Why did Lehman Asia head of structure division Leon Hindle Lie

News from
"Septermber 25, 2006 Derivatives Week"

[Lehman Launches Extendable CDO Deal

Lehman brothers in Asia has launched a single-tranche synthetic collateralized debt obligation with an extendable feature in a bid to boost returns. "It's purely for yeild enchancement," said Leon Hindle, senior v.p. in Hong Kong, noting the proliferation of extendable and callable features embedded in CDOs due to the curent tight-spread environment.
The deal, dubbed Beryl Finance Series 2006-10, and rated AAA by Fitch Ratings, is referenced to a USD 14.31 billion portfolio comprised of a 155 default-swaps with USD 114 million in credit-linked notes being structured. In the transaction, orriginally targeted for three-years, Lehman has the right, not obligation, to extend the length of the transaction to a final maturity of seven years. As Lehman is the credit protection buyer, it would look to extend the deal out if spreds go wider, effectively allowing it to pay protection at locked-in cheaper levels than available in the market.

Hindle added the deal will be sold to a mix of investos via direct sales and third-party distributors in Asia.
]

===========================

Leon Hindle was the head of Lehman Asia Structure Division which was responsible for all the Lehman Minibond sold in Asia (Hong Kong, Singapore, Taiwan, Australia).

The above Beryl Finance Series 2006-10 in the news was referring to the Minibond Series #27 CDO Collateral (which was USD $114,465,000 for Series #27 A & B in USD) .

雷曼亚洲安排了迷债及迷债最为隐藏之部分：合成CDO。雷曼亚洲让迷债发行商 (SPV) Pacific International Finance 买入雷曼自己安排的（以上新闻中所提之）合成CDO。雷曼亞洲之結構產品部門主管 Leon Hindle 卻在新聞發佈上講：此產品是“通過直接銷售和第三者分銷商賣給各類投資者”

Leon Hindle 新聞發佈上的言行：

－ 掩盖了此产品其实是100％全数直接卖给Pacific International Finance，是雷曼亚洲安排 Pacific International Finance 作为迷债抵押品买入的。
－ 掩蓋了此產品是為雷曼迷債抵押品而設計的事實,
－ 掩蓋了此產品跟雷曼迷你債券的關係 。
－ 掩蓋了雷曼一手操縱此產品之買賣雙方之事實。
－ 掩蓋了此產品是面向香港的零售客戶們銷售的事實。


Lehman Asia arranged the Minibond and knew exactly that SPV Pacific International Finance Limited was the SOLE buyer of this USD 114 million worth of Synthetic-CDO (comprised of 155 CDS) portfolio. It was Lehman Asia who arranged the deal for both buy-side (Pacific International Finance, owned by HSBC) and sell-side (Beryl Finance, an SPV owned by Lehman).

Why did Leon Hindle, the head of Lehman Asia Structure Division, claim that " the deal will be sold to a mix of investos via direct sales and third-party distributors in Asia."?

He knew very well that there was no mix of investors at all, there was only a pre-arranged investor, that is, the Pacific International Finance which was the Minibond Issuer. The Minibond was sold to retail clients via banks in Hong Kong, with the prominent "Credit-Linked to 7 well-known Companies".

Why did he lie about the buyer and the nature of the deal (arrangement) ?
What did he try to hide?
What was he afraid of ?


In the MInibond Issue Prospectus, there was no information to mention about the 155 CDS or the fact that the so-called minibond collateral (in fact, the underlying securities) was selling 155 CDS insurance, and was not invested into any real debt.

In the 2003-2008 period, in all the MInibond Issue Prospectus, there was no information to mention about the 100+ CDS or the fact that the so-called minibond collateral (in fact, the underlying securities) was credit linked to a portolio of 100+ (usually 125-190) reference entities. It was never specifically mentioned that the underly securities was not invested into any real debt of the 7 well-known reference entities.

(Click here for information related to Minibond Series #27 and General Minibond Information).

Related reading:
- From Lehman Minibond To Oracle Capital Limited

- SEC Sues Goldman Sachs, Alleging Fraud in CDO Tied to Subprime