HONG KONG: A group of mainland investors has filed a complaint alleging group members purchased large amounts of high-risk financial product accumulators, after they were given misleading information by banks.

About seven complainants from Beijing, Shanghai and Guangdong met the Executive Director (Banking Development) for the Hong Kong Monetary Authority (HKMA), Raymond Li, Friday to voice their dissatisfaction.

They alleged that banks including HSBC, Hang Seng Bank, DBS Hong Kong and ABN Amro did not disclose the nature of the products, their structure, nor the risk entailed in purchasing the instruments. Some said they were even cajoled by bank employees who provided them false information.

The unhappy investors created an alliance early in July, intent on gathering additional evidence from other investors who felt they had been burnt.The group now has more than 10 members. Alliance organizer Jin Liang estimated that sales malpractice was a factor in the sale of HK$500 million high-risk products.

Jin lost about HK$10 million. He owed HSBC another HK$230,000. In October 2007, he planned to buy equity through an HSBC account manager, who advised him to buy 1,000 shares of China Aluminum Corp.

Jin was asked to invest additional funds in the stock months later, when he discovered the account manager's recommendation had led him to invest in a "forward accumulator", the most high-risk product. He had purchased 500,000 shares.

Jin claimed he told the HSBC account manager he was looking for a safe investment. Jin said his advisor did not disclose that he was buying a high-risk product, did not disclose its nature, nor did she inform him there was a cooling- off period when high-risk instruments were involved.

"I feel deep regret that such a reputable bank would adopt bad sale practices," Jin said.

Another investor Lai Jianping, a lawyer in Beijing, blasted ABN Amro, accusing the company of cheating him out of almost HK$21 million. He made his investment according to the advice of the bank's investment consultant in 2007.

He claimed the bank never mentioned margin deposits, he said. Yet Lai kept getting requests to deposit over HK$10 million into his account over four months, while the bank threatened that if he did not do so, his investment would be sold off.

"The banks misled us and snatched our money. Our cases have nothing to do with the volatile market, but the moral hazard of the banks," he said.

Lai took his complaint to the police Friday, saying civil litigation would be too costly for him. He is however demanding full restitution of his money.

Another complainant Hui, who lost HK$13 million said the staff of DBS Hong Kong gave her false information about her investment. She said the bank kept asking her to fund her account, bringing her under considerable stress. She said she reached the point of contemplating suicide.

Lawmaker Chan Kam-lam, of the Democratic Alliance for the Betterment and Progress of Hong Kong, who has been working to help investors, criticized local banks for promoting the high-risk products to mainlanders without sufficient disclosure of information.

"Mainland investors have limited knowledge of the Hong Kong stock market. The sale practice is disappointing," Chan said.

He also raised questions about whether banks were legally entitled to promote the products on the mainland.

The complainants approached the HKMA last year, but Li said the agency's manpower was deployed to handle the Lehman minibond collapse at the time.

Li apologized for the delay and promised to look into the cases in three months.

HSBC said staff at the bank receive professional training and are required to comply strictly to regulations in performing transactions.

The HKMA pledged to examine the HK$500-million claims within three months.

(HK Edition 08/01/2009 page1)