HONG KONG (Reuters) - More than 100 angry Hong Kong investors marched on government offices on Sunday, calling for action after losing money on structured products linked to failed U.S. investment bank Lehman Brothers Holdings Inc.
The protesters, many of them elderly retirees, accused the government of failing to provide proper oversight and said local banks did not do enough to warn of them of the risks involved.
Many had purchased so-called “minibond” products, notes secured by swap obligations guaranteed by Lehman.
“They were misleading investors on the risk. They said the minibonds were highly stable,” said W.H. Chiu, a 66-year-old retiree.
Lehman filed the largest U.S. bankruptcy case in history this month after collapsing under the weight of toxic assets, mainly related to real estate, that are now worth only a fraction of their original prices.
Chiu said he purchased about US$20,000 worth of minibonds from a branch of the Hong Kong subsidiary of Industrial and Commercial Bank of China (ICBC). He said he was still fighting to get information on the fate of his investment and feared it would end up as “rubbish”.
An advertisement issued by a unit of Sun Hung Kai & Co Ltd touted the product as “a strong collection letting you invest with peace of mind”, while noting in fine print that the notes involved “a high degree of risk”.
A number of protesters, who sat cross-legged in front to the government office while chanting slogans and raising clenched fists, noted the products had been sold to elderly clients, who invested a large proportion of their savings believing them to be relatively secure.
“I also buy shares and forex products. If I lose I don’t complain,” said Daniel Chan, a 40-year-old computer engineer.
“This was not a bond. It was a structured note. The name was misleading. A lot of old people believed them.”
Chan said he had bought HK$500,000 ($64,300) worth of minibonds through a branch of the Bank of East Asia, which had told him they were waiting for further information.
He said the Hong Kong government had a moral obligation to help the small investors burned by the investments because the advertisements used to sell them had been authorized by the Securities and Futures Commission. Chan said he didn’t have the “knowledge or the money” to pursue legal action on his own.
“The government should step in. If the government don’t pay, the should force the bank to pay,” said Marty Chou, the managing director of a import firm. He said he’d invested US$1 million in Lehman-linked products.
The losses were devastating for some protesters. A 34-year old accountant who gave her family name as Yau said she came to the event because her elderly shopkeeper father had lost US$250,000, a large portion of his life savings.
“They told him ‘It’s very safe. It’s just right for you. I just found out that it’s a credit-linked derivative,” she said. “He never thought that he would suffer any loss.”
She said her mother had been unable to sleep for three nights because of the losses.
“Right now, I don’t know how long they will have to postpone their retirement. It’s very sad,” she said. “It’s a very emotional event for them. They just don’t trust banks anymore.”
(Editing by David Fox)
$1=7.776 Hong Kong Dollar