Hong Kong investors sue Lehman over 'minibonds'

A group of Chinese investors filed a class action lawsuit Thursday against failed investment bank Lehman Brothers and HSBC to ask for the return of $1.6 billion.

Laywers said the plaintiffs are mostly retired people and retail investors who bought $2 billion worth of structured products that 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.

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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. The lawsuit was filed in the bankruptcy case of Lehman Brothers Holdings Inc., which entered court protection on Sept. 15.

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.

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Since it entered Chapter 11, 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 have sparked protests by investors in Asia and Europe.