From Associated Press:
HONG KONG (AP) — An investigation will be launched in Hong Kong into the sale of financial products linked to collapsed U.S. investment bank Lehman Brothers after lawmakers voted overwhelmingly for a probe.
The legislature passed a motion 47-4 empowering a subcommittee to summon top financial officials and bankers and have them turn over internal documents during the investigation. Four other lawmakers abstained from Wednesday’s vote.
“The Legislative Council has the responsibility to investigate the cause of the saga, whether there’s any dereliction of duty and whether there should be any punishment,” said Kam Nai-wai, a Democratic Party legislator who helped investors with Lehman-linked products over the past two months.
Hundreds of investors who lost money protested outside the legislative building Wednesday while lawmakers debated inside for more than seven hours. They have complained bank sales staff did not fully explain that the financial products they purchased were linked to the bankrupt U.S. company, leading them to believe they were a low-risk investment.
Banker David Li said any investigation would slow the efforts of banks in reaching settlements with their clients and damage Hong Kong‘s reputation as an international financial center.
“Subjecting banks to what amounts to an unlimited power to demand documents and the appearance of bank managers before the subcommittee will only draw resources away from the great efforts banks are making,” said Li, who represents the banking sector in the legislature.
The Hong Kong Association of Banks said in a statement issued late Wednesday that it hoped lawmakers would be “discreet” in handling the confidential business information of banks and the personal data of customers while conducting the inquiry.
Billions of dollars in bad debt forced Lehman Brothers Holdings Inc., once the fourth-largest investment bank in the U.S., to file for bankruptcy in September, a victim of the world’s worst financial crisis in decades.