Bank officer charged over minibond investments

PUBLISHED : Thursday, 11 November, 2010, 12:00am
UPDATED : Thursday, 11 November, 2010, 12:00am

A bank customer service officer appeared in Eastern Court yesterday accused of inducing five customers to invest HK$1.26 million in Lehman Brothers' minibonds.

Chan Lai-ha, 51, did not enter pleas to five charges of fraudulently or recklessly inducing others to invest money. The case is adjourned to December 1 for transfer proceedings to the District Court.

The minibonds, issued or guaranteed by the US bank which collapsed in September 2008, are a type of high-risk, credit-linked derivative - a financial instrument that derives its value from an underlying security.

On March 17, 2004, Chan allegedly induced Stephen Wong Man-ka to invest US$50,000 in Minibonds Series 9 by claiming that he would not suffer any loss of the principal amount, and that the investment did not carry any economic risk of loss. By making similar claims, she allegedly induced Ip Man-ye and Leung Chu-pang to invest HK$200,000 in Minibonds Series 15 on December 28, 2004.

On March 9, 2005, and December 1, 2007, she allegedly induced Ip to invest US$10,000, and Huyhn Tu-chau to invest HK$400,000.

The fifth charge alleges that Chan, on February 1, 2006, induced Li Ruilan to invest HK$200,000 in Minibonds Series 35, by claiming that the issuers of the product were the following - HSBC Bank, Hutchison Whampoa, the MTR Corporation, the People's Republic of China, Standard Chartered Bank, Sun Hung Kai Properties and Swire Pacific.

Chan is also accused of telling Li that in the unlikely event of a 'credit event' occurring, she would only suffer a loss of a portion of the principal invested. Each offence carries a maximum penalty of HK$1 million in fine and seven years in jail.