SFC warning to issuers in the midst of global financial crisis

Mun Yeow, senior associate and Brian Chen, trainee solicitor, Allens Arthur Robinson

The recent collapse of Lehman Brothers has rendered its ‘mini bonds’ almost worthless with angry investors alleging that they were marketed to them as a low-risk product. It later transpired that the mini bonds were not bonds but derivatives designed for professional investors, not for retail investors. As a result, many investors are asking whether the banks fully disclosed the risks pertaining to that investment or were the banks in breach of any law or regulatory codes of conduct? In this context, the Securities and Futures Commission has issued circulars reminding issuers of investment products of their obligations to investors. Senior associate, Mun Yeow, and trainee solicitor, Brian Chen, look at the circulars and their implications.