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