Banker goes to trial over minibonds

Banker goes to trial over minibonds





By Fu LeiChina Daily

The first bank staff member to go to trial on accusation of misleading her clients into purchasing Lehman Brothers minibonds appeared Thursday in the District Court.

Cheung Kwai-kwai, 47, was charged with coaxing her clients to invest a total of about HK$6.8 million in the structured products, linked to Lehman Brothers between 2005 and 2007 when she was a manager for personal finance with the Bank of China

Hong Kong Limited.

She had pleaded not guilty to all nine counts of fraudulently or recklessly inducing others to invest money.

The Hong Kong unit of the Bank of China was the biggest distributor of the securities in the city. The bank sold over HK$10 billion to retail investors since 2003, according to the Hong Kong Monetary Authority.

The bank has offered to pay more than HK$3 billion to investors holding the securities of failed Lehman Brothers, almost half the total compensation extended by 16 Hong Kong banks in a deal brokered by the city’s securities regulator.

A majority of Cheung’s six clients, aged between 40 and 78, haven’t completed secondary school. Three are retirees.

A 62-year-old retired female cleaner testified Thursday morning she had known the defendant for more than a decade. She said Cheung had gained her trust after brokering funds and fixed-term investments for her.

Cheung was alleged to have asked the retiree to put up $65,000 for a low-risk, high-interest and principal-guaranteed investment in 2005 without informing her she was buying Lehman minibonds.

The bank placed Cheung on compulsory leave in April.

A conviction would carry a maximum fine of HK$1 million ($128,882) and seven years imprisonment.

The court will continue to hear the case next Monday. The trial is expected to last for 20 days.

Three staff members of the bank have been arrested in relation with the sale of the structured products.

A 33-year-old ex-assistant manager of Dahsing Bank was sentenced last week to 200 hours of community service after she

admitted forging a signature of her client to buy securities worth HK$200,000.

The purchase, however, had been given verbal agreement by the client who did not have a chance to sign before the deadline.

HK$6.8 millionThe amount of money the accused BOC bank manager, Cheung Kwai-kwai, coaxed her clients into investment

>HK$10 billionThe amount of securities the BOC HK has sold to retail investors since 2003