DBS Holdings to pay $84m as part of Lehman Brothers settlement

16 July 2010

DBS Holdings' Hong Kong-based unit is to offer up to $84 million in compensation to clients who made investments in products linked to failed bank Lehman Brothers.

According to the Securities and Futures Commission (SFC), the firm agreed to pay out the money but did not accept liability for any losses incurred.

However, the statement said that the Lehman Brothers-related Constellation Notes “may not have been suitable” for certain investors.

As part of the arrangement, low-to-medium risk clients who purchased the notes will be fully reimbursed.

The settlement will cover more than 2,000 customers, or over 60 per cent of the client-base if they accept the resolution scheme.

In a statement by DBS, which was quoted by Bloomberg, the bank said: “Resolution payments are being offered, without admission of liability, in the interests of our relationships with our customers and in the broader interests of the Hong Kong financial system.”

Martin Wheatley, chief executive officer at the SFC, said: “The SFC is determined to reduce the risk of mis-selling in our market. Resolutions like this reinforce the high cost to everyone if we don’t get this right in the future.”

Lehman Brothers filed for bankruptcy during September 2008.

By Jim Ottewill

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