Two employees of Bank of China Ltd's Hong Kong subsidiary have been charged in connection with sales of financial products linked to collapsed Lehman Brothers Holdings Inc, Bank of China announced Monday. Thousands of small Hong Kong investors complain they were misled about products linked to Lehman and were left in limbo when the Wall Street bank collapsed in 2008.
The two employees of Bank of China Hong Kong were charged under Hong Kong securities laws, Beijing-based Bank of China said in a statement. It said a third employee was arrested March 26 but has not been charged. The bank said it would cooperate with investigators.
The statement gave no other details but police said earlier that two employees of an unidentified Hong Kong bank were arrested March 26 on suspicion of fraud after being accused of persuading eight customers to invest in derivatives backed by Lehman between 2005 and 2008. It said about $3.5 million was involved.
Some 30,000 small investors bought $1.8 billion in Lehman-linked derivatives in Hong Kong before the bank's collapse. Investors complained they were not fully informed of the risks of the complex derivatives, which were innocuously labelled "mini-bonds." After public protests, Hong Kong regulators announced a settlement with 16 local banks in July that returned up to 70 percent of principal to the buyers, or up to 6.3 billion Hong Kong dollars ($813 million).