The HK$100 million put up by 18 Hong Kong banks 'to protect the interest of investors' in Lehman Brothers-linked derivatives amid a US legal battle will be deducted from the proceeds of selling the derivatives' underlying assets, legislators learned yesterday. These assets need to be sold in order for investors to be repaid. The news angered lawmakers and investors in the products - mostly minibonds - which lost much or all of their value when the US investment bank collapsed three months ago. They said they had not been consulted. 'This is very funny, and unreasonable,' said Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, which represents many of the investors. 'It's like taking money from your pocket without asking for your permission.' The United States arm of British bank HSBC is the trustee for the derivatives. Its actions to 'protect the interests of investors' may include a legal battle with liquidators for Lehman Brothers, whose lawyers have told HSBC that, under US bankruptcy law, issuing banks may not sell the derivatives. The banks had intended selling them to fund a buy-back of such derivatives from investors. HSBC USA and the liquidators disagree on where in the queue of Lehman Brothers creditors the minibond investors stand. Some 43,700 Hongkongers invested HK$15.7 billion in Lehman derivatives - mostly minibonds, which, despite their name, are not corporate bonds but high-risk credit-linked derivatives sold as proxy investments in well-known companies. Banks agreed to a government suggestion they buy back the products at current value, but many investors want compensation, claiming they were mis-sold as low-risk investments. Ann Kung, chairwoman of the Hong Kong Association of Banks' taskforce on minibonds, told legislators it was not certain the dispute would result in court action. Legislators Kam Nai-wai, of the Democratic Party, and Audrey Eu Yuet-mee, of the Civic Party, criticised the banks for not consulting the investors about the HK$100 million fund. 'It is the minibond holders who are funding the American litigation with their assets and bearing the risks of such litigation,' Ms Eu wrote in a letter to Mrs Kung.