Practical solution: Financial Secretary John Tsang briefs reporters on the Government's proposal to solve the Lehman minibonds problem, flanked by Monetary Authority Chief Executive Joseph Yam and Secretary for Financial Services & the Treasury Prof KC Chan.

Financial Secretary John Tsang has called on Lehman Brothers minibond distributors to buy back the minibonds at their estimated value, stressing it is the most practical solution to solving problems faced by small investors.

After a meeting with minibond trustees and distributing agents today Mr Tsang told reporters the proposal will avoid the need for investors to go through a long and tedious liquidation process.

"The Government fully understands the position of the small investors and knows they want the most up to date information concerning their investment and an early solution," he said, adding it has been playing the role of an active facilitator.

Mr Tsang said he has obtained the trustees' agreement to disclose to the distributors details of the minibonds' underlying collateral, so investors can get a clearer picture of where exactly they stand.

"This proposal will enable the investors to get some of their money back quickly," he said, hoping investors and distributors will find it fair and practicable.

Mr Tsang said some banks have welcomed the proposal while other distributors will consider it. The Government hopes all banks will join and a decision can be reached as early as possible.

Investor complaints

Up to October 3 the Monetary Authority received 5,567 complaints from retail investors alleging improper selling of investment products by licensed banks. It has assigned a complaint number to 4,205 cases for follow-up action, and is contacting complainants in another 1,250 cases to get more details.

It has assessed 112 cases to determine the action needed and launched investigations into 22 of them. In seven cases there is insufficient evidence of misselling. Further information is being sought in the remaining 83 cases.

Its Chief Executive Joseph Yam said the authority is dealing with the complaints as quickly as possible objectively and without pre-judging the issue. Should cases of misselling be found the authority will treat it seriously.

About one-third of authority staff and outside help are dealing with the complaints and more staff will be brought in.