves the citizens so they go after the errant banks, CASE serves PAP's interests, tells the investors go fly kite.

AlphavilleSG said...

How can CASE not stand on the side of consumer, defending their rights?

Yeo Guat Kwang, independent director of Advance SCT Ltd

Brief Biography

Mr Yeo Guat joined the Group on 1 March 2008. He has been a Member of Parliament for Aljunied GRC since 2001 and was the Member of Parliament for Cheng San GRC from 1997 to 2001. He currently is an Alignment Director in the National Trades Union Congress (NTUC). He also serves as the Executive Secretary of the Amalgamated Union of Statutory Board Employees (AUSBE). Mr Yeo has been elected as the President of Consumer Association of Singapore (CASE) since 2002. He also serves as member of the Board of Directors in various statutory boards, including the Standards, Productivity & Innovation Board (SPRING Singapore), PUB Board, the Land Transport Authority (LTA) Board, Financial Industry Dispute Resolution Centre (FIDREC) Board and Singapore Chinese Orchestra Board. He is also a Member of the Workplace Safety and Health Council and the Standards Council.

Anonymous said...

What I like to know is by the announcement from HK gov, does it mean the HK gov is gonna sue also the great Development Bank of Singapore?

Anyone any idea?

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