Lehman class action suit filed in US
A class action suit on behalf of Hong Kong minibond buyers has been filed in New York against units of British bank HSBC and Lehman Brothers, and The Bank of New York Mellon.
The suit says the banks failed to protect investors and demands the return of an estimated US$1.5 billion held as collateral for the minibonds.
HSBC said it had done nothing wrong and would defend itself.
The defendants are HSBC USA, HSBC Bank plc, the Bank of New York Mellon Corporation and Lehman Brothers Special Financing.
The plaintiffs claim that the defendants did not protect the interests of investors or their collateral. Some 48,000 Hong Kong investors bought HK$20 billion of minibonds and other complex, credit-linked derivatives issued or guaranteed by the now-defunct US investment bank Lehman Brothers.
HSBC USA is trustee in an entity Lehman Brothers created to issue minibonds, whose directors are provided by HSBC Cayman, operating in the Cayman Islands. BNY Mellon is trustee to a related entity.
The plaintiffs argue that BNY Mellon should return US$1.51 billion it holds in collateral underlying the minibonds.
They are also seeking damages from HSBC USA, Pacific Finance and the latter's directors for neglecting their duties.
'Any allegations that HSBC as trustee failed to protect the collateral are denied,' Vinh Tran, an HSBC spokeswoman in Hong Kong, said.
BNY Mellon could not provide a comment yesterday.
The seven lead plaintiffs are aged 30 to 60 and invested between HK$160,000 and HK$3.1 million in minibonds. Four of the investors are retirees.
Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, has said previously that unless an investor expressly opted out of the class-action suit, they would be party to it.
