Investors strike deal with law firm on filing class action Legal proceedings in the minibond wrangle could begin in the US within two weeks after investors struck a deal with lawyers to file a class-action suit there. The deal - made after a four-hour meeting between the Allied Victims of Lehman Products and US law firm Coughlin Stoia Geller Rudman & Robbins on Monday - allows the firm to charge up to 18 per cent of the damages if the plaintiffs win. A complaint was likely to be filed within two weeks, Allied Victims chairman Peter Chan Kwong-yue said yesterday. 'We are optimistic and the firm has been in touch with us for two months. The deal is reasonable ... but the exact amount will be decided by the court eventually.' The law firm promised to pay all expenses, including the cost of bringing people to give evidence, the group said. Early last month, Allied Victims said the law firm had requested a portion of at least 20 per cent in fees and payment for expenses if the case was won. The group has also chosen four to five representatives who may be the leading plaintiffs in the case. All are women and two are US nationals. Coughlin Stoia lawyer Patrick Daniels, who arrived in Hong Kong on Monday and met more than 1,000 minibond investors yesterday, will represent the plaintiffs. The firm won the largest recovery in class-action history of almost US$7.3 billion for shareholders after Enron collapsed in December 2001. Typically, law firms would be awarded 15 to 20 per cent of the cash recovered in cases similar to this one, he said. Mr Chan said unless an investor expressly opted out of the class-action suit, they automatically took part in it. Democratic Party lawmaker Albert Ho Chun-yan said the case might last two to three years. The group is planning to sue HSBC in the US state of New York for breaching its fiduciary duty, or its responsibility to maintain trust or confidence with a party, by allowing minibonds to be sold, and for having a conflict of interest by acting as trustee to the issuer of the product and providing directors for that issuer. An estimated 43,000 investors bought complex derivative notes linked to or issued by Lehman before it collapsed in September. Of them, 33,000 put money into minibonds. Minibonds are not corporate bonds, but consist of high-risk credit-linked derivatives. They are sold as a proxy investment in well-known companies. Many people have pursued representative legal action - whereby cases that are highly representative of a larger group go to court first for an outcome that could affect the others - through the Consumer Council's legal action fund. However, there is no class-action in Hong Kong. US law firms often calculate fees as a portion of damages, called a contingency fee arrangement. Meanwhile, the Legislative Council's subcommittee on minibonds has demanded the Securities and Futures Commission provide details of its investigation of Sun Hung Kai Investment's sales of minibonds, it said yesterday. The SFC has reprimanded the company, which offered to purchase minibonds from customers. Subcommittee chairman Raymond Ho Chung-tai has also instructed the Legco Secretariat to ask the SFC and the Monetary Authority to explain in detail their reasons for refusing to provide the full text of their reports on the matter. Twenty-three more investors who purchased Lehman-related products filed cases against 10 banks in the Small Claims Tribunal. More cases filed with the tribunal may be referred to the District Court as DBS and Bank of China requested it hear the cases.