2009年9月28日星期一

Hong Kong's SFC seeks to strengthen investor protection

"Hong Kong's SFC seeks to strengthen investor protection | AboutHK.Com - More Information About HK"

AFP

Hong Kong's SFC seeks to strengthen investor protectionHong Kong's securities watchdog on Friday announced proposals to tighten regulations on the sale of unlisted investment products in a bid to avoid a repeat of the Lehman Brothers "minibond" fiasco.

In a public consultation document, the Securities and Futures Commission proposed that brokerages and banks should disclose their own commercial interests when selling financial products to the public.

The SFC said the intermediaries should be required to gauge their clients' knowledge of derivative products.

It also proposed a "cooling-off" period for investors who change their mind after purchasing longer-term products, allowing them to get a refund subject to a reasonable administrative charge and any legitimate market value adjustment.

"The changes we have proposed will enhance our regulatory regime but they must go hand-in-hand with strict compliance by institutions that sell investments to the public," Martin Wheatley, the SFC's chief executive officer, told a press conference.

"It is important to distinguish the actions being proposed today...(from) the debate now taking place -- globally, regionally and nationally -- about what structural changes to regulation may be required to prevent a future financial crisis," he said.

"These are very different issues, requiring different considerations."

The consultation targets the inadequacies of the city's existing investor protection regime after the controversial sale of minibonds to 29,000 people, including many vulnerable retirees.

The value of the products collapsed when Lehman Brothers went bankrupt in September last year.

Many of the investors claimed the banks had mis-sold them the products as they were not made aware of the risks involved and have since staged protests against the banks, the government and the financial regulators.

In July, 16 banks in Hong Kong agreed to partially refund some of the investors in a deal that could cost them up to 6.3 billion Hong Kong dollars (808 million US).

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