SFC orders Core Pacific-Yamaichi International to repurchase Lehman-linked products

The price would be equal to the principal amount invested by the customer minus any coupon payments received.

The Securities & Futures Commission has instructed Core Pacific-Yamaichi International (HK) to repurchase Lehman Brothers-related structured products from clients at original value. It also reprimanded the company over its internal systems and controls relating to the sale of the products.

The commission said on Thursday the company will repurchase outstanding Lehman Brothers-related structured products at a price equal to the principal amount invested by the customer, less any coupon payments received, according to an SFC report.

It will also offer to pay compensation to all its eligible former customers in respect of their previous holdings in Lehman Brothers-related structured products in an amount equal to the principal amount invested by them, less any coupon payments, residual value or sale proceeds received.

The total amount the company offers pursuant to the repurchase and compensation offers is about $9.6 million.

The company has also agreed to:

• immediately implement special enhanced complaints handling procedures to resolve, in a fair and reasonable manner, all complaints in relation to the sale and distribution of structured products other than Lehman Brothers-related structured products;
• engage an independent reviewer, to be approved by the commission, to review its systems and processes relating to the sale of structured products and to report to the commission, and to commit to the implementation of all recommendations by the independent reviewer; and,
• engage a qualified third party, as approved by the commission, to review and enhance its complaints handling procedures, and to commit to the implementation of all recommendations by it.

The commission said the agreement resolves its concerns about the company’s sales practices in respect of Lehman Brothers-related structured products and is in the best interest of investors.