StanChart staff sold billions worth of Lehman notes in just three days
Four Standard Chartered Bank employees sold billions of dollars worth of Lehman Brothers-related equity-linked notes to customers over three days in February 2008, just six months before the Wall Street giant collapsed.
Benjamin Hung Pi-cheng, chief executive of Standard Chartered's Hong Kong operations, told lawmakers investigating problems caused by the Lehman Brothers bankruptcy that those 'Series 17' notes were very popular because they offered favourable terms. Hung said the four bank sales staff probably managed to sell the notes in just a few days because many of their clients were repeat customers who were familiar with them. Lawmakers want details of the sales staff and the repeat customers. About 50 people who bought Lehman-related financial products from Standard Chartered which later soured vented their anger in front of the Legislative Council building yesterday. They want compensation from the bank based on the value of their investments two years ago.
Separately, a man who bought HK$8 million worth of Lehman-related structured notes was ordered yesterday to stop making a nuisance of himself at DBS Bank branches. DBS obtained the order against Kenneth Wong at the Court of First Instance days after filing a lawsuit in the same court for damages against him for causing nuisance and trespassing. Under the order, Wong may not go within 50 metres of any DBS branch without making an appointment 48 hours in advance. DBS' lawyer, Sara Tong, said when asking for the order: 'Wong has broken beer bottles and spilt beer on the floor, lain across the entrance, spoken in foul language to staff, and set his shoes on fire. The list goes on.' Wong had bought Lehman-related structured products known as Constellation notes.
Hong Kong investors lost billions of dollars on minibonds and other investments guaranteed by Lehman when the Wall Street giant went belly up in September 2008. Minibonds are not corporate bonds but high-risk, credit-linked derivatives. They are marketed as proxy investments in well-known companies. Equity-linked notes are debt instruments, usually a bond, that base their performance on the return of the underlying equity.