CPL Seminar - 20181204

     

      The first topic of the seminar was “The 10th anniversary of financial tsunami and the Lehman Minibond incident”, presented by Dr. Ho Chung Tai, who was the chairman of the subcommittee set up under section 9(1) of the Legislative Council (Powers and Privileges) Ordinance (Cap.382) (LCPPO) to inquire into matters relating to the sale of the Lehman Brothers (“LB”)-related Minibonds and structured financial products. According to HKMA, some HK$20.23 billion worth of various LB-related structured financial products had been sold through banks to over 43,700 investors, including HK$11.2 billion in Minibonds held by about 33,600 investors. According to Dr. Ho, the whole inquiry process took about 3.5 years to complete with about 200 meetings, interviews of senior government and regulatory officers, top management of banks, legal advisors, witnesses, front-line bank staffs, victim investors and so on. With the lengthy and tough process, Dr. Ho was satisfied that 85-96.5% of the structured finance products were brought back from retail investors who were content about the outcome. The Lehman Minibond incident was settled, but Dr. Ho thought similar incident may happen again if investors do not learn and educate themselves. New investment products and schemes such as crowdfunding and cryptocurrency have emerged during the last 10 years and attracted a lot of market interests. Dr. Ho reminded us to be more knowledgeable cautious and vigilant. He believed that history always repeats.

      The second topic was presented by Ms Carol Gaw, an US attorney-at-law, a qualified accountant, and an ex-private banker, all with major multinational firms. The title was “Common Reporting Standard (CRS) - application and implications”. Under the CRS framework, financial institutions in Hong Kong are required to identify and report to the IRD the financial accounts held by tax residents of overseas reportable jurisdictions (including individuals, entities and controlling persons of certain entity accounts) on an annual basis. The Inland Revenue (Amendment) (No. 2) Ordinance 2017 came into operation on 1 July 2017. Ms Gaw continued to explain the relevant sections of the ordinance on the legal obligations of financial institutions to gather the required information by using the required due diligence procedures. She highlighted the definitions of reportable accounts, controlling person, required information and compliance & enforcement under the IRO, Ms Gaw wound up her speech with discussion of some case studies. Mrs Gaw’s presentation addressed a lot of interest, hot discussion and exchange of views from the floor.