November 2011

A press statement by The Alliance of Lehman Brothers Victims in support of the Occupy Central Movement

The LB Debacle Reveals the Deep-seated Conflict within the Hong Kong Society

Why over 70% who purchased Lehman Brothers-related structured financial products are over 50 in the LB Debacle?

The situation is caused by a number of factors. Universal retirement protection is not available in Hong Kong and most retirees have to rely on their savings. During the latter half of the last century, Hong Kong has undergone fast economic development which provided opportunities for some of the 50-year old to successfully move up the social ladder, enabling them to save for their retirement. However, things have since changed at the turn of the century. Bank interest has been practically reduced to zero. Consequently, the banks in Hong Kong have targeted their fixed-deposit clients as potential buyers of these LB-related structured products, which as claimed would yield a slightly higher interest.

Banks fail to carry out their fiduciary duties over the sale of LB-related structured products

The high risk LB-related structured products are undoubtedly not suitable for conservative investors. However, banks have gone out of their way to target these conservative clients in pursuit for huge profits, compromising business ethics and breaching the law. The US banks and investment sector have created the toxic products which are prohibited for sale to ordinary citizens in their home country. But the banks in Hong Kong distribute and retail them to local citizens.

Both the SAR government and its regulatory authorities have failed to carry out their duties

Both the SAR government and its financial regulators, namely the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC), have turned a blind eye to the extensive sale of LB-related structured products to unsuitable investors. Activities of financial institutions are supposed to be under the supervision of HKMA and SFC but it turned out to be no supervision in this instance. The way the SAR government handling the LB Debacle revealed their inclination to protect the banks in the same manner as it protects the interest of property conglomerates in Hong Kong.

The HKMA and SFC have completed an investigation report over the sale of the LB-related structured products by the banks in the LB Debacle. Against public interest, they choose not to make public the findings on the systematic failure of the banks. To relieve the political pressure of the government, the banks in return have produced half-hearted repurchase packages.  This ugly under-table deal was made at the expense of sacrificing the interest of the LB victims and demeaning the universal values of our society, namely our respect for justice and righteousness.

Furthermore, both the government and the banks have never disclosed the fact that the value of the redeemed LB Minibond securities have exceeded their original price and that Lehman Brothers have stolen a considerable amount of the securities in contravene of their contract. It is a shame that the government have yet again failed to ensure the interest of small investors.

The existing legal system is unfair to the individual against the conglomerates

The LB Debacle has once again demonstrated the inability of an ordinary citizen to fight against the powerful corporate under the existing legal framework. A number of LB victims still have not received a fair compensation and they are being driven into a hopeless situation.  In the absence of class action in Hong Kong, it is impossible for them to take any legal action against the banks because of the exorbitant legal costs.

Our demands for the general public –

l The government to make public the investigation report of the LB Debacle, and stop the inclined policy towards the big financial institutions and property conglomerates;

l Abolish the system of supervising the financial institutions by two separate regulatory authorities;

l The sale of the investment products of the banks should be conducted entirely separate and independent from the general retail banking operations;

l Change the existing legal system and to formulate legislations to allow class action;

l Initiate a retirement protection scheme for all Hong Kong citizens;

Our demands for the LB victims –

l The government and the banks openly admit responsibilities for the LB Debacle and apologize to all concerned;

l The banks to make restitution to all LB victims including the small group who have yet to receive any compensation.

The Alliance of Lehman Brothers Victims

26 Nov 2011