Investors seeking to recover capital from Lehman bonds

Taiwanese investors invested an estimated NT$40 billion in the financial products issued by Lehman Brothers, which was once the fourth largest securities group and investment bank in the U.S. with a 158-year-old history before its demise.

The majority of the investment instruments held by local investors were structured bonds promoted by various banks and other financial institutions on the island.

The Cabinet-level Financial Supervisory Commission (SFC), the China Bankers Association (CBA), and the Investors Protection Center (IPC) held a coordination meeting last Friday to deal with the problem to help investors recover their assets.

Both the CBA and IPC will accept registration from investors who had investments under NT$1 million in structured bonds floated by Lehman Brothers.

The FSC will handle larger cases with capital investments exceeding NT$1 million, according to an agreement reached at the meeting. However, investors complained that they were unable to file formal appeals nor register to redeem bonds or seek compensation.

They said no government or private agencies will take their cases.

CBA officials said they did not know how to handle the cases because they were still waiting for instructions for a standard procedure to be worked out by the FSC.

But following renewed coordination among FSC, CBA and IPC yesterday, officials at all three organizations said they will accept the cases effective immediately.

It remains vague if the investors can get their investment capital back or how much of the capital they can recoup from the repackaged financial derivative products.

Some Hong Kong investors are in a similar dire situation.

About 100 of them held a public demonstration yesterday and asked for lawmakers’ assistance to help them get back their capital.

Banks that sold the bonds for Lehman Brothers in Hong Kong agreed to return only about 60 percent of the capital the investors originally invested.

Most of the investors were not satisfied with the proposed deal offered by the banks that talked them into purchasing the financial instruments.

The Lehman Brothers’ Taiwan branch was already suspended from engaging in stock investment activities after its head office filed for bankruptcy and sought court protection in New York in mid-September.

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