打虎悍將閉門訴說 證監罰則難阻嚇大行

證監會法規部執行董事施衛民（Mark Steward）絕對可說是證監會的一大「打虎悍將」，先有成功檢控美資大行摩根士丹利前董事總經理杜軍進行內幕交易的彪炳戰績，其後又成功阻止了電盈大股東的私有化計劃。接，又在雷曼迷債案中，迫使一眾分銷銀行及證券行向客戶作出巨額回購。他的經歷絕對足以寫成電影劇本，可惜，此人十分低調，平日鮮有接受傳媒訪問，更遑論細說「打虎」經歷。不過，昨日他破例在一個閉門的研討會上，詳述了他調查雷曼迷債的心路歷程。期間，他慨言證監會的懲處罰則只能阻嚇小經紀而不能阻嚇大銀行，因對他們來說，罰金只及一名銀行家的年終獎金！

據本報記者取得的施衛民發言稿顯示，他除了在會上詳細交代今次調查十多家銀行涉嫌以誤導手法推銷雷曼迷債的經過外，還總結了一些鮮為人知的體會。首先，很多投訴人至今仍然認為，他們可以援引證監會的調查發現來向銷售銀行興訟。不過施衛民明言，「很多在外國慣常使用的戰術工具在香港都不存在，例如在澳洲，因不良銷售手法而受到損失的受害人，可以由監管機構代表提出訴訟……（但）香港現行的監管制度根本沒有相關的授權」。

接他指出，在香港， 「（證監會）可以施以的最高懲罰僅為一千萬元，另加暫停牌照及作出公開譴責」。他形容謂， 「這些懲罰的設計只是針對一個由小經紀組成的證券市場，而不是針對一個由大銀行主導的市場。」

「自從證券及期貨條例通過以來，銀行在證券市場上的生意，增長得十分可觀，而投資產品的市場更是由銀行主導的……向銀行施以的懲罰只及一名銀行家的年終獎金，情就好像把棉花糖擲向篝火。」

不過，官場耳語謂，特區政府的財金官員這陣子已忙得不亦樂乎，先有預算案派錢的手尾還未搞掂，為落實強積金半自由行安排而不可或缺的法案又正展開，根本難有心力去為證監會添牙添爪，何一旦政府推動此事，勢必惹來富可敵國的銀行家反撲，故此這肯定不會是現屆政府會做的事。

對於一眾迷債事主來說，更重要的一條是「見好即收」。施衛民指出，即使大家能證明分銷行犯錯，也只能按此向分銷行追究相關錯誤的「刑責」，但不等於可以要求分銷行全數承擔所有的金錢損失。接，他明確指出， 「辯方可以有很強的抗辯理由稱，由於雷曼的倒閉並非任何一個香港人所能左右，因此難以要求分銷雷曼迷債的人全數賠償投資者的損失」。

他言下之意，當然是希望投資者接受現時的賠償方案。三日前，16 家雷曼迷債的分銷銀行宣布了新一輪賠償細則。當方案稍後得到所有迷債系列75％投資金額持有人的支持，近3 萬名本港雷曼迷債投資者有機會於今年6 月收回更多款項，亦即在2009 年六至七折回購計劃之上，額外取回約15％至36.5％本金，令大部分迷債投資者合共可收回多達85％至96.5％本金。對於很多人來說，這已是不幸中的大幸。

難怪有知情者慨言，金融海嘯前購入匯豐的投資者如此也不可能收回本金的85％！或許會有迷債持有人抱爭取公義的決心來跟銀行鬥下去，但筆者有理由相信這只會是極少數。網誌：blog.mingpao.com/LSZ.htm

李先知

迷債風險，金融騙局

許多媒體，政府監管機構的官員捫評論迷債，卻連迷債的真實風險究竟為何物都不敢明確地講清楚。只以複雜的“信貸掛鉤”來清淡地帶過。

請每一位評論迷債的人士在發表評論之前，先問問自己：於迷債的風險究竟為何？當初迷債的發行商和銷售銀行是如何介紹迷債的風險的？

事實是，銀行向顧客「力銷」的是“跟7個著名公司信貸掛鉤”的迷你債券，而迷你債券其實是由兩層「信貸違約掉期」產品組成，這大肆宣揚的“跟7個著名公司信貸掛鉤”的只是表面文章。這第二層「信貸違約掉期」是跟100多個公司信貸掛鉤。這第二層「信貸違約掉期」的風險和特徵，不僅顧客不知，連眾多的銀行職員捫也一直不知道。這才是迷債騙局的精華所在！！！

這也是為甚麼銀行閉口不談迷債的真實風險。

迷債騙局，在於迷債銷售商捫「力銷」產品的風險和特徵跟產品的真實風險和特徵是有著巨大區別的！

客觀事實是銀行行騙, 金管局失職, 港府卸責, 現在港府扮哂有為協助調解!

現在，不僅兼管機構，銀行，連媒體也不敢明確指出這迷債的騙局所在。只敢以信貸產品複雜，高回報要考慮高風險來為迷債發行者和銷售商辯護。迷債之複雜，在於設計者想用第一層的跟7個著名公司信貸掛鉤來欺騙客戶，以達到不告知客戶關於第二層的跟00多個信貸掛鉤的風險。

迷債設計者設計了這麼個複雜的結構，就是不想讓客戶捫了解到迷債的真實風險所在。不是太複雜而不能解釋，其實是不想解釋而做出這麼個雙層結構來欺騙普羅大眾。

”高風險“，關鍵在於何謂風險。顧客理解的迷債之‘高風險’在於公開大肆宣揚的“7個著名公司信貸”的高風險，顧客捫卻不知，還有這沒有告知的第二層的高風險存在。這第二層的高風險是跟100多個各類公司信貸掛鉤！！！ 這就是迷債騙局的根本所在，只講第一層的跟7個公司信貸掛鉤的‘高風險’，卻不講這第二層跟100多個公司信貸掛鉤的‘高風險’！！！

迷債辯護士捫可以用諸多藉口為不介紹第二層信貸掛鉤產品風險辯護，心裡卻都明白：不提第二層的風險，是因為不想客戶捫知道還有這第二層100多個公司信貸掛鉤的高風險！！！

債系列6真是以高息來吸引客戶， 儘管利息比同期前後的迷債系列5或7,10 都為高，銷售量卻是最差的，只有4百多萬美金，因為講明迷債的高息要跟150個公司信貸掛鉤。

正因為由這第二層信貸掛鉤產品，這就是為甚麼要付錢請 PWC 來 處理迷債，因為這第二層信貸掛鉤產品而引起的麻煩！！！

令香港市民利益受損，助成金融騙局令香港蒙辱的到底是誰？？？？？

這次是買入迷債的香港市民被騙，明天又是哪些香港市民？

李麗貞（香港銀行業僱員協會主席）在 “還銀行從業員一個公道”（文匯報 2011年3月24日）中就明確指出：

［ 試想一名藥房的售貨員，向顧客推銷一罐聲稱含有豐富維他命、適合兒童發展需要的最新奶粉後被發現原來這是一罐「毒奶粉」，嬰兒食用後更變為「大頭BB」。事件曝光後，政府即時檢控藥房售貨員，罪名是「對產品認識不足」及「向顧客披露不夠」。對於「毒奶粉」的來源及為何流入市場卻一概不管，相信各位讀者也會認為是荒天下之大謬，然而以上的鬧劇卻真真實實地發生在銀行前線員工身上。
。。。。。。
誠如文首的小故事，香港一旦有「毒奶粉」出現，政府只檢控藥房售貨員而拒絕嚴格監管奶粉的衛生安全，絕對是一個不公平及不負責任的做法。金管局及證監會絕不應只選擇性檢控銀行前線員工，但卻讓負責推出產品的銀行高層置身事外。整件雷曼事件的主因在於香港的金融監管機構監管不力，只懂亂批金融產品交由銀行銷售。一旦發現問題就第一時間「卸膊」，除了有損香港國際金融中心的聲譽，更令到一些向顧客推介產品的前線銷售人員蒙受不白之冤，更甚者因此前途盡毀，鋃鐺入獄。
。。。。。。
香港的金融監管機構更有責任做好把關的工作，不要被無良的投資產品設計者，以魚目混珠的包裝手法、混入不合理的槓桿投資手段，使平民百姓再墮「國際金融大騙局」，讓「金融毒奶粉」再次流入市場。但願金融海嘯不再來，讓金融業內的投資者及從業員都能在健全制度下，為香港能成為世界金融中心之首而努力！

by Jean L.

Have the banks learned their lesson after minibond fiasco?

Have the banks learned their lesson after minibond fiasco?

Sixteen Hong Kong banks on Sunday offered to pay back Lehman minibond investors up to 96.5 per cent of their investments. While this may provide some relief to those who got burned with minibonds, it fails to address the questions about mis-selling in the banking industry that refuse to go away.

The latest offer follows the banks' July 2009 proposal of a repurchase scheme whereby those accepting the terms could recover 60 to 70 per cent of their initial investment.

Minibonds crashed when Lehman Brothers went bankrupt in the early days of the financial crisis in September 2008. Banks have since paid back about HK$5.2 billion to customers who complained they were misled by bank staff about the risk levels associated with the minibonds.

Legislator Chim Pui Chung said investors should accept the new offer, drawing parallels with investment in HSBC before the crisis. HSBC stocks were trading around HK$140 before the crisis and are now hovering around HK$80, having lost more than 40 per cent.

The latest offer from the banks, however, does not constitute a healthy trend as it means alleged malpractices can be compensated with monetary settlements.

Will all individuals and small brokers who have committed malpractices in the past now be allowed to wash away their sins using money and allowed to carry on as if nothing happened?

In handling complaints of alleged misconduct, the Securities and Futures Commission has, in the past, settled some cases with brokers, but at the same time pulled them up and forced them to conduct internal reviews and make improvements where necessary. We have not seen the same approach concerning the banks.

The central question in the minibond saga remains unanswered: did banks really mislead their clients? Not just minibond investors, but everybody in Hong Kong wants to know the answer as it is fundamental to the reputation of the institutions we trust our money with.

Have banks taken any lessons from the minibond experience? The Hong Kong Monetary Authority stipulated they must introduce measures to protect investors, including segregating commercial banking and securities investment businesses. Mystery shoppers were also sent out to check on banks and brokers.

But the hard sell culture has barely been dented. Every time White Collar swings by a bank for a simple transaction, the teller goes through the accounts and launches into a detailed sales pitch for insurance policies or other products where money would be better spent.

This clearly is an invasion of the customer's privacy. When all the customer wants is to renew a time deposit and has not asked for any information on any other investment product, why does she have to listen to a sermon on the flavour of the month?

Banks also deploy poorly trained and ill-equipped outsourced personnel for products and loans promotions. This does serious damage to banks' reputations as most people appointed to make these telephone sales are out of their depth. They crack and reveal the real cost of the loans when subjected to the lightest of grillings.

Many of these callers are salespeople who need to meet their quotas to keep their jobs. The choice between keeping one's job and protecting customers is a no-brainer, one would think.

The minibond fiasco did lasting damage to the banks' reputations and brought their flawed sales tactics into sharp focus. Putting money back in the pocket of angry investors might lessen the protests on the streets, but won't restore the trust they have lost

Hong Kong Lehman investors reject settlement offer

Hong Kong Lehman investors reject settlement offer

Hong Kong Lehman investors reject settlement offer
(AFP)
HONG KONG — A group of investors in now bankrupt Lehman Brothers in Hong Kong on Monday demanded a full refund of the money they lost, dismissing a settlement offer as "unfair".

Regulators in the southern Chinese city announced Sunday that banks that sold minibonds linked to Lehman Brothers have agreed to repay tens of thousands of investors up to 96.5 percent of their investment.

The 16 banks will buy back a large chunk of the financial products at the centre of a major scandal, after they were sold to more than 40,000 investors before their value tanked when the US bank went bankrupt in 2008.

Investors ploughed a total of HK$15.7 billion ($2 billion) of their savings into minibonds and other complex products backed by Lehman.

But Sunday's proposal was criticised by the Allied Victims of Lehman Products, a pressure group that reportedly represents about 7,000 local minibond holders in the controversy.

"This is an unfair settlement proposal," Eddy Chan, the group's chairman told a news conference, saying the investors are "rightfully entitled to 100 percent payment".

"The simple fact is, these banks have deceived us -- they tricked us time and time again. Actually, I think we deserve more than 100 percent because of the time and energy we wasted on the fiasco," he said.

Chan vowed to "keep protesting" until the investors had receive a full refund.

Thousands of investors who bought the minibonds -- many of them retirees -- accused the banks of misselling the complex products, sparking a protracted tussle between customers, regulators and the banks over the buyback.

The 16 banks include Bank of China (Hong Kong), Bank of Communications (Hong Kong) and the Bank of East Asia.

The settlement proposal must be approved by at least 75 percent of noteholders at meetings expected to be held in May.

Kam Nai-wai, a lawmaker who has represented some of the investors, said the offer was "not sufficient to reflect the banks' responsibility".

"The banks should be punished for wrongly marketing the products," he told AFP, adding that he believes the proposal may trigger a new round of litigation among some investors.

"I have reason to believe some victims will continue to explore possible legal action to seek a full repayment."

But banks and regulators welcomed the deal, with the city's Securities and Futures Commission and Hong Kong Monetary Authority jointly saying the agreement "will provide substantial recoveries for all customers" holding the products.

Former Wall Street titan Lehman Brothers collapsed in September 2008 under mountains of debt, leaving investors reeling and sending shockwave across the global financial system.

Lehman investors reject new offer

Lehman investors reject new offer

Lehman investors group rejects offer

28-03-2011


The Alliance of Lehman Brothers Victims has rejected the latest compensation offer. The group -- which represents people who bought investment products linked to the collapsed American bank -- was responding to the offer by 16 Hong Kong banks to pay back up to 96.5 percent of their original outlay.
But the Alliance's convenor, Eddy Chan, insisted that they should get a 100 per cent refund. Earlier, the Financial Secretary, John Tsang, urged investors to accept the payout offer.

Under the deal, the estimated 31,000 investors could recover up to 96.5 percent of their initial outlay - an improvement on the 60 percent offered in 2009. Mr Tsang said the proposal showed that the banks were sincere. But he added that if investors were still unhappy they could go-ahead with legal action.

A Civic Party legislator, Ronny Tong, also advised investors to take the offer. He told RTHK's "Hong Kong Today" programme that any offer of compensation of more than 90 percent should be acceptable and that if the dispute was drawn out further it would be a drain on public resources.

He added that despite the offer, the regulatory bodies could continue to pursue banks which had broken the law in the sale of the minibonds.

HK banks unveil final resolution on Lehman minibonds

HK banks unveil final resolution on Lehman minibonds

HONG KONG, March 27 (Xinhua) -- Hong Kong's Association of Banks announced Sunday the 16 Hong Kong distributing banks of the so-called "minibonds" issued by Lehman Brothers agreed on a final resolution to buy back the products.

According to association Chairman He Guangbei, with the newly- added ex-Gratia Payment, eligible investors could have up to 96.5 percent of their initial investment returned, two and half years after the issuer of the financial product went bust.

Hong Kong's sole public service broadcaster RTHK on Sunday cited the association as saying that it's estimated over 30,000 HK investors are involved in the matter and the face value of these minibonds now stands at 13 billion HK dollars.

Considering the legal uncertainties still surrounding the matter, the offers in the resolution were "the best the banks could get for their clients," said Chairman He.

The Hong Kong government and the city's financial regulatory bodies welcome the resolution.

A government spokesman said the government is pleased with the high rate of recovery in the value of the minibond collateral and "we welcome the final resolution for the vast majority of the minibond noteholders and ex-Gratia Payment as a gesture of goodwill by the distributing banks."

In a release by the Security and Futures Commission, Commission CEO Martin Wheatley said the SFC acknowledges the additional voluntary payments by the banks and their continuing support for the Trustee which will further bolster the market's confidence in Hong Kong's financial institutions following the global financial crisis.

Meanwhile, Hong Kong Monetary Authority's Deputy Chief Executive Arthur Yuen believed "it is an important development which not only allows investors to avoid lengthy litigation and potentially costly fees and legal uncertainty, but also represents the concerted efforts among regulators, the participating banks and the relevant investors to recover the invested amount as far as practicable."

Lehman Brothers sold innocuously labeled minibonds, which were in fact complex derivatives, in Hong Kong region, Taiwan region and Singapore before it collapsed in September, 2008.

Disgruntled minibond investors in Hong Kong have taken to the street several times after the bank filed for bankruptcy. They complained that both regulators and distributing banks failed to inform them of the risks involved.

Hong Kong Banks Agree Extra Lehman Payouts

Hong Kong Banks Agree Extra Lehman Payouts

HONG KONG—Investors who lost money from investing in minibonds linked to Lehman Brothers Holdings Inc., which collapsed in 2008, will receive compensation of up to 96.5% of their investments, up from about 60% agreed to in 2009, the banks in the city announced Sunday.

雷曼苦主控中銀誤導

　　昨又有一名雷曼苦主入稟高院控告中銀香港誤導，要求賠償。姓名譯音為丘程英的女士在入稟狀透露，她在07年受到一名中銀香港的職員誤導，聲稱雷曼產品低風險，有穩定回報，令她投資了54萬港元和6萬美元退休積蓄購買有關迷債，及後遇上金融海嘯，她所有投資全都虧蝕，所以要求賠償。原告人又指，是次投資令她的退休積蓄全數蝕光，受此打擊後，健康轉差，因而患上肝炎，腿部麻痹和左耳失聰，因此另要求10萬元痛苦賠償及近3萬元醫藥費。

HKMA puts clamps on Morgan Stanley mini-bonds | Marketplace | ifrasia

HKMA puts clamps on Morgan Stanley mini-bonds | Marketplace | ifrasia

HKMA puts clamps on Morgan Stanley mini-bonds
IFR Asia 602 - 6 June to 19 June 2009

The Hong Kong Monetary Authority (HKMA), the territory’s de-facto central bank, has asked the distributors of Morgan Stanley-issued credit-linked structured products to carefully monitor and keep consumers informed of the risk ratings of such products. The regulator said that it is keeping a close eye on developments related to the distribution of these products, known as Octave Notes.

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

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

How BOCHK hid the truth about PIFL Minibonds from Its customers using its sale managers

We have known for more than two years that BOCHK misled its customers when it sold them so-called Minibonds as bonds issued by PIFL. But the leaflet said “Not Principal Protection Notes” issued by Lehman Brothers. Now, according to a handful of victims during discussions and in court hearings, it turns out the firm also used its own sale managers to sell a lot of these Minibonds saying these notes were safe but hide the facts that BOCHK rated these notes as high risk.

Since shortly after Lehman Brothers filed for bankruptcy in September 2008, we have been hearing essentially the same story from thousands of customers from banks to banks. These were conservative investors, many with a long history of investing in term deposits, HK issued bonds and the like. Their bank managers came to them with a pitch for so-called “Minibonds” that similar to bonds. This was a very safe proposition, they said. The customers could potentially link to seven large companies, and the worst that could happen was that all seven companies had credit events, then they would not get their principal back which would likely not happened. Many customers were never even told that Lehman was the issuer of the notes, let alone that the notes were just a structure products of Lehman that invested into all kind of CDS, CDOs kind of derivatives.

We all know what happened next. These deceptively named notes were just synthetic bonds, and investors’ entire principal went to HSBC as trustee when Lehman folded and HSBC did not yet pay back any of the money they are supposely to do so. Many banks had payback 60% of this investment to their customers for these many of these banks were saying the Minibonds were low risk themselves. While BOCHK, the largest seller of Minibonds, rated the Minibonds as high risk, pocketed tens of millions in underwriting fees on the Lehman notes it helped to sale thru its bank sales managers. But these sale managers are now being charged in court for not telling their customers these notes were high risk for they got their shares of bonus for this mass mis-selling frauds. But the BOCHK bank managers are not responsible for the crimes as they signed the form without seeing the customers, and put all responsibility to their sale managers.

Here’s where things really get interesting. As the two-year anniversary of Lehman’s failure has come and gone, and as BOCHK frauds keep piling up, we have come to learn in court that BOCHK customers weren’t the only ones being deceived. BOCHK executives consistently issued training documents and CDROM to their sale managers for each products, encouraging their financial advisors to continue selling these notes to their best customers and lulling them into holding the notes even when alarm bells began to ring in the spring and summer of 2008. And let these sale managers to read the fine details themselves.

Sale managers have showed that in court that senior management told them to read the ratings agencies’ “A marks” for these linked seven companies and themselves had to reassured their customers that their due diligence were thorough in the training documents. Their bank managers did not have to check them but sale managers themselves counter-signed these risk forms for each others, these actions would pretend that the BOCHK did preformed the due diligence as required by SFC to sell the notes. Meanwhile, the higher-ups investment department of BOCHK must have tracked the market’s true measure of default risk: credit default swap spreads (in short, the price of insuring against hundred of companies default) without sale managers knew anything. Even as most major US companies’ spreads exploded, the executives apparently soft-pedaled the impact of this information, only to tell their sale managers that the Minibonds were not linked to US sub-prime housing market. But to those who sold Octave Notes that had US housing market CDOs, the sale managers never remind their customers to sell off their Octave Notes.

According to these disillusioned sales mangers inside court, when they told their customers that these seven companies were A rated, the witness and the sales managers had proved that these sale manager sometimes used the BOCHK training documents photocopies that did not have disclaimer to hide the high risk nature of the Minibonds. In truth, they must have seen and worried about the parallels in court being asked by the judge how they can sell AAA rated CDOs but high risk to customers to be a secure investment. That why in many cases the Minibonds victims of BOCHK never got the sale documents from BOCHK sales managers for these managers ticked the high risk box in the sale documents and refused to give the form to their customers. In some cases, the sales manager folded the sale form hiding the high risk ticks and put the form inside the envolope so to let the customers not to read the form when they get home.

As BOCHK own investment department was exposure to Lehman—a fact the world now knows from BOCHK Legco hearings that BOCHK issued their training system inside the banks that let sale managers to get all the blames in selling out a lot of their Lehman Minibonds products—even as late as in 2008!

Many BOCHK sale managers got their customers in 2008 for catastrophe while many other smaller banks stopped sales of Minibonds in 2008 but all these banks never warned their customers. For most, they bit on their company’s pitch hook, line and sinker. They remained in the dark until it was too late and now are being charged.

Due to their greed, these sales managers are hopping mad at HKSFC, but their defense cost have to depend on BOCHK, but they could not come out as a result of their own firm’s deceit about their situations. Along with their (often former) customers, they should have joined the club no one wants to be a member of: Victims of BOCHK.

UBS Hid the Truth About Lehman Brothers from Its Customers—and Brokers!

UBS Hid the Truth About Lehman Brothers from Its Customers—and Brokers!

We have known for more than two years that UBS misled its customers when it sold them so-called “100% Principal Protection Notes” issued by Lehman Brothers. Now, according to a handful of former UBS financial advisors who have reached out to us, it turns out the firm also misled its own brokers.

Since shortly after Lehman Brothers filed for bankruptcy in September 2008, we have been hearing essentially the same story from dozens of UBS customers from coast to coast. These were conservative investors, many with a long history of investing in CDs, municipal bonds and the like. Their brokers came to them with a pitch for so-called “100% Principal Protection Notes.” This was a no-lose proposition, they said. The customers could potentially realize some modest upside during a rocky market, and the worst that could happen was that once the notes reached maturity, they would get just their principal back with no gain. Many customers were never even told that Lehman was the issuer of the notes, let alone that the notes were just a naked promise—an “unsecured obligation” of Lehman.

We all know what happened next. These deceptively named notes protected nothing, and investors’ entire principal went up in smoke when Lehman folded. Conservative investors whose brokerage firm had convinced them this investment was “guaranteed” were left holding the bag, while UBS pocketed tens of millions in underwriting fees on the $1 billion in Lehman notes it helped issue.

Here’s where things really get interesting. As the two-year anniversary of Lehman’s failure has come and gone, and as UBS’s arbitration losses keep piling up, we have come to learn that UBS customers weren’t the only ones being deceived. UBS executives consistently painted a rosy picture of Lehman, encouraging their financial advisors to continue selling these notes to their best customers and lulling them into holding the notes even when alarm bells began to ring in the spring and summer of 2008.

Brokers have reported that senior management told them to take comfort in the ratings agencies’ “high marks” for Lehman and reassured them that their due diligence was thorough. Meanwhile, the higher-ups must have tracked the market’s true measure of default risk: credit default swap spreads (in short, the price of insuring against a Lehman default). Even as Lehman’s spreads exploded, the executives apparently soft-pedaled the impact of this information, telling their brokers that UBS believed Lehman was on solid footing.

According to these disillusioned brokers, when they told their bosses that they were worried about Lehman in the wake of the Bear Stearns collapse, the execs reassured them that the firms were entirely different. In truth, they must have seen and worried about the parallels.

As UBS’s own investment bank was reducing its exposure to Lehman—a fact the world now knows from UBS press releases—UBS analysts issued research reports discouraging retail investors from selling out of their Lehman investments—even as late as September 2008!

Some brokers caught on to the executives’ game and got their customers out in time to avoid catastrophe. For most, they bit on their company’s pitch hook, line and sinker. They remained in the dark until it was too late.

These brokers are hopping mad at UBS, their books having been burned as a result of their own firm’s deceit. Along with their (often former) customers, they have joined the club no one wants to be a member of: Victims of UBS.

三萬雷曼苦主不納範圍內

三萬雷曼苦主不納範圍內

香 港 人 權 監 察

香 港 人 權 監 察

Lehman sues Citibank to recover over US$1.3bil

NEW YORK: The trustee overseeing the liquidation of Lehman Brothers Holdings' broker-dealer has sued Citibank to recover more than US$1.3bil in cash and other assets.

The assets include a US$1bil deposit that Citibank demanded to continue providing foreign exchange settlement services to broker-dealer Lehman Brothers Inc (LBI) after its parent filed for Chapter 11 bankruptcy protection, according to a complaint filed in US bankruptcy court in Manhattan on Friday.

Citibank also froze more than US$300mil in additional deposits, according to the complaint filed by Lehman trustee James Giddens.

When Lehman requested the return of the US$1bil deposit, Citibank said it had set the deposit off against other obligations Lehman owed to Citibank, according to the lawsuit.

The case centres on negotiations held during the frantic week of Lehman's bankruptcy filing on Sept 15, 2008, the largest ever, and its scramble to keep LBI functioning through the ensuing financial crisis. - Reuters

Lehman expected CDO market to worsen

Lehman expected CDO market to worsen
By finance reporter Sue Lannin

Posted Tue Mar 22, 2011 8:24am AEDT


A total of 72 local councils, charities and churches have launched a $260 million class action against Lehman Brothers Australia. (Reuters: Brendan McDermid)
The local arm of collapsed US investment bank Lehman Brothers expected the market for complex investments linked to mortgages and corporate debt to deteriorate before the onset of the subprime crisis in the US housing market, according to Lehman's internal documents.

The revelation in a Federal Court class action lawsuit was contained in documents from Grange Securities, the local arm of Lehman Brothers, which went bankrupt in September 2008.

The hearing is part of a $260 million class action taken by 72 local councils, charities and churches against the estate of Lehman Brothers Australia (LBA). Lehman Brothers took over Grange in 2007.

The plaintiffs accuse LBA of misleading them into buying collateralised debt obligations (CDOs), which helped trigger the global financial crisis.

LBA denies misleading the councils and is fighting the claim. It says the councils signed agreements which authorised Lehman to buy CDOs on their behalf.

Tony Meagher SC, barrister for the councils, told the Federal Court in Sydney that Grange did not tell their clients about the risk of a rise in defaults among lower investment grade rated companies, which were part of the CDO investment portfolio.

Instead, Mr Meagher told the court Grange's investment advisers bought and sold the complex products on behalf of their clients to maximise Lehman's profit rather than returns for investors.

Referring to Grange's budget for 2005/2006, Mr Meagher said the investment company made around $500,000 a year from fees on investment agreements with clients, but made millions of dollars from underwriting the products and trading CDOs between clients, many of whom were New South Wales councils.

The document said Grange wrote CDO deals of between $50 million and $100 million and had a CDO deal every six weeks.

"The market has been good but it will get worse over the next year," the document read. "I'm expecting defaults to increase."

The councils allege Grange bought and sold the CDOs between investors therefore creating a secondary market because there was little demand from professional investors for already issued CDOs.

In another document, the head of the structured finance team at Grange, Moray Vincent, told staff the "prime targets" were existing clients who "operate on a high trust basis with Grange."

A number of the councils signed investment agreements with Grange which authorised Grange to make investments on their behalf.

In an email, Rod O'Dea, senior vice president of investment markets at Grange, expressed his concerns in response to an August 2005 internal report about the company's lack of formal procedures for managing clients.

He feared inadequate portfolio management could trigger demands from clients for Grange to buy back CDOs.

"If we blow up, we will get a tsunami of stock back to us," Mr O'Dea said.

A June 2007 email from Michael Clout, the head of fixed income at Grange, to sales staff told of a $100 million CDO inventory that the company wanted to reduce its exposure to.

"Can we focus on the usual suspects," Mr Clout said in the email.

Mr Meagher said Grange should have been aware of a January 2005 report on CDOs from the Bank for International Settlements, which coordinates financial regulation globally and serves as a bank for central banks.

The report said CDOs could be riskier than corporate bonds with equal credit ratings.

Collateralised Debt Obligations (CDO) are bundles of loans grouped together into an investment portfolio, which exposed investors to subprime and corporate debt.

Synthetic CDOs involve an extra layer of complexity called Credit Default Swaps, which are insurance contracts, often taken out by the seller or issuer, such as a bank.

The insurance contracts are paid out if a company within the portfolio defaults, reducing the pool of money available to investors. In some cases, the entire investment value of CDOs has been wiped out.

The case is continuing.

Complacent leaders must shed indifference to people's plight

Complacent leaders must shed indifference to people's plight

Hong Kong people appear increasingly willing to be critical of what they perceive to be incompetent or inappropriate decisions by government and have diminishing respect for the influential and moneyed elite. These trends are not, of course, confined to Hong Kong.

In both democratic and autocratic societies, an increasingly well-educated middle and lower class are becoming angry and cynical over complacency, arrogance, greed, self-interest and incompetence displayed by governments and those elites in a position to exploit others.

Unrest in a society is driven by poverty, oppression, corruption and a feeling of hopelessness in the face of government and fat cats' lack of interest in the plight of the people. An angry public response is only to be expected.

Indeed there are instances of considerable public restraint, given the extent of inequality in some societies. The current troubles in the Middle East are indicative of where such problems as these may culminate. Furthermore, despite the censorship and controls on information in some societies, the role of the traditional mass media is being usurped by centres of ideological beliefs that have no boundaries. Excesses, corruption and incompetence are thus increasingly being exposed.

Hong Kong is fortunate in that it is a wealthy society without oppression, reasonably free of corruption and possesses a well-educated and ambitious workforce. And yet the seeds of discontent exist.

Hongkongers are fortunate in so many ways. However the Gini coefficient, a measure of the wealth gap in a society, places Hong Kong in the bottom 10 per cent of the world's countries, in company with many of the corrupt and despotic regimes in Africa and South America.

A state of denial exists in government over pollution, which is tantamount to callous indifference. Middle-class salaried families (let alone the poor) find it difficult to live in dignity. Sadly, government, in its arrogance, apathy and antipathy, appears unwilling to look for solutions.

Recent incidents have shown a diminution in social cohesion. If unrest is not to continue, government and other leaders in Hong Kong must shed their complacency and indifference and address genuine concerns. Leadership must be clear-sighted and robust. Policymakers must engage the public with sincerity, honesty and candour.

Laws (even relatively trivial ones) must be implemented fairly. People must have equal opportunities. Decisions must be made altruistically and in the interests of future generations. The government must lead.

Hong Kong is an efficient, affluent, largely culturally aligned and resourceful society within which the benefits of good governance and confident leadership would be apparent almost immediately. We possess the potential to be a model society and an example to the world.

We ignore the current warning signs at our peril.

Tony Price, Tung Chung

另一角度出發 透視獅子銀行

另一角度出發 透視獅子銀行

多年來，香港人都對獅子山下的「獅子銀行」懷有濃厚的感情，汇豐（00005）多年來享有實力大藍籌的美譽，可是，經歷金融海嘯過後，小散戶其實是否應該從多角度去思考汇豐的投資價值、深思汇豐是否真的為一間「有讚無彈」的銀行？

　　即使不炒股票的人，也許都知道汇豐的股票代號是「5號仔」，可能是基於她是一家植根於香港的國際性大銀行、「老字號」，很多香港人都對汇豐有一份解釋不來的情意結。

　　每次發生股災，散戶都群起築成「血肉長城」，為汇豐的股價護航，曾聽人笑說，這是香港人最團結的一個時刻，而事實上，績優股眾，但似乎只有豐獨享「血肉長城」的厚待。

　　亦正因為「粉絲」眾多，有關汇豐的著作可謂汗牛充棟，不過大多數講述汇豐的書都是從較正面的角度去闡述汇豐種種的歷史、卓越的管理、投資價值等，但《汇豐2012》一書則別樹一幟，嘗試揭露汇豐段段的陰暗面。

近年負面事損穩健形象

　　本書大部分篇章談及的都是近年圍繞汇豐的負面事宜，如害人不淺的雷曼迷債、千瘡百孔的次按業務、教人意外的馬多夫騙局。

　　作者認為，從前汇豐的確是值得信賴的標誌，但現在已是「穩健形象不再」，自從銀行業所受的監管愈來愈寬鬆後，包括汇豐在內的銀行都開始涉足傳統貸存業務以外的生意，而且愈做愈大膽，涉足種種如次按等高風險業務，甚至投資於一些連專業金融人才也弄不清的衍生工具。

雷曼迷債種因監管寬鬆

　　作者除了批評汇豐有如「拿客戶存款去投機」的營運態度外，在雷曼事件上，他更質疑豐的操守，他引述美國一個律師團指出，雖然表面上汇豐只是雷曼迷債的託管人，但汇豐其實也是迷債發行商背後的控制人，直言汇豐是雷曼事件的「始作俑者」，而同時擔任信託人與發行人，有汇糾纏不清的利益衝突。

　　作者更指出，在「龐氏騙局」翻版的馬馬多夫騙案中，汇豐擔演了重要角色，多隻馬多夫基金的聯接基金都是由豐管理及擁有。

　　雖然本書痛陳汇豐種種不是，但從字裏看間也看出作者其實也批評了金融業寬鬆的監管，如在雷曼事件中，只要監管者心思慎密得連金融產品的名字也納入規管，便不會出現「迷你債券」這種「遺害阿毛」的糖衣毒藥了。

投資者宜思考正反意見

　　對汇豐迷來說，可能會對本書痛恨之至，可是，姑勿論本書的論證、論據是否客觀，作為一個理性的投資者，確實不宜只偏聽喜訊，而忽視憂患，褒言也好、貶詞也罷，投資者也該多聆聽不同的聲音，然後用自己的大腦過濾思考，才是正道。

書名：《香港．上海．汇豐故事》

　　作者：王浵世

　　出版：商務印書館（香港）

Investors appeal against ruling on Lehman-linked losses

Investors appeal against ruling on Lehman-linked losses

04:46 AM Mar 19, 2011SINGAPORE - A group of 213 investors, in a bid to recoup S$18 million in losses tied to failed American investment bank Lehman Brothers Holdings, has urged the Court of Appeal to overturn a ruling that dismissed their claim.

DBS Bank, which sold credit default swaps linked to Lehman, had inconsistencies in the investment's prospectus and pricing statement, the investors said in their appeal. DBS had declared the investments to be worthless after Lehman collapsed in 2008.

The inconsistency stemmed from "an obvious clerical error", Judge Lee Seiu Kin said in a Dec 10 ruling, dismissing the lawsuit. Statements on how the investment value would be calculated in a credit event, such as Lehman's collapse, were not meant to be comprehensive, mathematical formulae and were instead general descriptions, he said.

"While DBS insists on holding us to the strict terms of the contract, they seek to avoid liability by relying on what they call a clerical error," the group, represented by lawyer Siraj Omar, said in a statement on Friday.

DBS had sold its DBS High Notes 5 as a safe, low-risk investment, lulling the investors into having a "false sense of security", the group said.

The appeal is scheduled to be heard in the week of May 23.

Ms Jenny Lee, a DBS spokeswoman, said the bank does not comment on legal matters in progress.

Singapore's central bank in July 2009 banned 10 financial institutions, including DBS, from selling structured notes, such as credit default swaps, following claims by investors that they were misled on products tied to Lehman. DBS had its ban lifted in February last year, after it strengthened its internal procedures relating to advisory services across all investment products.

Investors in Singapore bought S$508 million of structured products linked to Lehman, which lost most or all of their value when the lender filed for the biggest bankruptcy in United States corporate history. BLOOMBERG

致 : 證券及期貨事務監察委員會

致 : 證券及期貨事務監察委員會

投訴人姓名: ( )
檔案號碼:

要求證監會就星展香港及其職員向本人作出失實陳述, 妄顧實情地誘使本人投資Constellation債券的欺詐/串謀欺詐罪行提出檢控..

1. 去年, 原星展香港總裁葉約德女仕在立法會(雷曼相關)調查小組聆訊中, 及26/ 3/2010星展香港提交給該調查小組的陳述文件第14.3 /14.5段(附件1). 提供了星展銀行將Constellation債券產品定為中低風險程度第2級風險的因素, 這些因素蓄意遺漏星債掛勾公司以 “首先失責為基準”這一事關重要的事實, 妄顧實情地作出失實陳述. 也直接導致產品風險評為中低級風險程度2的錯誤結果.

2. 星展香港把關鍵的, 但帶誤導性的錯誤資料: “產品風險程度2”, 印在給本人確認交易的Constellation債券系列____________的重要文件<債券申購表格>上, 對本人產生誤導. (附件___)

3. 星展香港把誤導性的 “產品風險程度2”, 和制定這個 "產品風險程度2"時, 被遺漏的風險因素 "首先失責為基準"條款, 同時印在<債券申購表格>上, 凸顯星展香港在評估Constellation債券風險時, 並非是忘記 "首先失責為基準"這一風險因素, 而是一方面利用證監會以"披露為本"的政策漏洞, 披露 "首先失責"風險條款, 令債券可以避開風險披露不足並可以順利過關發行. 另一方面, 利用銀行的專業知識優勢和本人對投資知識的缺乏, 及對銀行和政府的盲目信任, (相信銀行說的 “中低風險產品”和相信經過政府審批的投資產品應該 “不會騙人”), 意圖更容易成功地誘使本人投資.

4. 星展銀行將Constellation債券定為中低風險程度產品的動機還有: a) 將高風險產品低回報合理化; b) 將把高風險產品賣給低風險客戶, 或在賣高風險產品時沒有對客戶進行風險評估等違規銷售行為合法化; c) 利益輸送. 星展香港為產品評級時, 不納入“首先失責”條款, 使苦主在被蒙騙中損失金錢. 但屬同一集團的債券發行商新加坡星展, 卻以同一個“首先失責”條款來計價, 而得到金錢利益.

5. 銷售過程中, 職員___________並沒有向本人解釋 "首先失責"是什麼, 也沒有向本人講解 "首先失責"的後果是會令部份或全部本金盡失. 是蓄意遺漏這項事關重要的事實.

投訴人簽署:

投訴日期 :

DCCC 527/2010 DCCC 1272/2010 (Consolidated court case against BOCHK : TAI CHING )

BOCHK : TAI CHING (戴晶)
Charges : Offence to fraudulently or recklessly induce others to invest money
H.H. Judge : S. D'Almada Remedios
Department of Justice
Defense :Deacons

BOCHK staffs fully exposed their lies in the mis-selling of high risk Minibonds to old customers during court cross examinations:
First witness :

The witness only bought YMB bonds from banker.
The banker asked the witness to buy Minibonds to replace term deposit for the banker checked the witness account and found that even thru the witness had term deposit but the term was not expired but still pushed her to buy the Minibonds for more bonus payments and to meet new BOCHK quota to sell more Minibond 35 series.
During the sales, she did not read the documents, none of these documents was explained to her. The witness was not told of the high risk natures of Minibonds involved.
When the witness signed the documents, she was wearing old glasses (for walking but not for reading) and several document were signed in the same time. If the banker told her that Minibond was risky, then the witness would not signed these documents.
The banker told the witness that Minibonds was linked to seven big companies and worst case was for these seven companies to close down was impossible.

The witness was low risk, but she found out the banker raised all her rating to high risk on 26th, Sept 2008 when the witness got her documents back at that time.
All Jan, 2008 and 2006 bank's risk forms were rated low and the banker never told her that her risk level was raised from low to high. The score was raised to 56 from formally 45 at that time, without upgrading of her risk level, she could not buy the Minibonds.

During Lehman Brothers saga in 16th Sept, 2008, the witness saw BOCHK Taikoo City branch was light up late after office hour. After the witness went home, she saw the leaflet of Minibonds was shown on TV in 6:45, so the witness called the banks and located a BOCHK staff.

The Minibonds brochure that was shown to her were in photocopies in black and white, the witness asked the banker to give her the original but was told that these brochures were all given out. However, the witness got the brochures the third days after she went back to the bank to buy RMB.

The brochure were printed with small letters except the pictures of the Chinese name and the seven companies. And the witness could only see those seven companies with her eyeglasses but not the small wordings.

The banker introduced to the witness the Minibonds and said the Minibonds was linked to these seven companies and the witness thinked that what the banker meant was that she was actually buying these seven companies notes.

The banker never gave the prospectus to the witness to see, and there were no mentioning of colaterals that consisted of AAA rated CDO, CDS, and the meaning of term Principle protected that were used by Fund managers to sell funds was never spoken by banker.

The banker only mentioned that in three years if the Minibonds were untouched, the witness would get 100% money back and when the banker was asked if the Minibonds was a safe investment, the banker told the witness to trust her in words "you stupid pig, trust me" in friendly manner.

Finally the witness trust BOCHK and signed all documents. And during the court statement, the court even do not have full true prospectus shown to the judge and the witness.

http://minibondsoctaveconstellation.blogspot.com/2010/12/prospectus-of-minibonds.html

The banker even told the witness that government bonds such as Russian bonds were not safe, so this Minibonds was a safe buy.

The money used to buy the Minibonds were from Insurance saving plan.

During cross examinations, Deacons used original leaflet in order to try to confuse the witness about fine details as the photocopies were unclear in many parts.

The witness did refused first to buy Minibonds before pushed into buying these products.

Safe buy to mean low risk were mentioned during sales to confuse the witness to go for purchase.

The banker said that no way all seven companies would close down.

The banker filled in the forms for the witness , after the witness was softed by banker, the banker filled in other forms such as withdraw form and other documents.

The checking signature was in fact signed by the bank teller against normal rule of checking banking sales procedures.

Later on, the court learnt that the risk form were filled in by BOCHK while the teller lied that the customer came to fill in the risk form herself. No banks in this world would ask a teller to manager risk form for customers except BOCHK that would against rules of HKMA.

The bank teller even telephoned the witness after the witness complainted to the police to warn the witness that no way the witness could lay charges against them as BOCHK had build a iron wall against all charges.

The witness thought that even one of the seven companies closed down, she would only lost the interest as the money lost was only one out seven companies that she had invested for the banker never told her that the witness would lost all her money even if one of the seven companies closed down.

The witness told the judge that it is BOCHK that forced the banker to sell these high risk products to the retiree, even thru the banker is also guilty. Only in witness statement inside HKMA, the witness knew what high risk meant. The witness was never told of what was inside Minibonds and she was brought to believe that Minibonds was a deposit product.


Second witness :

The witness was called to the VIP counter to attend banking business by the banker. The conversation was taken in the corridor.

After the witness entered into the room, the banker took out a brochure from her desk and intoduce to him about Minibonds.

The banker told the witness that the money had to put there for three years to earn 6% interest for USD.

The banker told the witness that if these seven companies would not close down
while pointing at these seven companies. The witness and his wife told the banker that they wanted a secure investment.

Inside the VIP room, the banker did look at the computer, but the banker did know about the money the witness had in the corridor even before they went into VIP room.

Banker did not use the computer before she pushed them to buy the Minibonds, and only after they signed the purchase form then the banker used her computer.

The witness had bought ELN before, but never knew these products were high risk. For the witness could received stocks if the ELN reached the lower values, and stocks were still mostly safe investment.

The witness never told the witness that he was updating the risk level and the banker filled in the risk form for the witness except the first few line of amount bought and personal datas.

The witness was never told of risk level and form, and was only told by the banker that he had to answer a few qustion just for bank use.

The banker never left the room during sales of products to ask for manager approval.

The banker also lied that she had asked her staff next door to sign for the witness form for old age customers. But the witness wife should be left during the sales for she had a meeting while the banker staff lied to the court both customers were present while the banker had statement written before that the customer wife had left.

Police Expert witness on Minibonds:

In program prospectus, there are reference that imply that only experience investors are suitable to invest on these structure products.

Worst case of default would not be the fall of these seven companies as listed on leaflet.

CDO and CDS datas are available in internet and calculation of the values of colaterals could be done by banks daily.

At time of maturity, the brochure listed that 100% payback to investors, but the values of the CDOs would not be the full values after swap counterparty get their share of loss. Full payment during maturity to investors would likely be impossible as refered to the statement listed in brochure.

Retail investors are not secure even thru these seven companies are secure.



Banker statement:

She knew about CDOs and only cared about these CDOs were not related to US Sub-prime housing market before selling these Minibonds but never on risk levels.

She did not care about her duties as investor advisor to care about her customers saving, but only on sales quota set by the bank.

She earned more under incentive schemes with sales of more Minibonds.

Banker never cared about disclaimer causes in the training manual and leaflet that put her resposible to explain the details and risk of Minibonds to customers.

Banker was trained thru CDROM, program prospectus, leaflet and Powerpoint presentations sent by training department of BOCHK.

http://minibondsoctaveconstellation.blogspot.com/2010/10/blog-post_25.html

Banker was responsible to set up training programs for her branch of bankers and was told to follow the CDROM about the procedures to sell these high risk products to customers but the banker never followed the rules so she could easily sell these high risk products to non-supecting customers.

"Know you customers" to the banker was only to lie to their senior customers about products she sold knowing they could not understand what she said.

The Banker filled in the risk form for the customers except the names, ID no. , type of products and the values of the investment.

The banker did not read program prospectus as required by BOCHK before the sales to customers.

The banker sold very high risk Minibonds products to low risk customers saying very high risk derivative products were very safe.

The banker put diversify products risk into BOCHK internal document for replacing low risk term deposit with very high risk Minibonds, and the rest of the products spread were ELN. BOCHK now became the only bank in the world that asked very old cutomers to diversify all their savings into very high risk derivate products as against rule of G20 nowadays.

http://minibondsoctaveconstellation.blogspot.com/2011/01/professor-louis-pauly-who-directs.html

Top management from BOCHK never warned to their senior customers over age 65 about high risk nature of the products except minor details of the leaflet that nobody understood and only asked more sale staff to sign once more on the purchase forms. That why most of the sales of Minibonds were for unexpected senior citizens of HK who all bought these derivative products as bonds.

Expert witness from Deacon lawyer firm

Seven companies on Minibonds 35 and colaterals of AAA rated CDOs were very secure in his studies, he did not understand the reason BOCHK CDOs experts in investment branch put all these structure products as high risk.

http://minibondsoctaveconstellation.blogspot.com/2009/03/lessons-from-lehman-minihbonds.html

Minibonds were in fact synthetic bonds.

Expert witness has no real experience as fund or bank investment managers and did not understand that derivative products are all high risk structure products without real collaterals. That why these PhDs in microeconomic field led to all these financial troubles in the real world and no more microeconomic PhDs are working for G20 any more.



http://minibondsoctaveconstellation.blogspot.com/2011/03/second-boc-officer-on-minibond-charges.html

BNY Mellon Pays Off Debt to Lehman's Brokerage Unit

BNY Mellon Pays Off Debt to Lehman's Brokerage Unit

Lehman Failed Lending to Itself in Alchemy Eluding Dodd-Frank

Lehman Failed Lending to Itself in Alchemy Eluding Dodd-Frank

[極醜惡]港警打女人，受害人現身解說

Amnesty International Hong Kong website 23001250 Email : admin-hk@amnesty.org.hk (on your reports AI Index: ASA 19/001/2007 on HK police against demonstrations),

UN human right commissions mbogner@ohchr.org (on COMMITTEE AGAINST TORTURE CAT/C/SR.844 and 846- the Hong Kong Bill of Rights Ordinance (Cap. 383), which incorporates into HKSAR's law the provisions of the International Covenant on Civil and Political Rights;b- the enactment of the Independent Police Complaints Council Ordinance on 12 July 2008, providing that the Council will start operating as a statutory body in 2009)



How HK police attacked young girls and grabbed her chest :

Global regulators toughen up trading risk rules | Reuters

Global regulators toughen up trading risk rules | Reuters

(Reuters) - Global regulators published new rules on Thursday to make the world's financial plumbing safer, but trading in stocks, bonds and derivatives will likely become more expensive.

World leaders want more financial transactions cleared and settled so there is an electronic audit trail showing who is exposed when anything goes wrong, as it did with the crash of U.S. bank Lehman Brothers in 2008.

Clearing houses will have to increase their default funds by asking for bigger margins and collateral from banks and brokers whose transactions they process on behalf of investors.

"There will be a need for a lot more capital in the system, probably billions of dollars," said Daniela Russo, director general of payment systems and market infrastructure at the European Central Bank.

The cost of extra collateral and margins is likely to be passed on to end investors but Russo said a safer, less risky financial system won't be free of charge.

Clearing in derivatives will become mandatory in many cases, which is already sparking competition in Europe and the United States where most trading in them takes place.

Regulators want to make sure that clearing houses taking on this extra business are resilient.

"With these new principles we believe we have produced a blueprint for the safety and stability of global financial infrastructure that will stand the test of time," said Hans Hoogervorst, who chairs the technical committee of the International Organization of Securities Commissions.

IOSCO, which groups over 100 watchdogs like the U.S. Securities and Exchange Commission, authored the draft rules with the Committee on Payment and Settlement Systems, which comprises central bankers from across the world.

Clearing is where trades are squared before settlement, the legal exchange of cash for ownership and safekeeping.

The 24 principles are out for public consultation and will come into effect by the end of 2012.

LEHMAN LESSON

The measures will apply to clearing houses like DTCC, Eurex Clearing, LCH.Clearnet and Cassa, and settlement houses like Euroclear and Clearstream.

They will have to hold enough collateral to cover their current credit exposures, potential future exposures and, for clearing houses in particular, enough financial resources to meet a wide range of stress testing scenarios.

Clearers would also be required to hold more liquidity or easily accessible cash-like funds so that if they get into trouble, they can operate long enough to close out trades.

The Lehman crash alarmed regulators because not all investors were able to retrieve their assets from the bank easily.

A substantially new principle recommends that clearing houses should have segregation and portability arrangements that protect customer positions and collateral.

The regulators also set out principles on how clearing houses can link up with each other, known as "interoperability."

Links between clearing houses are an "important source of additional operational and financial risks, which call for more stringent requirements."

Some regulators fear a domino effect rippling across the financial system if one derivatives clearing house goes bust, but banks who trade derivatives and shares say interoperability leads to competition and cheaper tariffs.

The new rules also help banks in countries where there is not enough derivatives trading to make a local clearing house viable and so they have to use a foreign clearer.

Financial market infrastructure "should establish fair and open access to its services, for both direct and indirect participants, with any restrictions justifiable only in terms of specific issues impacting safety and efficiency," the regulators said.

(Reporting by Huw Jones; Editing by Gary Hill)

Hong Kong Police use pepper stray to attack a 8 years old boy who was meeting his friends with his mother after dinner

Amnesty International Hong Kong website 23001250 Email : admin-hk@amnesty.org.hk (on your reports AI Index: ASA 19/001/2007 on HK police against demonstrations),

UN human right commissions mbogner@ohchr.org (on COMMITTEE AGAINST TORTURE CAT/C/SR.844 and 846- the Hong Kong Bill of Rights Ordinance (Cap. 383), which incorporates into HKSAR's law the provisions of the International Covenant on Civil and Political Rights;b- the enactment of the Independent Police Complaints Council Ordinance on 12 July 2008, providing that the Council will start operating as a statutory body in 2009)


PLEASE NOTICE OF THE HUMAN RIGHT ABUSE OF HK GOVERNMENT POLICE FORCE AGAINST SMALL CHILDREN

Photos of the Joint demonstration of Lehman minibonds victims group together with Social Demoncrate
http://hk.myblog.yahoo.com/hanhoco/gallery?fid=72

Pressure builds on Hong Kong after anti-budget

HONG KONG (Reuters) - Hong Kong police arrested 113 protesters after an anti-budget demonstration late on Sunday, as the government came under increasing pressure from activists who criticized authorities for not doing enough to help the poor.

The protesters took to the streets despite a revised government plan last week to grant HK$6,000 ($771) to each Hong Kong permanent resident, after a wave of public criticism over the government's failure to offer more relief and welfare measures in the budget to help local residents cope with mounting inflation, expected to hit 4.5 percent this year.

Hong Kong announced a bumper surplus of HK$71.3 billion ($9.15 billion) for the 2010/11 financial year.

Police said in a statement issued early on Monday that the protesters were arrested after they blocked roads in the city's downtown financial district and confronted police.

Police said they were forced to use pepper spray on groups of activists after repeated calls for them to disperse peacefully and to maintain public order amid heated scenes and chants for the city's financial secretary to resign.

Among those arrested were two boys aged 12 and 13, while several people were injured in the standoff including an eight-year-old boy who was caught by the pepper spray.

Hong Kong Financial secretary John Tsang said in a briefing on Monday he had not ignored public demands, though he declined to respond to the calls for him to resign.

"I believe that this is a good opportunity for us to consolidate our experience on how to make improvements in future," said Tsang, whose popularity ratings have plunged since the February 23 budget.

Many of those arrested were youngsters linked to the radical pro-democracy political party, the League of Social Democrats, whose members include activist lawmaker Leung Kwok-hung.

Organizers of Sunday's anti-budget protest said over 10,000 people took part, but police put the figure at around 6000.

A government spokesman said in a statement Hong Kong authorities would "listen to and carefully consider the views expressed by the public with an open mind."

(Reporting by Donny Kwok and James Pomfret; Editing by Sugita Katyal)

調查報告(hk coverup of bank fraud in DBS Constellation Notes)

Ms. Karin Finkelston
Director

E-mail: kfinkelston@ifc.org



有關註冊機構: 星銀
有關行政主任: Sunny
Richard
Sion
有關產品 : Constellation (Lehman-related) Credit Linked Notes (“the Notes”) Notes 有關期間 : 由2006年2月至2007年7月
主管人員 : Ivy, Sammi, Carol, Alex, Albert, Charles, Leo
1.行政簡報:
1.1這報告提議金管局應該查閱此案件有關星其三個前行政人員Sunny , Richard, Sion,他們都是負責監督銀行有關的規範活動:包括第一類證券買賣及第四類提交予證監會報告有關證券產品,現建議並考慮根據證券及期貨條例向他們採取處分行動。
1.2此調查報告結果涵蓋兩點主要議題:
(i)DC在2009年8月20日, 2009年8月24日及2009年11月5日的裁決(準DC會議)關於銀行在其銷售CLN票據給其客戶時的系統出錯；
(ii)有關銀行對其產品未有做到盡職審查及其職員培訓不足之處。

(I)準DC會議的裁判及再進一步調查工作

1.3在準DC會議, DC已有了一個概念就是對銀行及其三個前行政人員根據以下兩點的初步印象:
(A)沒有履行給予客戶一套完整的章程,即發行章程Programme Prospectus, 章程Issue Prospectus及有關適當的附件；
(B)銀行在其銷售過程的缺失違反證監會的操守準則及票據發行人的要求規定。
1.4議題(A)關於銀行系統及其職員缺失出錯,在之前的調查已揭露了銀行一眾相關人士(相關人士)沒有跟隨銀行的內部規定給予客戶章程, DC確立了其觀點就是銀行未能引入足夠及清晰程序及提供足夠監督去確保遵從票據發行人(在以下第2.1段釋義)要求規定及” 操守準則”)。
1.5議題(B)關於銀行系統缺失出錯以確保其客戶明白票據產品的風險。” 操守準則”是要銀行履行責任確保向其客戶適當正確披露產品的風險並確定他們完全明白。銷售職員一般做法是只倚賴市場推廣單張(Marketing Leaflet)來解釋票據給客戶，然而,比較起其章程(附件21)這推廣單張是不足夠披露解釋其票據的性質及其風險。
1.6DC確立了其觀點是(相關人士)只是簡單執行銷售程序，所以銀行及其三個前行政人員應該承擔在銷售過程中沒有確定披露充足風險的主要責任。
1.7在1625個公開個案當中, 調查小組對其中1002個個案(大約62%)進行調查,並發現在與76%的(相關人士)面談時(即259人中的196人)承認在銷售過程中沒有解釋章程內容。大量(相關人士)的會面聲明中已支持這個調查結果,因此調查小組確立了其觀點有足夠證據成立對銀行及其三個前行政人員Sunny , Richard, Sion的初步不利表證。

(II)關於銀行的產品盡職審查及其職員培訓調查

1.8再者,因為BSD就關於銀行對其產品未有做到盡職審查的轉介, 調查小組做了進一步調查並揭露有關以下兩個紀律上的問題：
問題(I): 產品盡職審查過程不足
問題(II): 職員培訓不足
1.9調查揭露銀行內兩個部門即零售銀行(Consumer Bank)及私人銀行(Private Banking)採用了不同的產品風險評級,在以評定產品其不同風險的級別時,銀行明顯取決了在假設客戶投資者意願是持有該票據直至到期日。然而, 調查小組建議其假設設定在有關時期是不適用的。
1.10基於以上的調查結果,要是銀行沒有在相關時期採用那假設作為一個因素去設定票據的產品風險評級,那就沒有需要考慮其帶來的問題；然而, DC可能會決定並沒有足夠牢固證據支持以上結果, 調查報告亦考慮到要是銀行採用那假設作為一個因素去設定票據的產品風險評級,這做法是否正確公平。
1.11關於職員培訓,銀行欠缺提供足夠培訓給職員以執行適當職責,在培訓過程中的培訓不足及培訓教材缺乏。銀行沒有培訓其職員如何充分披露產品風險,其中沒有教導職員解釋章程,其票據的風險,採用什麼基本因素作為考慮票據的風險評級, 調查報告揭露沒有明確介定責任去確保銷售職員有足夠的培訓。

行政主任的角色及責任(附件16)
產品
1.12Sunny 是零售銀行的主管是負責提供零售銀行業務上策略性的指導,包括發展、批准及執行商業計劃, Sunny 是負責遵照及控制標準。Richard, Sion在相關時期是直接向Sunny 匯報。
1.13Richard是投資產品部(“IPG”)執行董事,負責發展和執行商業計劃及投資產品市場策略, Richard其中一項職責是聯同其組員,去確保遵從產品和市場推廣工作計劃,包括對內及對外的要求規定。
1.14Sion是銷售及分銷部門(“S&D”) 執行董事,負責領導、計劃及管理零售銀行的銷售功能表現, Sion需要確保完全遵從對外的監管要求規定,並同樣要遵從對內的政策、標準、指引及程序,尤其是特別適用於銷售投資產品,例如訓練及透過定期簡報和工作坊指導銷售職員認識投資市場環境,新投資產品及如何遵照必要規定條件。

2.背景及職權範圍
產品

2.1銀行,作為分銷商,在相關期間銷售與雷曼相關票據,該票據是由星銀安排並由Constellation Investment Ltd發行, Constellation Investment Ltd是星銀的SPV(票據發行人)。

職權範圍

2.3事件覆審小組The Event Review Committee(“ERC”)就下列職權範圍指示向銀行進行調查:
(a)通過以下確立個案事實：
(i)查明在相關期間,銀行對其票據成立的產品盡職審查過程
(ii)覆查銀行在相關期間處理分銷產品的審查及票據風險評級
(iii)覆查銀行提供培訓以確保其職員得到足夠的知識進行向其客戶銷售及解釋產品
(b)基於確切的事實評估銀行, 相關人士/行政主任或任何其他人士是否犯下行為不端罪行,及/或不合適和恰當行為,並建議採取處分。

產品盡職審查過程簡報如下:

有關人士 過程

環球金融市場組
產品構思-票據:主要產品特色(即是處於下層的機構信貸評級,責任範圍,扺押品及償還期)
環球金融市場組, 投資產品部 及 銷售及分銷部門
關於產品特色的非正式和沒有記錄的討論,決定是否經零售銀行分銷
投資產品部,高層,產品及投資策略組
(每星期會議,產品及業務風險評估PRM)
沒有記錄的有關票據風險評級決定的討論
環球金融市場組, 零售銀行主管, 投資產品部 , 銷售及分銷部門及其他部門(每月會議)
互相討論後批准開始銷售票據,會議記錄只記錄有關決定,並沒有詳述討論項目
環球金融市場組, 投資產品部 及 銷售及分銷部門(每星期會議)
沒有記錄的有關票據跟進銷售日程、市場反應及銷售技巧的會議



2.4當有新票據系列可推出市場時,環球金融市場組(“The GFM”)會首先以電郵方式聯絡投資產品部主管詳加說明票據的主要特色(即是處於下層的相關機構信貸評級,責任範圍,扺押品及償還期)作為參考。
2.5產品組的成員(為拓展產品)會與環球金融市場組及投資產品部代表討論由環球金融市場組提供每一票據系列的主要特色並決定是否經零售銀行分銷,該些討論是非正式和內容亦沒有記錄。
2.6在2004年3月銀行成立了產品及業務風險評估(PRM)作為每項推出市場的投資產品風險評估參考, 產品及業務風險評估是透過環球金融市場組及投資產品部就產品的特色,即是否保本,資產分配,槓桿級別,處於下層的機構信貸評級,責任範圍,扺押品(假如有)及產品償還期的討論結果,全部投資產品都有風險評級,為五級之中的其中一級(低、低至中、中、中至高及高),評級過程會考慮和比較相關其他產品及市場上類似產品(附件17)。
2.7票據的風險評級是經由投資策略組組長, 產品組組長及投資策略組的一位投資策略組人員根據2004年的產品及業務風險評估作出討論並確定, 該些討論內容亦沒有記錄。
2.8當上述討論完畢, 產品組覺得滿意, 產品組的成員會基於投資產品部提供的產品特色預備一少數幻燈片,該些幻燈片將會用在隨後的每月會議,目的是給予會議討論及尋求批准在市場上銷售票據, Sion講述:…假如沒有反對意見,(我們)批准一併把新的票據系列推出市場(在每月會議中)( 答案320)
2.9銀行會舉行每月會議討論及批准分銷不同的投資產品,這些會議由投資產品部主管Richard作為主席,參與會議人員包括零售銀行、銷售及分銷部門的相關產品組長, 環球金融市場組代表及其他組別提供市場資訊及經濟展望等人士。
2.10會議通常會進行1至2小時及對大約5項投資產品進行討論, 會議主席(投資產品部主管)將會用約10分鐘介紹每項投資產品,他的陳述及其後的討論只會使用一少數幻燈片作工具並沒有其他參考資料。在2006年下半年前,ｐｏｗｅｒｐｏｉｎｔ並沒有包括票據風險評級,只是經由投資產品部主管在會議中口頭提及。
2.11銀行並沒有機制小心監察在決定產品推出市場前有否產品盡職審查,所有定案皆由與會者互相同意決定,雖然有會議記錄,但沒有記載有關投資產品包括票據的討論內容(附件18)。
2.12投資產品部在每星期舉行一次會議,由投資產品部主管主持,只討論一些銷售日程、市場反應及銷售技巧,這些每星期的會議並沒有會議記錄,至於有關票據的風險,結構及特色只會在每月會議中討論。
2.13沒有有關政策處理票據相關持續的產品盡職審查, 零售銀行的產品組組長(“CHONG”)說明曾經有一次類似的檢討進行,這次檢討是由零售銀行於2005年尾成立的Consumer Banking Control Assurance Team主辦(Ans.111-113,日期2009年12月11日)。然而他們只監察及關注銷售人員的銷售技巧,確定銷售行為沒有脫離他們的銷售政策, 而沒有直接負起監察銷售票據的穩定性和安全,自2007年初起, 環球金融市場組會進行一個半年檢討,是針對其相關機構的信貸評級, 扺押品及信貸市場表現,在2007年前,並沒有任何就有關票據進行適當及持續性的產品盡職審查檢討。
2.14這些票據是由安排人星銀於2003年9月開始創立的票據計劃中其中一項產品, 該票據計劃經過一項新產品服務程序(NPSP)包含安排人的不同職務—市場風險,信貨風險, 風險管理,法律及監管機構等,零售銀行主管及私人銀行主管是(NPSP)內的兩個簽署確認方,負責一切經由零售銀行及私人銀行渠道銷售產品的後勤數據,在(附件12)NPSP的第8頁記載.確保配對適合的客戶是業務組的責任,他們需要跟足他們自己的客戶適當配對程序並確實包含在項目計劃書內。
2.15NPSP顯然是一個綜合概括的批核程序適用於由安排人所創立的任何票據計劃中產品,這不是一個產品設計只於票據的產品盡職審查程序,它不包含任何分析及核實工作,例如研討, 勘測或咨詢,有關產品盡職審查以確立確立予客戶一個公平適當的產品風險評級, Richard在會面中說明銀行沒有任何有關產品盡職審查程序的文件。

產品培訓
2.16銀行聲明曾有一些有關票據的職員培訓講習班,包括(a) 推出票據產品培訓；(b)新職員的專業技巧培訓；(c)每兩星期一次的組別簡報(有關文件於2008年10月22日提交金管。

(a)推出票據產品培訓: 在2003年,當銀行有新產品推出便會為銷售人員提供有一次性的票據介紹課程,其後便沒有特定的票據產品培訓, 銷售人員的 票據產品培訓只能倚賴新銷售人員的培訓、定期的組別簡報及下述的討論；
(b)新職員的專業技巧培訓:人力資源部會為所有新銷售人員安排一個21天的培訓講習班,其中的8天培訓包括投資產品知識(票據是其中一項), 零售銀行運作及條例。在新職員培訓中只會採用由銷售及分銷部門預備的2張幻燈片的材料概觀星展的IF業務,有關票據的討論及範圍只限於信貸事件的概括描述,包含的風險因素及目標客戶；
(c)組別簡報: 銷售及分銷部門的投資銷售經理會為每一個銷售區域舉辦每兩星期一次的組別簡報, 簡報包括首次展出的投資產品,市場最新資訊及重要規定,假如有新票據系列推出, 投資銷售經理會向銷售人員反覆解釋培訓資料,發送電郵, 銷售稿,常見問題及銷售工具包等, 發送電郵, 銷售稿及常見問題是由投資產品部負責, 銷售工具包則由環球金融市場組提供, 銷售人員需要就提供的文件包括章程自行學習,因為投資銷售經理不會向他們解釋章程裡的內容(包括風險因素)。
2.17調查報告建議銀行銷售人員由提供的文件,銷售工具包(在以下2.18所描述) 及產品推出時的常見問題自行學習獲得的產品知識顯然不足夠,而且, 培訓中沒有提供給職員咨詢及輔導如何協調客戶投資目標及票據產品特色的不同之處。
2.18銀行在銷售每票據系列時, (相關人士)將會收到以下5項有關他們的銷售：
- 推出產品備忘錄(由投資產品部準備作內部使用)： 派發給銷售人員的內部文件概述產品的特色, 銷售票據的獎勵,客戶的推廣優惠及提供予(相關人士)一份有溍在可能交叉購買票據(所有系列)的客戶名單；
- 銷售工具包(由環球金融市場組準備作內部使用)：一份營銷演示工具包內包括概述產品的條款,信貸參考機構的詳情,贖回條款, 扺押品,發行人資料及風險公開部份(所有系列)；
- 市場推廣單張(由環球金融市場組準備)：一份經證監會授權的推廣單張內簡單地包括了利率、,信貸參考機構、主要條款撮要、備註及風險因素(經過挑選的)/重要通知(所有系列)；
- 銷售稿(由投資產品部準備作內部使用)：一份建議的銷售稿給予(相關人士)採用,強調有關產品特色部份要求(相關人士)向客戶解釋信貸事件的風險,即客戶有可能未能得到指定的利息及與產品關聯的其他風險(所有系列)；及
- 常見問題(由投資產品部準備作內部使用)：列出常被問到的問題及票據的解釋,包括首先失責,信貸事件及其後果, 不保本性質, 扺押品, 信貸評級與票據關聯的不同風險。

7.紀侓的理據準則
銀行及有關行政主任的責任
根據調查報告中得到的證據,有足夠證據初步表證成立銀行有犯了違規罪行及其三個前行政人員Sunny, Richard, Sion的違規罪行及/或不合適和恰當行為,。
(a)“銀行”違反以下管理要求：
(i)GP2(盡職審查)及證監會”操守準則”第3.4段 (對其客戶提供應有適當的謹慎規則,照顧及盡職審查),由於未能確保對其出售予銀行客戶的票據做到足夠適當的產品盡職審查, 缺乏適當的謹慎規則,照顧, 盡職審查及透徹分析達到明白及評估產品風險, 性質及結構,導致票據未能得到適當評級的結果；
(ii)GP5(給予客戶的資訊)及證監會”操守準則”第5.2段(知道你的客戶:給予合理的忠告)及第5.3段(知道你的客戶:綜合衍生產品)缺乏提供予銷售人員足夠產品培訓及不足的產品資訊溝通,以致未能確保足夠披露及提供經過客戶適當配對考慮的合理建議給客戶,在此銀行未能確保他們的銷售人員明白及披露予其客戶產品的有關資訊, 產品風險及產品風險評級分配方法；
(b) “Sunny ”,根據他的職責描述,是有責任監督零售銀行的Richard及Sion以達到更好的承諾及管理水準,但調查報告證據支持了Sunny 違反以下”操守準則”：
(i)GP2及證監”操守準則”第3.4段,未能確保對其出售予銀行客戶的票據做到足夠適當的產品盡職審查, 缺乏適當的謹慎規則,照顧, 盡職審查及透徹分析達到明白及評估產品風險, 性質及結構；
(ii)GP5及證監”操守準則”第5.2及第5.3段,缺乏提供予銷售人員足夠產品培訓及不足的產品資訊溝通,以致未能確保足夠披露及提供經過客戶適當配對考慮程序；
(iii)GP9及證監”操守準則”第12.4及第14.1段,承擔責任(i) 系統性及廣泛的銷售人員玩忽職守,未有向其客戶解釋票據的章程內容；(ii)在他的監督下, Richard及Sion的違規行為。
(c)Richard, 根據他的職責描述,是依照管理的要求規定,負責發展和執行商業計劃及投資產品市場策略。Richard亦在金管局面談中確認他的角色及其產品盡職審查的職責。調查報告證據支持了Richard違反以下”操守準則”：
(i)GP2及證監”操守準則”第3.4段,未能確保對其出售予銀行客戶的票據做到足夠適當的產品盡職審查, 缺乏適當的謹慎規則,照顧, 盡職審查及透徹分析達到明白及評估產品風險, 性質及結構；
(ii)GP5及證監”操守準則”第5.2及第5.3段,缺乏提供予銷售人員足夠產品培訓及不足的產品資訊溝通,以致未能確保足夠披露及提供經過客戶適當配對考慮程序；
(iii)GP9及證監”操守準則”第12.4及第14.1段,承擔責任(i) 系統性及廣泛的銷售人員玩忽職守,未有向其客戶解釋票據的章程內容；(ii)在整個相關期間存在的票據風險評估差異。
(d)Sion, 根據他的職責描述, 負責管理及推進星港的分行網絡的表現,指導銷售團隊達成業務指標,確保零售銀行及私人銀行完全遵從對外的監管要求規定,尤其是有關銷售手法及程序,提供及建議培訓予銷售及分銷方面,及追蹤培訓後的改善之處。雖然他在產品盡職審查的介入很少,但調查報告證據支持了Sion違反以下”操守準則”：
(i)GP5及證監會”操守準則”第5.2及第5.3段,缺乏提供予銷售人員足夠產品培訓及不足的產品資訊溝通,以致未能確保足夠披露及提供經過客戶適當配對考慮程序；及未能確保他們的銷售人員明白及披露予其客戶產品的有關資訊, 產品風險及產品風險評級分配方法；
(ii)GP9及證監會”操守準則”第12.4及第14.1段,承擔其責任,即 系統性及廣泛的銷售人員玩忽職守,未有向其客戶解釋票據的章程內容。

8.建議
8.1考慮到調查報告中有關產品盡職審查及職員培訓的證供及理據,連同準DC 的決定, 調查組建議DC:
(a)通知金管有證據支持在初步調查報告中,銀行有違規罪行；
(b) 通知金管有證據支持在初步調查報告中, Sunny, Richard, Sion有違規罪行及/或不合適和恰當行為；
(c) 通知金管轉介這個銀行, Sunny , Richard, Sion案件予證監會以考慮對他們採取紀侓行動。
*** 完 ***

Greenspan: The Costs of Government Activism

Greenspan: The Costs of Government Activism

Lehman Failed to Advise of CDO Risks, Australian Towns Tell Sydney Court

Why in court case in HK concerning SFC107 the HK judge disregards these facts :

HKMA also cover up these facts in their investigation

Lehman Failed to Advise of CDO Risks, Australian Towns Tell Sydney Court
By Joe Schneider - Mar 2, 2011 1:57 PM GMT+0800

Lehman Brothers Holdings Inc.’s Australian unit failed to advise of the risks of collateralized debt obligations and ignored policies that required municipalities to invest conservatively, a lawyer for towns and councils seeking to recoup investment losses said.

The town officials “had little or no knowledge of the complex structured investments,” Tony Meagher, a lawyer representing the towns, told Federal Court Judge Steven Rares in Sydney today at the start of the trial.

Wingecarribee Shire Council, the City of Swan and Parkes Shire Council claim they were sold improper investments as Lehman pushed synthetic collateralized debt obligations, or SCDOs, to collect fees and commissions that were greater than it would have earned from selling term deposits. The towns, which represent Australian municipalities that bought SCDOs from Lehman from March 2003 to May 2008 and lost money, seek refunds for the cost of the investments.

By June 2005, 110 local governments in Australia, including 55 in New South Wales, with A$640 million ($646 million) in funds were being advised by Lehman, the towns said in court papers. Wingecarribee has A$21.4 million of losses on the books from the investments, some of which the town continues to hold, Meagher said. Swan and Parkes have losses of A$15.9 million on the books, he said.

‘Ignored Requests’
The synthetic collateralized debt obligations, which invest in credit default swaps or other non-cash assets to gain exposure to pools of debt comprising of mortgages, car loans or credit card debt, weren’t the sort of investments municipalities were allowed to make by law and Lehman ignored municipal officials’ requests to invest in floating rate notes where capital was guaranteed 100 percent, Meagher said.

In some of the CDOs, all the invested capital could be wiped out if one of the companies holding the debt defaulted, Meagher said.

“I can’t imagine local government officials having the capacity to assess the risk of default of companies around the world,” Rares said.

Lehman Brothers Holdings, the Australian unit’s parent, was the fourth-largest investment bank before filing for the biggest bankruptcy in U.S. history on Sept. 15, 2008. The Australian unit followed and appointed a voluntary administrator under the country’s bankruptcy laws, on Sept. 26, 2008.

Lehman’s Lawyer
John Sheahan, Lehman’s lawyer, declined to make an opening statement. He said the judge had “a good understanding” of the areas in dispute.

The Australian suit is the first time Lehman has been forced to defend itself in a trial over the sale of the SCDOs, John Walker, executive director of IMF (Australia), the country’s largest litigation funder, said in a telephone interview. IMF is paying the costs of the lawsuit.

“It’s the first one to go to trial internationally,” Walker said. Similar lawsuits have been filed in the U.S. and Europe, although none have reached the trial stage, he said.

Wingecarribee was repeatedly offered between November 2005 and January 2007 an individually managed portfolio program developed by Lehman for local governments, the town said. Wingecarribee signed the deal Jan. 15, 2007, and Lehman recommended the municipality invest A$3 million in a so-called Federation CDO. The town sold the CDO less than two years later for A$450,000, according to its financial statements.

Witness and expert testimony in the trial is scheduled to take four weeks, with an additional two weeks set aside for closing arguments, Meagher said outside court.

The case is Between Wingecarribee Shire Council and Lehman Brothers Australia Ltd. NSD 2492/2007. Federal Court of Australia (Sydney).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net
.

Lehman battles investors over derivative payouts

Lehman battles investors over derivative payouts

Reuters

7:54 a.m. CST, March 4, 2011
By Sarah White

LONDON (Reuters) - A legal tussle between defunct Lehman Brothers and investors in highly complex debt vehicles has drawn attention from financial professionals and British football clubs alike.

The dispute reaches beyond the obscure clauses in the instruments caught up in the row, with consequences for the order in which creditors get paid out in a bankruptcy -- a source of contention in football insolvencies too.

Billions of dollars of derivatives are at stake, and risk losing their worth if the case goes against investors.

A similar, widely-trailed case settled in the United States last year had already sparked alarm among lawyers, noteholders, and academics watching the securitization industry.

One Manhattan federal court judge, calling for a review of a decision on the case last September before a settlement with Lehman was reached, cited its "potentially game-changing effect on the structured finance business."

She added that it had "potentially far-reaching ramifications for the international securities markets and has triggered significant uncertainty in the financial community."

The dispute centers on a series of credit-linked notes, part of only one of Lehman's synthetic collateralized debt obligation (CDO) programs -- known as Dante -- valued at $12.5 billion at the time of the firm's collapse in September 2008.

The stakes are high for those owed money by Lehman, for whom derivative deals are a big chunk of what they are hoping to claw back. The creditors are pitted against a group of Australian investors known as Belmont in a UK appeal to the Supreme Court, where three days of hearings ended this week.

A verdict is expected to emerge after several weeks, lawyers close to the case said.

Both Lehman and the investors are hoping to seize the assets backing the deals, and any final ruling would set a precedent for how the priority of payments in billions of dollars worth of similar deals are worked out.

LOOMING DOWNGRADES

Investors need a validation of so-called flip clauses in the notes they hold, designed to reorder payment priorities in bankruptcies and allowing them to jump in ahead of Lehman.

Trouble looms if they lose, as noteholders in deals with similar structures would find they had no guarantee of being paid out when other parties default.

"Certainly for anything that is rated, the rating agencies may seek to downgrade in some cases. They are watching very carefully what happens with the litigation," said Jennifer Marshall, a partner at Allen & Overy specializing in insolvency, whose clients have followed the case.

"For non-rated transactions, I'm sure you'd find parties coming back to the table wanting to renegotiate."

The synthetic CDOs, which expose investors to a pool of insurance contracts on debt known as credit-default swaps, were in the main rated triple-A.

Some of the legal arguments at stake in the exotic-sounding financial deals could also have a bearing for football clubs.

The British taxman and the Premier League, the top league in the country, are intervening in proceedings, hoping for clarity on the priority of payments when clubs go bust.

Footballers are usually paid out first, to the detriment of the taxman -- a situation the UK Revenues and Customs department may be able to reverse if it can cite legal precedents.

But a conclusion may yet take time to emerge.

Lehman managed to settle with another group of Australian investors caught up in the Dante CDO row last November, after U.S. bankruptcy judge James Peck ruled in Lehman Brothers Holdings Inc.'s favor, but UK courts found against it.

Should Lehman lose its appeal at the Supreme Court, a transatlantic battle between the U.S. and British courts could be revived, if litigation heads back to the United States.

Lawyers would have to work out which rulings to abide by, adding an extra lawyer of complexity to Lehman's sprawling bankruptcy workout, the biggest and costliest in U.S. history.

(Editing by David Cowell)

踢爆金管局審議制度既不合常理也不合法理和天理的一場鬧劇！

踢爆金管局審議制度既不合常理也不合法理和天理的一場鬧劇！
金管局以類似刑事裁決準則來審議民事投訴對投訴人不公平，其裁決是建基於無疑點、有充分証據、疑點利益歸銀行、寧縱無枉、和「一刀切」來釐定責任。其實細看金管局的審議制度就不難看到其違反常理和法理的地方，做法除袒護銀行行外也為自己監管失誤開脫，而投訴人就變成代罪羔羊，白白損失了畢生積蓄，有違天理!

查其審議制度在常理上有以下不合理的地方：

（一）為什麼要以類似刑事裁決準則來審議民事投訴？民事裁決取決於裁決者認為那一方理據較強而不一定要控方的理據是100%成立和有充分證據支持,特別書面證據。

（二）違規銷售事件的發生絕大部分都牽涉多方面(包括監管機構)的責任，只是各方面要付上不同程度的責任而已，金管局理應就投訴劃分各方的責任，以「一刀切」方式來釐定責任是犯了一個基本的大錯，因為要一方承擔全部責任是罔顧各方都要負上不同程度責任的事實，更把自己監管失誤的責任推到銀行和苦主身上。如金管局因保密協議而不能公開各方的具體責任，那可以以各方應承擔的百分比來劃分責任。

（三）金管局聲稱他們已對千行整個銷售過程作出調查，沒有証據証明銀行有一絲絲的違規，這包括持牌人或註冊人操守準則中的全部守則如培訓、產品審查、客戶風險評估、銷售對話錄音、產品陳述、文件完整性等等，這個可能嗎？再者金管局憑什麼理據令16銀行作出迷債六成和解方案和星展銀行昨出星債的十成和解協議？難道那17銀行是慈善機構可憐投資者嗎？

再者其審議制度在法理上也有以下不合理的地方：

（一）因為銀行有責任把交易對話內容錄音，當投訴人投訴有關會談內容有失實陳述時，舉証責任在銀行，如銀行不能提供錄音，疑點利益應歸投訴人，但金管局本末倒置！

（二）在法理來說，只要能確立違法事件已發生，任何解釋或理由都不能推翻違法的事實而最多只影響量刑的輕重，金管局往往在確立違規事實後還接納銀行律師的狡辯來推翻違規的事實，簡直是本末倒置，無法無天！這些違規事實包括沒有在銷售時錄音、沒有把章程提供給投資者、銀行職員培訓不足、在有錄音記錄下銀行向投資者作出失實陳述等。

金管局有選擇性地採納了情理和法理面都對銀行有利的審議方式來處理投訴，這無疑是官商勾結和包庇銀行，也掩飾自己在監管上的失誤，這是違反了常理、法理和天理！香港這個所謂國際金融中心有這樣的無能監管機構，令人遺憾和無奈！而金管局怎會不知道理虧，所以她不敢說投訴不成立或銀行沒有違規，而是以「沒有足夠証據採取紀律行動」來敷衍投訴人，在鐵證如山下竟然找不到足夠証據，這是連小孩子也不會接納的白癡解釋！

【經濟法律】渣打回購ELN的骨牌效應

【經濟法律】渣打回購ELN的骨牌效應

黃覺岸

雷曼苦主兩年多以來的艱苦抗爭，隨著渣打銀行突然與證監及金管局達成協議，以最高達95%回購已發行的股票掛票據（ELN），回購的方案雖然十分複雜，但照顧全面，連已經接受和解的苦主亦可以受惠，最少新聞所訪問的苦主，無一表示不滿，渣打是在不承擔責任的前提下事實上承擔了全數責任，趁業績理想，去年盈利豐厚的時刻豪花十四億元徹底解決困擾銀行的問題，重建客戶對渣打的信心，這是高明的做法，渣打方案固然可為其他銀行作為借鏡，亦成為新的指標，對其他銀行構成了壓力。

以法律而論，渣打模式還有一些未解的問題，金管、證監與渣打三方面的協議，這是三方同意合情合理，而渣打不會再被監管者追究違規銷售的監管上問題。協議還是留有尾巴，就是若涉嫌犯有刑事行為則屬例外。原則上這是重要的。

原則上，若有詐騙行為，是禍害於社會而不單是個別人士有金錢損失的民事問題，所以監管機構無權代社會作出不追究責任的承諾，這是警方與政府的公權力所在，而無論金管或證監皆無權越權作出承諾。但不言而喻的是事實上不會再就〈證券及期貨條例〉作出檢控，而正在進行檢控當中的個案，與渣打無關。

由於渣打的苦主已獲近乎百分百賠償，就算證監會想再作據第107條作以失實陳述欺詐地引誘他人投資的行為作檢控，也會因為苦主已獲賠償，不欲再出庭任證人而無法進行司法程序。銀行由於肯作負責人的賠償，作為法人就欠缺犯罪的意圖，當初只是疏忽。

另一法律問題是回購建議不適用於法團、渣打私人銀行的客戶及專業投資者。後二者法律上不容易界定，特別是專業投資者，若然界定的標準不合情理，苦主可向法庭提出訴訟，勝算機會不少。除非在行業之內早有眾所周知的定義，而無論新舊的定義都要符合合理的原則，否則很容易被司法覆核所否定。筆者可作假設性的舉例，專業投資者指有證監所發投資顧問牌照，是合理，有金融財業或會計學徒，也是合理，若只是投資經驗比較豐富，就列入不得賠償，是不合理。

法律以外還有政治問題。渣打以外的銀行，又發行ELN的，勢必要有所追隨，否則苦主勢不罷休，現時起而行動、天天示威的苦主其實還是少數人，但有渣打苦主的成功例子（數百人上星期衝擊渣打馬拉松的舉行，是為代表作），其他銀行必受更多的壓力，政府也會在背後給予銀行更大壓力。

其他雷曼產品的苦主，甚麼精明債券、PPN、迷債等，風險根本比ELN更高，回報則遠比其低，是5-6%利息與20%高息的分別，受刺激必定起抗爭。迷債苦主雖曾獲六成賠償，但眼見賠償差別之大，深感不公平，必會重燃抗爭的怒火。

政府的態度如何？一直以來似是偏幫銀行，但背後促成渣打投降之後，更一大問題是發行迷債最多的中銀香港。第一單針對中銀職員的檢控雖然不成功，但陸續有來，若然苦主的抗爭意識能重燃，迫中銀補賠餘下四成差額，是不困難的

Second BOC officer on minibond charges

Second BOC officer on minibond charges in a series of mis-justic shows in HK court of HK gov. cover up of BOCHK mis-selling frauds:


A Bank of China manager faced the District Court yesterday accused of misrepresenting Lehman Brothers minibonds to customers - two weeks after colleague Cheung Kwai-kwai was acquitted of similar charges.


Tai Ching, 39, a senior personal financial services manager at BOC's Taikoo Shing branch, is accused of fraudulently or recklessly inducing two customers to invest more than HK$1.3 million in Minibonds Series 35 in January and February 2008.

She pleaded not guilty to two charges under the Securities and Futures Ordinance. The prosecution dropped a third charge, offering no evidence.

Prosecutor Neil Mitchell said Tai persuaded Wong Sau-ching and Ho Kit-sum into signing up for HK$320,000 and HK$1 million worth of minibonds by saying they were very secure or very safe, statements the prosecution said Tai knew were false.

Tai also told them, knowing it to be untrue, that the product was linked to seven entities: HSBC Bank, Hutchison Whampoa, MTR Corporation, the People's Republic of China, Standard Chartered Bank, Sun Hung Kai Properties and Swire Pacific, Mitchell said. Tai (pictured) never mentioned that the minibond was related to Lehman Brothers.

The court also heard that Tai told Wong, 57, a housewife with a secondary school education, that if one of the entities ran into trouble, the bondholders would only lose the portion corresponding to that entity and that it was impossible for all entities to suffer a credit event.

On the same day, the court heard, Wong was asked to sign a questionnaire in which she was classified as a moderate aggressive investor, although she only wanted to be involved in low-risk investments.

Ho, 69, a retiree with primary school education, was approached by Tai when his fixed deposit matured in February 2008. He later bought HK$1 million worth of minibonds after Tai told him he could earn more interest and the product was safe.

The court was told Tai admitted to Wong that she misled her in making the investment when Wong confronted her following the collapse of Lehman Brothers in September 2008.
Wong Sau-ching was scolding the judge that she came to court as witness for truth but not for money, but for justic . Ms Wong was being repeatly asked by the judge to stop speaking of her side of the story about how she was being misled to buy these false bonds.

The trial continues as the judge was stopping Wong Sau-ching several times when she wanted to tell her story that in the signing of risk form, the BOC bank teller in that branch, Ko Lai Lai falsied the risk form after sales. And the defense lawyer, with the help of the judge, tried hard to misled the witness that the bank teller, Ms Ko did herself come inside the sale room to approve the risk form with the forged document produced by BOCHK. In fact, Wong Sau-ching was alone with Tai Ching all the time during the sales process and Ms Wong was very angry to face these false charges as a witness with prejudice judge helping the defense lawyer to force her to agree that the other manager was also inside the room.

The other bank teller, Ko Lai Lai, even called her in phone threating her that her statement against the bank was useless as the BOCHK team had build a iron wall against any witness statements. And the judge forced Ms Wong not to speak any more as a witness in these areas.

It was very strange in HK that even bank teller can supervise selling structure products in HK

SFC, HKMA and Standard Chartered Bank (Hong Kong) reach agreement on Lehman Brothers-issued Equity Linked Notes

Hong Kong (HKSAR) - The following is issued on behalf of the Hong Kong Monetary Authority:

The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) announced today (March 1) that an agreement has been reached with Standard Chartered Bank (Hong Kong) Limited (Standard Chartered) in relation to the bank's distribution of equity linked structured notes issued and guaranteed by Lehman Brothers (LB ELNs) (Notes 1 & 2).

Without admitting liability, Standard Chartered has agreed to make a repurchase offer to eligible customers (Note 3) holding an outstanding LB ELN distributed by Standard Chartered.The total value of the repurchase offer is estimated to be approximately HK$1.48 billion and will cover over 95% of the outstanding transactions in LB ELNs by Standard Chartered customers.

Following an investigation by the SFC and the HKMA, both regulators were concerned that Standard Chartered may have exposed LB ELN customers to higher levels of risk than were suitable for them by not adequately considering concentration risk when assessing the suitability of LB ELNs for customers (Note 4).

"Intermediaries have an obligation to ensure suitability when making a recommendation or advising on securities.Assessing the right level of concentration is a necessary part of the suitability assessment," said the SFC's Chief Executive Officer, Mr Martin Wheatley.

"For example, a person who invests most of his assets in a single investment runs the risk of losing nearly all his money if the investment fails.If the investment is already high risk, this degree of exposure may well be unsuitable," he explained.

"Regulated persons must adopt an appropriate approach to give careful consideration to a customer's concentration risk as well as a number of other factors specific to the customer when assessing customer suitability," said the HKMA's Deputy Chief Executive, Mr Arthur Yuen.

Under the repurchase scheme, Standard Chartered has agreed to make the repurchase offer at a price equal to the total value of each eligible customer's investment in outstanding not principal protected LB ELNs less 5% (or less 10% in the case of customers holding principal protected LB ELNs) of each customer's total assets held at or with Standard Chartered at the end of the month immediately preceding the date of the purchase of the outstanding LB ELNs or, the amount invested in LB ELNs (whichever is higher) (Available Assets) (Note 5).

The repurchase offer price will exclude the amount of coupons already paid to the customer but include an additional amount representing the interest that would have been earned if the amount invested in LB ELNs that is over 5% or 10% of the customer's Available Assets (as the case may be) had been invested with Standard Chartered on a fixed term deposit instead of being invested in LB ELNs (Notes 6).

Under the repurchase scheme, Standard Chartered will also pay top up payments to those customers with whom Standard Chartered has already entered into settlement agreements but would otherwise have been eligible to receive a repurchase offer to the extent that such payments are needed to ensure those customers are treated in the same way as other customers participating in the repurchase scheme.

Under the agreement, Standard Chartered will notify customers of their eligibility within 10 calendar days from today's date and send the repurchase offer or the offer of a top-up payment to each eligible customer within five weeks of that first letter.Eligible customers will have 60 days to accept the repurchase offer and Standard Chartered will make the repurchase payment within 30 days of each eligible customer's acceptance of the repurchase offer.

In entering into this agreement under section 201 of the Securities and Futures Ordinance, the SFC took into account that:

1 the total value of the repurchase offers under the repurchase scheme that will be made available to eligible customers who invested in LB ELNs at levels in excess of 5% or 10% of their Available Assets;
2 although LB ELNs were high risk products, they were less complex than Minibonds and likely to have been suitable products for most customers as part of a diversified portfolio;
3 unlike Minibonds, there is no distributable collateral for the LB ELNs;
4 as unsecured creditors there is little chance LB ELN holders will receive a substantial payment or dividend in the Lehman Brothers bankruptcy so the payments from Standard Chartered may be the only possible return for eligible customers (Note 7).
5 the repurchase offer will enable the vast majority of Standard Chartered's LB ELN customers to obtain a reasonable recovery without the costs and associated risks of separate litigation;
6 the agreement will bring the LB ELN matter to an appropriate end for the benefit of Standard Chartered and its customers who participate in the repurchase scheme;
7 a result on these terms could not have been achieved through disciplinary action by the SFC against Standard Chartered and/or its officers and employees; and
8 Standard Chartered has undertaken to engage an independent reviewer, to be approved by the SFC and HKMA, to review its systems and processes relating to the sale of unlisted structured investment products, to report to the SFC and the HKMA and will commit to the implementation of all recommendations of the independent reviewer.

The SFC and the HKMA consider that Standard Chartered's repurchase scheme is reasonable and appropriate in light of their regulatory concerns and the agreement is in the public interest.

"The obligation to ensure suitability when advising or recommending a securities product to a customer is a cornerstone of investor protection in Hong Kong.This outcome serves as an important reminder that concentration risk is a necessary element in assessing suitability," Mr Wheatley said.

"The HKMA welcomes the resolution.The HKMA believes that this resolution is a reasonable and practical one and is in the interests of investors and in the public interest.Eligible customers are encouraged to consider the offers positively," Mr Yuen said.

In view of the repurchase scheme, the SFC will not take disciplinary action against Standard Chartered and its current or former officers or employees in relation to the distribution of LB ELNs, save for any acts of dishonesty, fraud, deception or conduct that is criminal in nature.The HKMA has also informed Standard Chartered that it does not intend to take any enforcement action against their executive officers and relevant individuals in connection with the sale of LB ELNs to customers who have accepted the repurchase offers or the top-up payments under the repurchase scheme, except for any acts of dishonesty, fraud, deception or conduct that is criminal in nature.

Standard Chartered's HK Unit To Pay HK$1.48 Bln To Buyers Of Lehman-Linked Products

HONG KONG (Dow Jones)--The Hong Kong banking unit of Standard Chartered PLC (2888.HK) will pay about HK$1.48 billion to many of its customers who had bought a Lehman Brothers-linked structured derivatives product, Hong Kong regulators said Tuesday.

The agreement between Standard Chartered Bank (Hong Kong) Ltd. and the Securities and Futures Commission and Hong Kong Monetary Authority underscores the territory's regulators' efforts to improve oversight of the sale of complex structured products after Lehman Brothers collapsed in 2008, wiping out investments made by many buyers of products linked to the U.S. bank.

Under the agreement, Standard Chartered's Hong Kong unit will repurchase 95% of the outstanding transactions of Lehman Brothers-related equity linked structured notes.

The bank's Hong Kong unit hasn't admitted to any liability as part of the resolution.

"(Financial) intermediaries have an obligation to ensure suitability when making a recommendation or advising on securities," Securities and Futures Commission Chief Executive Martin Wheatley said in a statement.

-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com