HK investors planning US suit in Lehman fiasco
(Associated Press WorldStream Via Acquire Media NewsEdge) HONG KONG_A group of Hong Kong investors in Lehman Brothers-backed financial products plans to sue in U.S. court after the Wall Street firm's collapse left their investments possibly worthless, a lawyer said.
The lawsuit is expected to be filed this month in New York against European lender HSBC for its role in distributing the Lehman-tied investments, Patrick Daniels, an American attorney representing the investors, said late Tuesday.
Investors _ among them retirees who sank their life savings into the products _ have faced billions of dollars in potential losses since the storied Wall Street firm filed for bankruptcy in September, leading to widespread anger, demonstrations and government probes.
More than 40,000 Hong Kongers bought Lehman-backed investment products through banks and brokerages, with the total outstanding value of the products estimated at HK$20.2 billion ($2.6 billion), according to government estimates.
The majority of the investments were labeled "mini-bonds," though they weren't straightforward corporate bonds but rather complex derivative products.
For its part, London-headquartered HSBC provided the directors for the special investment company set up to issue the mini-bonds and served as a trustee that was supposed to hold the collateral backing the investment products. Other Hong Kong banks, not HSBC, sold the mini-bonds to retail investors.
Daniels said HSBC was obligated to protect and represent the interests of investors.
"They failed in that obligation, and that's the case we are going to hold them responsible for," he said Tuesday following a meeting of Lehman investors in Hong Kong.
An HSBC spokeswoman noted the bank did not directly sell the mini-bonds to investors.
"Will we defend ourselves vigorously," said bank spokeswoman Vinh Tran.
The federal lawsuit will seek class-action status for the some 33,000 mini-bond investors, said Peter Chan, head of an investor group involved in the case.
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