Retail Disclosure Standards In Hong Kong

Originally Published 10^th October 2008

Issuers of structured products in Hong Kong must consider whether their offering and advertising materials adequately disclose the risks affecting investors' returns as a result of current market conditions.

Background

Amid growing claims of mis-sales by distributors of Lehman's "Minibonds", the SFC has released a circular (also see SFC press release) requesting issuers to review the adequacy of their product disclosure.

The approach taken by the SFC is to place responsibility on issuers to determine what constitutes adequate disclosure.

Lehman's "Minibonds"

Both retail and "sophisticated" individual investors holding underperforming (and, in some cases, failed) investments make a variety of claims, the most consistent being mis-sales by their distributors. They claim not to have understood what they were buying.