Hong Kong Government Meets Banks Accused Of Mis-selling Lehman Bonds

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HONG KONG (AFP)--Hong Kong's financial services chief on Thursday weighed in on the dispute over the possible mis-selling of investment products backed by failed U.S. bank Lehman Brothers (LEH).

Chan Ka-cheung, secretary for financial services, met representatives of 21 banks, who are accused by disgruntled investors of mis-selling "mini-bonds" that could now be worthless.

"The secretary met with representatives from the Hong Kong Monetary Authority, the Securities and Futures Commission, and the banks today," said a government spokeswoman.

"The meeting was held with the hope that the banks can find ways to step up their communication with the retail investors and increase their transparency."

Some of the banks, including DBS (D05.SG) and DahSing (2356.HK), had agreed to settle through mediation and have been negotiating with individual investors on compensation deals, according to a report in the Apple Daily.

The move has put pressure on other banks to find a solution, prompting Chan to hold the meeting, the report said.

The investors, who bought HKD12.7 billion ($1.63 billion) of the complex financial products, had earlier threatened to sue the banks for not explaining the risks involved before selling them the bonds.

Many of the investors are retired and had put all their savings into the investment because they trusted their banks.

The Securities and Futures Commission said previously it has launched an investigation into some of the institutions on alleged mis-selling.

Lehman Brothers, one of Wall Street's most established banks, collapsed last month, sparking turmoil on financial markets across the world.

Dow Jones Newswires