Why Did a Bank Officer Stand Trial Over Minibonds?

Who was the first bank officer prosecuted over minibonds?

In November 2010, Bank of China personal banking officer Cheung Kwai-kwai became the first bank employee tried for mis-selling Lehman minibonds, facing nine counts of fraud or recklessly inducing investment involving over HK$6.11 million of principal. Prosecutors said that between February 2005 and February 2008 she nine times told six retail investors that six “minibonds” and two “Constellation bonds” were low-risk, capital-guaranteed products. One victim, educated only to Primary 3, testified she bought out of 20 years’ trust without understanding what “capital-guaranteed” meant.

What was wrong with the sales pitch?

The pitch claimed the products were safe, capital-protected, higher-yielding than deposits, and linked to six to eight global names (Coca-Cola, HSBC, McDonald’s); even one default would cost only a sixth to an eighth of principal. Another BOC manager was also implicated, trial pending.

What is the lesson for investors?

Never buy products you don’t understand on trust alone; know the risks first, and choose long-term investments like MPF by risk tolerance. Explore risk-graded funds at MPF fund comparison.