The Securities and Futures Commission will investigate whether banks misrepresented minibonds and other complex debt securities backed by Lehman Brothers, the US investment bank that collapsed last week. Its investigations and those of the Monetary Authority would form the basis for a 'systemic review', within three months, of the financial regulatory framework, investor protection and investor education, Financial Secretary John Tsang Chun-wah said. SFC chief executive Martin Wheatley said: 'Having conducted several meetings with minibond investors to hear their grievances, we have decided to conduct formal investigation into allegations of mis-selling by certain licensed intermediaries.' It will look at the conduct of three distributors of the products and examine whether the minibond issuers and their advisers failed to disclose any material facts, matters or circumstances when submitting prospectuses and marketing literature for vetting. Hong Kong investors hold HK$15.6 billion in Lehman Brothers minibonds and related structured notes, and have been anxiously seeking news about their investments since the bank filed for bankruptcy. They blame local banks for misinforming them about the risk involved in holding them. The commission has warned they face substantial losses. The minibonds consist of high-risk derivatives such as synthetic collateralised-debt obligations and credit default swaps guaranteed by Lehman Brothers. They were marketed as proxy investments in prominent firms such as Hutchison Whampoa and HSBC. The Democratic Party has received 660 complaints from investors holding minibonds worth HK$685 million. It has organised protests and a meeting between the authority and investor representatives. Yesterday, 100 angry investors attended a similar meeting organised by the Democratic Alliance for the Betterment and Progress of Hong Kong. The DAB estimated that 40,000 investors had bought derivatives worth HK$13 billion backed by Lehman Brothers. DAB legislator Chan Kam-lam promised to organise a large-scale protest and meetings with Chief Executive Donald Tsang Yam-kuen, John Tsang and the Monetary Authority. The party has formed a working group to help the investors, comprising lawyers, academic experts in finance and other Legco members, he said. Asked whether the DAB would consider joining forces with the Democratic Party, he said: 'We will try to find the best method possible.' The SFC has so far received 233 complaints and 1,129 inquiries about investments linked to Lehman Brothers. The Monetary Authority has handled 1,338 inquiries, some of them referrals from the commission.