SCMP:Mainland investors claim HK$500m loss on 'misleading' accumulator bets

1 August 2009

A group of mainlanders who said they had lost up to HK$500 million in accumulator investments complained to the Hong Kong banking regulator yesterday about banks in the city allegedly misleading them.

"We were misled by Hong Kong banks into purchasing stock accumulators. We were not warned about the risk of the products," the convenor of the Alliance of Hong Kong Private Banking Victims' - who said he preferred to be known as Jacky Jin Liang - said. With legislator Chan Kam-lam, Mr Jin and six other mainlanders met Hong Kong Monetary Authority executive director Raymond Li Ling-cheung yesterday.

Mr Jin said the alliance's 12 members bought the high-risk accumulator stock derivatives from five banks - HSBC, Hang Seng Bank, Citibank, DBS Bank and ABN Amro Private Banking. They had suffered losses of between HK$400 million and HK$500 million.

He said some were told that the products were "shares with discounted prices" rather than high-risk products. "And some of us believed the stock market would plunge but [the banks] still asked us to buy accumulators that led to severe losses."

Mr Chan said the authority had promised to investigate the alliance's complaint. The lawmaker said the HKMA promised to look into the cases in the coming three months.

An accumulator is a term-limited contract that allows investors to buy shares or foreign currency regularly at a fixed price below the market price when the contract begins. If the value of shares or currency rise, they can make a substantial profit. If the value falls to below the purchase price, there is no limit to potential losses.

At least two of the group made police reports to the Commercial Crime Bureau yesterday.

One, lawyer James Lai Jian-ping, said ABN Amro Private Banking had sent a staff member to Beijing two years ago to ask him to open a Hong Kong account. He said he was then "cheated" 15 times into investing more than HK$100 million.

DBS Bank (HK) and ABN Amro Private Banking said they had stringent sales procedures conforming to regulatory requirements. The Hong Kong Association of Banks and Citibank said they did not have enough information to comment.

Separately, legislator Kam Nai-wai said 18 Lehman Brothers "professional" minibond investors also met Mr Li. They wanted to be covered by the latest repurchase agreement but were told they were not eligible. They would be asked if they wanted the authority to continue investigations into their cases.