The Hong Kong Association of Banks announced Friday that it had accepted the buyback proposal of the Hong Kong Special Administrative Region (HKSAR) government regarding the Lehman Brothers minibonds.

The association said that the distributor banks involved had agreed to the proposal and it has appointed Ernst & Young as the independent financial adviser responsible for the buyback process, including the establishment of market value.

The task force hopes to finalize details of a concrete proposal as soon as possible.

Speaking after a meeting with the association and the Monetary Authority of Hong Kong, KC Chan, Secretary for Financial Services and the Treasury of the HKSAR government, said that he hoped the banks' consensus can help the minibond holders to get back their assets at market value, shortening the lengthy liquidation process.

While it will take time for banks to assess the value and draw up the buyback plans, he said that he believed they will complete them as early as possible.

The Monetary Authority on Friday appointed PricewaterhouseCoopers as an independent consultant to oversee the buyback process to ensure impartiality.

Meanwhile, the authority referred 24 cases involving complaints of banks' alleged misselling of Lehman Brothers investment products to Hong Kong Securities and Futures Commission for further action.

The authority said there are adequate justifications for immediately referring them to the commission. The authority is ultimately responsible for deciding whether a bank has been guilty of misconduct.

The commission's Chief Executive Officer Martin Wheatley said it will ensure misselling allegations are investigated efficiently, effectively and expediently.

It will examine whether the evidence exposes any systemic weakness in management controls, as a single organization is often the subject of multiple allegations. It will also gather evidence and allow the alleged violator an opportunity to respond.

It will review the evidence and consult the authority in determining what sanction, if any, is to be imposed. Sanctions may include suspension or revocation of bank registration, reprimands, fines or prohibition orders.

The commission said it has the potential to agree a voluntary settlement, taking into account what actions the person or institution has taken to remedy or mitigate the misconduct.

Up to Oct. 16, the authority had received 12,091 complaints concerning Lehman Brothers-related products. Besides the 24 referrals, it has started investigations into another 95 complaints and is seeking more information on 783 complaints. Another 21 complaints did not have sufficient evidence.

(Xinhua News Agency October 17, 2008)