HKMA Doesn't Want To Deal With Customer Complaints

HKMA Doesn't Want To Deal With Customer Complaints

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蔡耀君

蔡耀君：金管局倡設風險「說明書」
金管局副總裁蔡耀君昨天首次出席立法會作證。......他表示，在取證過程中面臨最大的困難是調查銀行前線員工，是否在售賣金融產品時已全面披露產品的風險及性質.......蔡耀君指出，在目前逾二萬宗的投訴中，對銀行的指控主要集中於對銀行前線人員並未詳細解釋清楚所售賣的金融產品性質及風險。當局亦發現個別員工對金融產品的風險認知不足，但他強調，因目前眾多投訴仍未完成，故此很難得出結論判斷問題是否為普遍現象。
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蔡耀君：金管局倡設風險「說明書」
回應:

随意 對於2萬多人的關於同一個產品（迷你債卷）的投訴，通常應該是首先清除有沒有系統性失誤。金管局的調查方式是：假定銀行沒有系統性失誤（可意會不可言傳），對每一個投訴案例，按金管局預先設定的問題，逐個詢問。金管局選擇的調查方式是否更有效地調查和找出事件的主要原因？或則只是更有效地需求更多人力／財力和時間來完成調查？ 對於2萬多投訴，這是最佳方式呢還是最低效益方式之一呢？金管局這麼多高薪專業人才，好像非常善於選擇 "只看枝節，不看問題的基本關鍵"，" 只見樹枝 ，不見森林 "（恐怕連樹都沒看見）的調查方式。其結果是勞民傷財，且效益低下。不能夠象證監會一樣地迅速查出和糾正銀行的系統性錯誤。造成金管局以浪費公款來縱容和庇護銀行的錯誤的局面，既損害公眾利益，也損害了香港政府和香港金融界的公信力。如果將來事實證明金管局的調查邏輯和方式只是有效地將主要問題和次要枝節問題混淆，從而造成需要更長地時間和浪費公款（納稅人的錢）去調查(關於迷你債卷的)投訴。那麼，有沒有‘問責’的人？ 5月27日 10:59
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金管局的調查方式是浪費資源且效益低下，只為保護銀行和銀行家的利益

随意 證監會就迷你債券涉及的內部系統及監控進行調查後, 有效地發現了涉及迷你債卷銷售的基本問題。 證監會譴責了迷你債卷 co-distributor 新鴻基 SHK Securities Limited 和 凱基證券亞洲有限公司（凱基證券）。證監會的調查方式迅速有效，不僅僅是保障了公眾利益，還有效地使用了證監會的（人力財力）資源。2。金管局卻調查伊始就完全排除有銀行系統性錯誤的可能， 將可能出現的的錯誤定性為（個別）銷售人員的“錯誤銷售”。雷曼破產之後，銀行職員和銀行的錶態都充分顯示了銀行並不清楚迷債的真實特徵和風險，並不清楚迷債的最“精華”部分:抵押品的性質。（當然，不排除有銀行高層是完全明白理解迷債實質但有意隱瞞，這有待於律政司/警察商業犯罪調查科的進一步調查）。是甚麼原因促使金管局決定不首先對銀行系統做基本調查的呢？ 是甚麼原因促使金管局決定採用需要大量人力耗時且低效益的方式來調查2萬多迷債投訴呢？ 蔡耀君 "表示，在取證過程中面臨最大的困難是調查銀行前線員工，是否在售賣金融產品時已全面披露產品的風險及性質." 5月27日 11:01

随意 2009年1月，證監會就新鴻基金融的迷債銷售提出的關註包括：［ 一、對產品進行的盡職審查是否足夠；二、對前線人員提供的培訓是否足夠，從而確保投資者理解產品涉及的一切重大風險；三、迷債系列的風險水平；向零售銷售人員傳達迷債風險評級的信息；及採取理應採取的措施，確保銷售人員提供合理適當意見；等等］新鴻基金融曾為許多銀行提供了關於跟迷債相關的培訓。事實上，許多銀行（如：永亨銀行等）的迷債銷售是直接跟新鴻基金融合作，而不是直接跟雷曼亞洲合作的。這就再次提出一個基本問題：是甚麼原因造成金管局（一再）堅持決定不做基本的調查，為甚麼金管局這麼確信銀行沒有系統性失誤呢？竊鈎者誅，竊國者侯？ 5月27日 11:01

随意 金管局為甚麼不公布金管局對於產品的真實特徵和相關風險的基本定義是？銀行至今一直不敢光明正大地曏公眾再次解釋銀行對於迷債的真實特徵和風險的理解. 銀行至今一直聲稱銀行是給客戶解釋了產品的真實特徵和風險的。在過去的幾年裡，銀行作為迷你債卷的銷售商，從來都是勇於跟其客戶解釋迷你債卷的真實特徵和風險的。(事實是：銀行對於產品介紹的共同點是：只介紹迷債跟7個著名公司信貸掛鈎而只字不提抵押品，從未解釋迷債不是投入到跟7個公司相關的債卷或資產之中， 從未介紹迷債還跟其它諸多公司（100多）信貸掛鈎的相關風險。這是幾年一貫的一致Pattern，金管局至今所調查的400多個例就可證明此 Pattern。或許銀行公會可以提供不同的個例？）現在，沒有職員肯給客戶重新解釋一遍。為甚麼銀行不可以光明正大地以系列19和27為例(or other series)再次給公眾解釋一遍 ？蔡耀君 "表示，在取證過程中面臨最大的困難是調查銀行前線員工，是否在售賣金融產品時已全面披露產品的風險及性質." 5月27日 11:07

随意 請金管局在受到投訴的職員裡，隨便找出10－20個的銷售過迷債的銀行職員來跟公眾再次演示和解釋一下他們對產品的“透徹理解”。這個請求應該是銀行求之不得的吧。終於再次有機會跟公眾演示和解釋一下他們對產品的“透徹理解”了，這可是大長銀行名譽的絕好機會啊。“蔡耀君指出，在目前逾二萬宗的投訴中，對銀行的指控主要集中於對銀行前線人員並未詳細解釋清楚所售賣的金融產品性質及風險。當局亦發現個別員工對金融產品的風險認知不足，但他強調，因目前眾多投訴仍未完成，故此很難得出結論判斷問題是否為普遍現象。” 5月27日 11:14

随意 如果普遍不是“認識不足”的話，那麼，“不是認識不足‘ 是銀行職員們通常有那些認識呢？比如：”跟7個掛鈎，要鎖定3－7年，到期後可拿回本金？同時把Program Prospectus 和 發行章程給了客戶。“是否是屬於認識充足的了呢？這個“認識充足”，是否跟證監會的 Code of Conduct 的“透徹理解產品”的要求是一樣的呢？ 5月27日 11:15

随意 那些 “不是認識不足‘ 的銀行職員們通常對客戶做了些甚麼樣的解釋呢？有沒有跟客戶解釋抵押品的實質和風險？ 或則說，抵押品的實質和風險跟迷債的真實特徵和風險不相關因而沒必要提及抵押品以及其實質和風險？金管局為甚麼不舉個具體例子來說明“不是認識不足‘ 的銀行職員們在銷售時是如何做／解釋的呢？ 5月27日 11:23

随意 那些 “不是認識不足‘ 的銀行職員們 跟客戶的解釋會不會是以下這樣的：”跟7個掛鈎，要鎖定3－7年，到期後可拿回本金？“，他們都把Program Prospectus 和 發行章程給了客戶。如有以上情形， 投訴是否就屬於金管局”錶面證據不成立“的範疇了？而銀行職員則屬於”不是認識不足‘的類別了？金管局為甚麼不可以舉個實際的例子呢？既然金管局覺得“很難說這是一個普遍性情況".那么，應該可以有大量的實例來支持金管局的以上看法的了。 5月27日 11:29

随意 [迷債是一個結構極其複雜的金融產品，涉及一些保險承擔如CDS，貨幣及利率掉期及CDO等衍生工具，而這些迷債是由一個實則是「皮包公司」的公司所發行，亦涉及一些與他相關連的跨國公司的複雜關係，相信沒有相當水平的金融、公司法及合同法的知識，難以明白其中的各項風險，更不用說用準確及易明的語言向客戶解釋，以讓他們明白內裏的風險。(....)任志剛在立法局雷曼小組作供時承認，《證券及期貨條例》較《銀行業條例》賦予金管局較多權力以執行前線監管工作，例如《證券及期貨條例》第180條對中介人的監管及調查的權力，遠較《銀行業條例》第55條的相應條款為高。任志剛承認金管局一直未有使用《証券及期貨條例》，而只用《銀行業條例》，實在是把自己的老虎牙剝掉。 ]--- 轉載 信报：金管局在迷債事件有否失職？曾廣海、尹靖廷 2009年5月9日 5月27日 11:36
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轉載信报：金管局在迷債事件有否失職？曾廣海、尹靖廷, 2009年5月9日

Accumulators & Lehman Minibonds: Know the products, know your rights

http://www.tannerdewitt.com/media/publications/accumulators-and-minibonds.php

Recently there has been a lot of discussion among legislators, regulators and investors concerning the mis-selling of accumulators and Lehman Brothers Minibonds. Since the fall of Lehman Brothers in September 2008, many investors, be they individual or institutional, have suffered huge losses from their investments, particularly those who bought high-risk products. In this article, we hope to give you an overview of the nature of certain topical financial products, and discuss issues that investors should consider before committing themselves in financial transactions.

What is an Accumulator?


Accumulators are structured financial products. By entering into an Accumulator contract, you are agreeing to purchase a fixed amount of security, commodity or currency from a bank on a daily basis at a predetermined price ("Strike Price"). The contract usually lasts for a year, ie 250 trading days.
The Strike Price is set at a specified percentage of the initial market price of the stocks ("Initial Spot Price") so as to enable buyers to accumulate stocks at a discount. If the price of the stocks rises to 3%- 5% above the Initial Spot Price, the contract will be knocked out and the investor is under no obligation to perform the contract. However, if the price of the stocks goes below the Strike Price, the contract will continue and investors are obliged to keep accumulating stocks, notwithstanding that they are buying them at a loss.
After the crash of worldwide stock markets, the prices of many stocks reached their lowest, and it became unlikely that the stock prices would rise to a level that would trigger a knock-out before the expiry of the accumulator contracts. Thus some investors chose to unwind their accumulator contracts to cut losses, which inevitably attracted a significant penalty.
Accumulators are very risky products. The investor's gain is capped at a certain level but the extent of his losses is not limited. The downside risk seems remote when the market is good, but once the risk is realised the consequences can be disastrous. This is especially so for investors who leveraged their accumulator contracts on margin; these investors ended up losing all their money and owing large sums of money to banks.

What are Minibonds?

Since 2002, Lehman Brothers Holdings Inc ("Lehman Brothers") had been issuing a structured product called "Minibonds". To the surprise of many investors, a Minibond is not a bond issued by Lehman Brothers or any governmental body. It is a high-risk credit-linked note linked to an underlying security. It guarantees investors some payment of interest at regular intervals, which makes it looks like a bond.

Since the structure of Minibonds is complicated, the following diagram may help illustrate how it works:




The Minibonds were issued through a special purpose vehicle called Pacific International Finance ("PIF"). PIF was a wholly owned subsidiary of Lehman Brothers.

Lehman Brothers, being the issuing bank in this case, might or might not have invested in the companies on a list of reference entities. The list of reference entities consisted of sizeable and reputable companies, and they were simply used as a "reference" for credit default event purposes. Assuming that Lehman Brothers invested in the stock of some of these reference entities, inevitably Lehman Brothers exposed itself to a degree of risk. To minimise the risk, Lehman Brothers tried to buy "insurance" from retail investors through issuing the Minibonds.

Investors of the Minibonds paid money to PIF in exchange for Minibonds coupons. PIF, which collected investors' money via various distributing banks, invested the money in the credit-related derivatives of 100 to 150 companies ("Collateral Assets"), some of which were collateral debt obligations ("CDOs") involving sub-prime debts. In return, PIF guaranteed the Minibonds investors that they would get a fixed return of about 5% on their investments ("guaranteed return").
In reality, the return on the CDOs was a variable one, which means that PIF's investment in the CDOs might exceed 5%. In that case, PIF might keep the excess after paying 5% to the Minibond investors. Therefore, it was likely that PIF would choose to put their money in risky investments which gave returns higher than 5%, which in turn enabled them to gain from the arrangement.
To insure itself against the risk of exposure to the reference entities, Lehman Brothers swapped its risk against the reference entities with PIF, whose risks were the variable return from the CDOs. In return for this swap, Lehman Brothers agreed to give a premium at around 5% to PIF, which was then given to the Minibond investors. By accepting this 5% of return, Minibond investors were effectively giving "insurance" to Lehman Brothers insuring them against its risks. But Lehman Brothers did not insure Minibond investors against the failure of the Collateral Assets or the CDOs at any point of time. This was the "Credit Swap Arrangement".
Under the Credit Swap Arrangement, once a credit event happened, the arrangement came to an end and the Minibonds were liquidated. Credit Events include:
If any of the reference entities failed, investors would have to pay Lehman Brothers for the "insurance" it had bought via the Credit Risks Swap.
If more than 11 companies of the 150 companies listed in the Collateral Assets failed, or a certain percentage of the CDOs or credit linked derivatives held as Collateral Assets went into default, the whole Minibond would be liquidated, and the loss would be borne by investors.

In scenario 1, investors could lose their money as they had insured Lehman Brothers against the risks of the reference entities. The amount of loss would be heavily dependent on the recovery rate of the failed entities. In scenario 2, since the Minibonds would be liquidated, investors who held Minibond coupons would be unable to get any further return from the CDOs. PIF bore no risk of default in the whole arrangement.

Contractually, the fall of Lehman Brothers is not one of the credit events. However, the winding up of Lehman Brothers halted the payment of the 5% premium to investors. Further, as investors' money had all gone to the CDOs and Collateral Assets, the fall of Lehman Brothers significantly diminished the value of those CDOs. In some cases, the value of the investments became almost worthless.

When the crisis unfolded, many investors filed complaints to the Securities and Futures Commission ("SFC") and the Hong Kong Monetary Authority ("HKMA"), alleging that the retail banks had mis-sold the Minibonds to them. Indeed, the incident has raised a number of important issues. First, it is questionable whether the distributing bank clearly described and explained the products to Minibond investors. As the product was so complicated, even sales representatives at banks did not fully understand the underlying risks, and it is therefore unlikely that they accurately communicated the risks to retail investors.

Further, it appears to be misleading to call, or to allow this product to be called, a Minibond. Generally, bonds are low risk in nature and the yield is stable and guaranteed, yet Minibonds are nothing like real bonds except that they yield a fixed premium at intervals.

Who are Professional Investors?

Under the Securities and Futures Ordinance (Cap. 571) ("SFO"), any person or corporation who satisfies the requirements set out in Part 1 of Schedule 1 and section 3 of the Securities and Futures (Professional Investors) Rules is deemed to be a "Professional Investor". According to the sections, the following parties are covered:

A trust corporation which has total assets of not less than $HK40 million;
Any individual, either alone or with any of his associates on joint account, having an investment portfolio of not less than HK$8 million;

Any corporation or partnership having a portfolio or not less than HK$8 million or total assets of not less than HK$40 million; and
Any corporation whose sole business is to hold investments and which is wholly owned by an individual who, either alone or with any of his associates on a joined account, has an investment portfolio of not less than HK$8 million.

When dealing with Professional Investors, financial institutions or banks are exempted from certain prohibitions, namely:

From issuing any advertisement, invitation or document made in respect of securities, or interests in any collective investment scheme or regulated investment agreement, which are or are intended to be disposed of only to Professional Investors (SFO s.103 (3)(k));

From making unsolicited calls ("cold calls") in respect of marketing investment products (SFO s. 174(2));

From Communicating an offer to acquire or dispose of any securities issued by a body but not accompanied by a written document that contains all the necessary information on the offer (SFO s.175).

In this regard, it appears that the word "Professional" points only to the state of wealth of an individual, rather then his state of knowledge. This is, of course, nonsense. Having a certain net worth does not mean a person is sophisticated or knowledgeable enough to safeguard his own interests and make the most suitable investment decisions. On the contrary, some "Professional Investors" may be more vulnerable than average investors as they are entitled to less protection under the law. As financial markets have developed very quickly, banks have designed and marketed many types of structured products in order to attract more funds from investors.

Investors are expected to keep abreast of the developments in financial markets so that they clearly understand the products that they are investing in.
What is the effect of signing a Notice to Professional Investors?
According to 15.4 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission ("Code of Conduct"), financial institutions and banks must provide a written explanation to clients explaining the risks and consequences of being treated as a Professional Investor. If a client is classified as a Professional Investor, the bank will ask the client whether he wishes to sign the Notice to Professional Investors (the "Notice"), which waives certain obligations of the bank. The purpose of this Notice is to ensure the investor consents to become a Professional Investor and acknowledges that he understands what information will not be provided to him.
If an investor agrees to be treated as a Professional Investor, the bank is not required to enter into a written agreement with him or to provide him with any written risk-disclosure statements. Further, the bank is not obliged to advise Professional Investors about the suitability of any recommendations put forward by it, or to provide prompt confirmation about the essential features of any transactions effected. Details of the exemptions are usually set out in the Notice.

The relaxed compliance requirements on banks give Professional Investors more flexibility in day-to-day trading, but fewer protections under the Securities and Futures Ordinance. However, under section 15.3 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, financial institutions are advised to assess whether a person has sufficient knowledge in the financial market or expertise in relevant products to qualify as a Professional Investor. According to the Code of Conduct, banks should take into account the following matters:
What did the investors trade before? What type of products has the person traded?

The size and the frequency of his trades (Professional Investors would be expected to have entered into not less than 40 transactions per year);
Dealing experience (a Professional Investor should have been active in the relevant market for at least 2 years); and
Awareness of the risks involved in trading in the relevant market.
Do aggrieved Professional Investors have any recourse for mis-selling?
After the collapse of Lehman Brothers, investors who purchased Minibonds started a series of demonstrations and filed complaints with the HKMA and the SFC, urging the authorities to investigate the whole affair. As mis-selling financial products is regulatory misconduct, the SFC commenced investigations which are expected to last for a considerable period of time.

However, even if banks are found to have mis-sold Minibonds or other structured products, investors will not receive monetary compensation.
In order to obtain remedies from the banks, investors can commence lawsuits on the grounds of misrepresentation and/or negligence. The chance of success would very much depend on the factual circumstances of each case and the background of the claimant. Needless to say, if the SFC has found misconduct on the part of the bank, it will definitely assist the investors' civil claim. Further, investors are entitled to request tapes of telephone conversations with the bank, and ask for copies of the sales documents that they have signed. This type of evidence is always useful.

What duties do financial intuitions or banks owe to investors under the common law?

Although financial institutions and banks are exempt from certain compliance measures when dealing with Professional Investors, they do owe a duty of care to this special group of clients under the common law.
It is established law from the leading Hong Kong case Field v Barber Asia (where this firm acted for the successful plaintiff) that financial advisers are liable for damages for any negligent advice given to their investors. A summary of the case can be found here.

Following this case, it is clear that the burden is upon financial advisors to ensure that products introduced by them heed the real desire and risk appetite of investors. Investment advisers should adequately explain the risk to investors and ensure that they understand them. This is so even when investment advisers have complied with all the regulatory rules and investors have signed all the application forms, explanatory documents, declarations and risk-disclosure statements.

An investor should establish that: (i) he is an inexperienced investor who has little knowledge about the financial market; (ii) the bank is acting in the capacity of a financial advisor and not merely a salesperson; (iii) the financial advisor in question has failed to take into account the investor's risk appetite when entering into financial transactions, and (iv) the risks were not clearly explained or disclosed to the investor prior to his entering into the transaction. Apart from these, the Court will also consider other relevant circumstantial factors of each case.

Focusing on the issues of risk disclosure, some argue that Lehman Brothers have done their job in that investors were provided with a prospectus which set out the Credit Swap Default and the criteria for choosing suitable Collateral Assets. However, the truth is that the composition of the Collateral Assets was never listed out in the Minibond prospectus, which suggests that investors were not told into which entities they were putting their investment money before they bought the Minibonds. According to the Prospectus, "We cannot state with certainty what the collateral will be when we publish an issue prospectus for a series of notes as we rely on the arranger to make suitable collateral available to us."

This article is not legal advice. You should seek professional advice before taking any action based on the content of this article.
Prudence Tai and Ian De Witt

Joseph Yam faults

Marred By Lehman ‘Blip’

By Theresa Tang and Kelvin Wong
http://www.bloomberg.com/apps/news?pid=20601080&sid=aOfGLXMFlMXE&refer=asia
May 20 (Bloomberg) -- Joseph Yam, who’s retiring as Hong Kong’s central banker, steered the city through the Asian financial crisis, a bank run and an epidemic -- only to get burned by the collapse of Lehman Brothers Holdings Inc.
Yam, 60, will exit on Oct. 1 as the chief executive officer of the Hong Kong Monetary Authority, the government said yesterday. His replacement hasn’t been named.
During a 16-year stint that made him Asia’s longest-serving central banker, Yam fended off an attack by speculators on Hong Kong’s currency peg and developed the city’s monetary system, which he steered through the British handover to China in 1997. The blot on his legacy may be failing as a regulator to prevent the sale to vulnerable investors, including the elderly and the mentally ill, of complex securities linked to Lehman.
“It’s a small blip on a remarkably long and tremendous service,” said Charles Goodhart, a former Bank of England policy maker who has known Yam since 1983 when Goodhart was an adviser on establishing Hong Kong’s dollar peg. “The Hong Kong financial system has remained stable while many around it have not. He’s been through some difficult patches and has managed them with great strength and purpose.”
Norman Chan, a former Yam deputy who is now an aide to Hong Kong Chief Executive Donald Tsang, is a possible replacement, the Hong Kong Standard reported May 15. Calls last night to Chan’s office and mobile telephone went unanswered. Yam declined an interview request last week, and Thomas Chan, the HKMA spokesman, couldn’t be contacted last night.
‘Most Effective’
“They’re going to miss him; he’s not going to be easy to replace,” former Federal Reserve Chairman Alan Greenspan said in an interview yesterday. “He was one of the most effective central bankers in the world for a long period of time.”
Yam leaves unresolved for his successor the “inherent contradiction” of a role that spans both financial regulation and fund management, said Billy Mak, a finance professor at Baptist University in Hong Kong. The HKMA manages the $193 billion pool of assets that backs the Hong Kong currency’s fixed exchange rate. Yam helped put together the U.S. dollar-linked system in 1983.
He joined the civil service in 1971 as a statistician after graduating from the University of Hong Kong and became an economist in 1976. His departure follows eight months of almost daily protests by investors after the failure of Lehman threatened the savings of thousands who bought securities called minibonds.
Security Buyers
Hong Kong banks sold the notes to older, poorly educated and mentally ill people, according to an HKMA report that legislators released last month. Individuals bought a total of HK$13.9 billion ($1.8 billion), according to the Securities and Futures Commission.
Yip Hau-wah, a 56-year-old hospital worker, said she lost half her HK$56,000 savings in minibonds that she purchased after getting cold-called from sales staff at a BOC Hong Kong Holdings Ltd. branch.
If Yam “has any intention to help us, he would’ve pressured the bank to refund us already,” she said during a May 15 protest.
Legislators including Chim Pui-chung, who represents the financial-services industry, have urged Yam to formally apologize to investors.
“This is a stain for Yambo,” he said. The nickname derives from the movie about the vengeful Vietnam veteran, “Rambo,” and was applied to Yam after his successful defense of the currency peg during the 1997-98 Asian financial crisis.
Compensation Criticism
Yam’s compensation has also attracted criticism. In 2008, he received HK$11.9 million ($1.5 million), compared with Fed Chairman Ben S. Bernanke’s $191,300 and Bank of England Governor Mervyn King’s 283,564 pounds ($400,000) in 2007. Central Banking Publications described him last year as the highest-paid central banker in the world.
The criticisms contrast with his achievements.
“Under his guard, Hong Kong has emerged in good shape from the past few banking and financial crises; that includes the Asian financial crisis, the Internet bubble and the current global credit crunch,” Mak said.
Yam directed $15 billion of stock purchases to successfully defend Hong Kong’s dollar 11 years ago, standing up to Greenspan in the process. Greenspan slammed the move, telling members of the U.S. House of Representatives Banking Committee that the step “won’t succeed” and would erode “some of the extraordinary credibility” of the HKMA.
‘Where it Hurts’
Yam countered by saying his stock purchases would hit speculators “where it hurts” by causing losses on short positions on the city’s shares and currency. A short position profits from declines in a security.
“I hated having to intervene in the markets,” Yam told Bloomberg in an interview last September. “I’m a believer in free markets.”
In the interview yesterday, Greenspan said his concern at the time was that “it’s very risky for a central bank to intervene in your domestic market, or you may end up with a very large share of the outstanding securities.”
In retrospect, Greenspan said, Yam’s timing “was exquisite. He picked the bottom of the market. Global stock prices rose very significantly over the next two or three years. I told him he was right, and I shouldn’t have been concerned.”
During his tenure, Yam also navigated Hong Kong’s financial system through the economic slump caused by severe acute respiratory syndrome, or SARS, in 2003, which killed almost 300 people in the city as tourists stayed away, leading to empty hotels and restaurants. He also offered assurances and extended deposit insurance to end a run last year on the Bank of East Asia Ltd.
Hong Kong’s lawmakers voted May 6 against a motion calling for Yam to step down.
“The Hong Kong Monetary Authority has done a good job in regulating banks,” David Li, Bank of East Asia’s chairman and the banking-sector representative in the city legislature, said during the debate. “Hong Kong banks have continued to function well in the current financial crisis, and this isn’t based on luck.”

Jeffrey Lam

Legislator Jeffrey Lam
http://www.rthk.org.hk/rthk/radio3/lettertohongkong/20080928.html
Dear Citizens of Hong Kong,
I know many of you have had a rough roller coaster ride recently. In just one week, we have seen the collapse of Lehman Brothers, the buyout of Merrill Lynch and the crisis surrounding the world ’ s largest insurer AIG. This financial hurricane threatens to jolt the world economy and has filled Hong Kong ’ s stock market with all the gloom. low-risk products? Unfortunately, the Lehman tsunami has already taken its toll on Hong Kong as buyers of mini-bonds backed by Lehman Brothers will stand to lose their life savings following its bankruptcy.
This is very upsetting. In fact, I feel the pain of these buyers. They took mini-bonds as a low-risk tool to safeguard their life savings from depreciation only to be told that the mini-bonds are indeed a high-risk derivative product that offers little protection. All they are looking for is only a mere three per cent yield every year and they relied on managers ’ professional advice to make their investments. However, some investors did not even know the products they purchased are linked with Lehman Brothers. Nobody had told them anything.
Those who remain unaffected in this debacle should not count themselves lucky because we do not know who will be the next victim. The Lehman mini-bond fiasco should not be treated as an isolated case. Indeed, when the financial market is going increasingly competitive, we have seen many aggressive managers who go all the way to talk you into buying their products. More often than not, they only emphasize on the good but do not warn you of the bad of the investments. Have they really explained to their clients the real definition of mini-bonds? The real risks associated with the notes? And the real issuer? Have investors been misled into believing that mini-bonds are These are the questions we have to look into and the regulatory authorities should not turn a blind eye to their plight.We, the Liberal Party, have therefore urged the Chief Executive to look into this matter and set up an ad-hoc group to help them reclaim most of their assets with legal assistance. We expressed to him the urgent need to strengthen the existing regulatory regime that oversees derivative products and to probe the sale approaches in question as well as any irregularities. We hope the Government can enhance the transparency of the system by providing investors with all the necessary information so as to better safeguard their interests. The Government should also keep a close eye on other cash-strapped financial institutions and formulate a contingency plan to prepare for the worst. It has to be pro-active and be able to stifle a flame before it grows into a roaring fire. The run on the Bank of East Asia triggered by credit rumours on Wednesday was an unfortunate example. It showed how easily these days customer confidence can be shaken. I have immediately reflected this public concern to Financial Secretary John Tsang.
I have urged the authority to take prompt action to restore public confidence in Hong Kong ’ s banking system by revealing more support data and providing a greater safety net for depositors.
In fact, they are not the only ones who suffer. The small and medium businesses are also feeling the pinch. Because of the US ’ s credit crunch, banks have already tightened their purse strings. Many small firms already find it hard to secure loans and they have to pay more to borrow money. This is definitely bad news as SMEs [small-medium enterprises] form the backbone of our economy by accounting for 98 per cent of business establishments in Hong Kong and 50 per cent of the total private sector employment. The poor availability of credit has definitely begun to have an impact on them.
Nobody will know whether the US$700 billion rescue proposal by the US Government to bail out financial firms will save the American economy, but one thing is for sure: it will lead to a massive devaluation of the dollar. This will set off a global chain reaction of high commodity prices, weak export demand, rising inflation and soaring bills of fuel, electricity and food. How can they keep their business afloat in the face of all these difficulties? Actually I know many friends who run small businesses are now agonizing over their future. They aired their grievances to me and said life is becoming more difficult for them. We can now see some very quiet evenings at restaurants and shops as everybody has to scrimp and save for a rainy day or even a storm in the future. And, because of high rent and utility costs, our long-standing spirit of entrepreneurship which has brought us success is nowhere to be seen now. Business operators dare not venture out into the world of new creative business because of all the financial constraints. I feel their plight and the Liberal Party would do whatever it takes to help them.
Indeed, we have called on the Government to raise the amounts of Working Capital Loan Guarantee and SME Development Fund for SMEs to finance and develop their businesses. Under special circumstances, the Government should offer borrowers greater flexibility in making repayment. In addition, we have also urged the administration to further relax and speed up the licensing process and the procedures to convert the use of vacant factories to spur the development of creative industries and local small business in Hong Kong. I still reminisce the good old days of the Poor Man ’ s Nightclub Market where we could have a happy night out eating and shopping. I hope the Government can bring back the vigour, vitality and creativity of that golden period.
Apart from the Government, I also hope landlords could make rental adjustments in these trying times to ease the plight of SMEs when they are grappling with reduced sales and rising bills. After all, if the small businesses cannot survive through the coming economic chill and have to pull down their shutters, who will go to rent their units? It will eventually hurt their rental business and become a no-win situation to all. Let us work together to fend off the coming challenges. I believe, with the perseverance, determination and ingenuity of Hong Kong people demonstrated in the past, we can ride out any storms and emerge stronger day after day.

Do You Hear the People Sing

modified from Les Miserables

1st July join the crusade

一起請支持七一
http://www.youtube.com/watch?v=x6-5g78Nr6Q&feature=related

Do you hear the people sing? 你是否聽見人們在高歌?
Singing a song of angry men? 高唱著憤怒之歌?
It is the music of a victim Who will not be slaves again! 這是他再不為受苦所唱的歌聲
When the beating of your heart 當你的心回應音樂中的鼓聲，
Echoes the beating of the drums 一起跳動時，
There is a life about to start 將會有一個嶄新的生命重新開始
When tomorrow comes! 我們不怕，因為天就要亮了。
Will you join in our crusade? 你願加入我們的聖戰嗎?
Who will be strong and stand with me? 你會堅強地和我站在一起嗎?
Beyond the barricade 在路障之外；
Is there a world you long to see? 你是否看到了有個你長久以來嚮往的美麗新世界?
Then join in the fight 那麼，加入這場奮戰吧!
That will give you the money to be free! 奮戰才能使你取得到本金的權利。
Do you hear the people sing? 你是否聽見人們在高歌?
Singing a song of angry men? 高唱著憤怒之歌?
It is the music of a victim Who will not be slaves again! 這是他再不為受苦所唱的歌聲
When the beating of your heart 當你的心回應音樂中的鼓聲，
Echoes the beating of the drums 一起跳動時，
There is a life about to start 將會有一個嶄新的生命重新開始
When tomorrow comes! 我們不怕，因為天就要亮了。
Will you give all you can give 你願傾盡所有，付出一切
So that our banner may advance 使得我們理想的大旗得以飛揚前進嗎?
Some will fall and some will live 我們中有些人會倒下，有些人會存活
Will you stand up and take your chance? 你願意與我同行並肩冒險嗎?
The blood of the martyrs Will water the meadows the financialgovernance of Hong Kong! 在廢證監和金管下犧牲者的血汗錢將洗淨香港金融的醜惡!
Do you hear the people sing? 你是否聽見人們在高歌?
Singing a song of angry men? 高唱著憤怒之歌?
It is the music of a victim Who will not be slaves again! 這是他再不為受苦所唱的歌聲
When the beating of your heart 當你的心回應音樂中的鼓聲，
Echoes the beating of the drums 一起跳動時，
There is a life about to start 將會有一個嶄新的生命重新開始
When tomorrow comes! 我們不怕，因為天就要亮了。

南華早報
Big turnout expected for July 1 democracy rally

The economic slowdown and a widening wealth gap in Hong Kong will push turnout in the annual July 1 march for democracy to a new high for Donald Tsang Yam-kuen's tenure, organisers of the event predict. Legislator Lee Cheuk-yan, general secretary of the Confederation of Trade Unions, made the prediction yesterday as the Civil Human Rights Front announced details.
"We are not making use of the bad economy to mobilise people, but people will see that the culprit for the economic problems is an undemocratic government. When there is democracy, grass-roots citizens' lives will be better," Jackie Hung Ling-yu, of the front's rights committee, said.
The front said the highest turnout for the July 1 rally since Mr Tsang became chief executive was 68,000, in 2007. It said more than 47,000 marched last year, but the police count was 15,500 and a count by the University of Hong Kong gave a range of between 17,000 and 19,000.
For the first time, the front will be joining five pressure groups, including a Christian group and those pushing for a minimum wage law and sexual minority rights.
The number of marchers is expected to be given a further boost as aggrieved investors from the Alliance of Lehman Brothers Victims in Hong Kong have told the organisers that they would participate. Some 48,000 Hongkongers lost most of the HK$20 billion they invested in credit-linked derivatives, such as minibonds, issued or guaranteed by Lehman Brothers when the US investment bank collapsed in September.
Protests against "mistakes in governance", a "wide wealth gap", along with demands for a "return of power to the people" and "improvement in livelihood" will be the four themes.
The march will also commemorate the 20th anniversary of the June 4 Tiananmen Square crackdown.
Meanwhile, Danish sculptor and human rights activist Jens Galschiot has made a fresh complaint to the Immigration Department following its refusal to say whether he will be allowed to visit Hong Kong to attend protests marking the Tiananmen Square crackdown. "I cannot help seeing the letter from the immigration authority as a disguised attempt to prevent me from going to Hong Kong to commemorate the 1989 massacre," Galschiot said. The letter said the department could not say in advance whether he would be allowed to visit.
12 May 2009

HKMA actions

南華早報
Sanctions loom in Lehman investigation

The Monetary Authority is one step closer to sanctioning those guilty of misconduct in 48 cases that involved the sale of Lehman Brothers-linked investment products.

It had concluded its investigation into the 48 complaints and was considering disciplinary action, the authority said yesterday. But it would decide on what action to take only after it had heard from those against whom the complaints were lodged.

"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," it said.
If found guilty, an executive officer of a financial institution could be withdrawn or suspended from office, and a financial practitioner's registration could be removed or suspended under the Banking Ordinance, an authority spokesman said.

An institution could have its registration revoked or suspended by the Securities and Futures Commission, be subject to a reprimand, a fine or a prohibition order. Employees of the firm who were involved could also be similarly sanctioned.

Some 48,000 Hongkongers lost most of the HK$20 billion they invested in credit-linked derivatives, such as minibonds, issued or guaranteed by Lehman Brothers when the US investment bank collapsed in September. Many of them have accused financial institutions that sold them the products of misconduct.

By Thursday, the authority had received a total of 20,913 such complaints.

Hours before the announcement the authority's chief executive, Joseph Yam Chi-kwong, told a Legislative Council hearing that mis-selling was inevitable because of the variable quality of bank employees.
Responding to criticism by financial services legislator Chim Pui-chung that the authority had not fulfilled its regulatory duties, Mr Yam said: "It is like crime ... always exists in the society. Are law enforcement departments responsible for that?"

The authority recently hired 40 more employees to handle complaints of mis-selling, he said, and would continue its recruitment to raise the current number of 243 officers to 300. Peter Chan Kwong-yue, chairman of the Alliance of Lehman Brothers Victims in Hong Kong, welcomed the possible sanctions in the 48 cases. Mr Chan also said the alliance was arranging a meeting with the Bank of China (Hong Kong) to discuss compensation. In yet another protest, dozens of investors stormed the Citibank headquarters in Central in the afternoon. They were removed by police in the evening.
09 May 2009

銀行公會主席王冬勝

http://hk.myblog.yahoo.com/iam-marclee/article?mid=537

雷曼苦主與銀公主席會晤後表示失望

07.05.2009 18:11

十多名雷曼迷債苦主今日與銀行公會主席王冬勝會面，表達他們對銀行處理雷曼迷債賠償事件的不滿。王冬勝承諾會將苦主的意見，轉達予銀行。不過，雷曼苦主大聯盟代表陳光譽，對會議失望，稱銀行公會應該約束銀行回購迷債。 會議期間，有五十名雷曼苦主，在中環拉起橫額示威。他們又計劃，明日由中環國際金融中心，遊行至匯豐銀行總部。至於立法會雷曼事件小組，明天會再召開研訊，再次傳召金管局總裁任志剛作供。

http://www.881903.com/Page/ZH-TW/newsdetail.aspx?ItemId=119033

About Bank of China

http://www.youtube.com/watch?v=IYeP_zrfSog&feature=channel_page
http//www.youtube.com/watch?v=Ou62QVmNd_E&feature=channel


I has bought Bank of China the Victoria Peak 15, that the news about this structure product from http://minibondvictim.blogspot.com/

剛剛收到中銀轉寄 Victoria Peak 發出的通知，再有 CDO 裏面的公司出事，離「蝕掉全部本金」又近一步。通知未有説明出事公司是「完全死」還是「部分死」。
系列 15
再多 2 間公司出事，分別是 Abitibi-Consolidated 和 Chemtura Corporation。
之前已有美國兩房和冰島三大銀行出事：
Federal Home Loan Mortage Corporation
Federal National Mortage Association
Glitnir banki
Kaupthing banki
Landsbanki islands
系列 15 有 9.1 間公司出事，就會蝕掉全部本金，之前出事的 5 間公司已用了 3.4 個名額，剩下 5.7 個名額。



系列 17
再多 1間公司出事，是 Abitibi-Consolidated。
之前已有美國兩房和冰島三大銀行出事：
Federal Home Loan Mortage Corporation
Federal National Mortage Association
Glitnir banki
Kaupthing banki
Landsbanki islands
系列 17 有 7.9 間公司出事，就會蝕掉全部本金，之前出事的 5 間公司已用了 3.4 個名額，剩下 4.5 個名額。
現在，只有希望每間出事的「新」公司，都不要用盡 1.0 個名額，盡量「捱」多一年半載，收多一兩期利息。




100 hrs protest in Bank of China

http://hk.myblog.yahoo.com/hanhoco/gallery