The agreement relates to the sale of Lehman Brothers equity-linked notes (LB-ELNs) to professional investors between July 2007 and May 2008, by the bank which formerly operated under the name of ABN AMRO Bank.
In a statement, the SFC said that according to the bank’s records, outstanding LB-ELNs were held by 12 professional investors, nine of which would have otherwise been eligible for a repurchase offer under a repurchase scheme on 18 July 2013 if they had not been classified as professional investors.
To “bring a satisfactory conclusion for eligible professional investors”, the bank has made repurchase offers to these identified professional investors at 100% of the principal value of each eligible professional investor’s investment in the LB-ELNs, the statement added.
The SFC said that in view of the agreement reached it will not impose disciplinary sanctions against the Royal Bank of Scotland and its current or former officers or employees in relation to the sale of LB-ELNs to professional investors, “save for any acts of dishonesty, fraud, deception or conduct that is criminal in nature”.
The Royal Bank of Scotland will further review complaints lodged by professional investors who are not eligible for the repurchase offer under its enhanced complaint handling procedures.
The Hong Kong Monetary Authority has also informed the bank that it does not intend to take any enforcement action against the bank’s executive officers and relevant individuals in connection with the sale of LB-ELNs to professional investors who have accepted the repurchase offers, except for any acts of dishonesty, fraud, deception or conduct that is criminal in nature.
In May 2011, Core Pacific-Yamaichi International (CPYI) repurchased Lehman Brothers-backed structured products worth HK$9.6m from investors, after reaching an agreement with Hong Kong’s Securities and Futures Commission.
Take a look at International Adviser’s recent profile of the Independent Financial Advisors Association, which had as one of its first challenges the issue of dealing with the local scandal that involved the sale of high-risk ‘mini-bonds’ backed by Lehman Brothers to thousands of ordinary retail investors.
