Hong Kong investors sue Lehman over 'minibonds'

HONG KONG: A group of Hong Kong investors sued Lehman Brothers and HSBC in the U.S. in their fight to recoup as much as $1.6 billion in losses after the collapse of the Wall Street firm left their bond holdings possibly worthless.

Lawyers in the U.S. said the plaintiffs are mostly retired people and retail investors who bought $2 billion worth of structured products that originated with Lehman and which HSBC marketed as low-risk ``minibonds.''

They say Chinese investors, who have a high savings rate, are drawn to conservative investments. Calling the investments minibonds drew more interest but investors have since complained that was misleading.

A unit of HSBC Holdings PLC sold the minibonds to the plaintiffs, many of whom did not realize they were exposed to risk of Lehman's failure.

Hong Kong investors said the lawsuit, which was filed Thursday, represented an important milestone in their fight to recoup losses which they have been doing in the past six months.

``The Hong Kong legal system cannot not help us get back our money, so we have to bring our case to the U.S.,'' said Peter Chan, convener of an investor group involved in the case.

Chan said the case filed by seven plaintiffs seeks class-action status for some 33,000 mini-bond investors in Hong Kong.

Lawyers contend that the $1.6 billion, which they say is collateral for the investments, should be returned. They argue the collateral is not the property of the Lehman estate.

Since filing for bankruptcy protection on Sept. 15., Lehman has sold off its most valuable units. The remaining Lehman assets are tied up as lawyers and advisers wind down derivative contracts to pay off creditors.

Structured products were sold to investors around the world. Lehman's failure rendered many of them worthless, and sparked protests by investors in Asia and Europe.