Investors sue HSBC, BNY Mellon and Lehman over 'Minibonds'
HONG KONG & NEW YORK - A group of Hong Kong investors that bought 'minibonds' linked to Lehman Brothers has filed a class-action lawsuit against Bank of New York Mellon, HSBC and bankruptcy-filed Lehman Brothers. Investors allege the minibonds were sold as safe bonds but were in fact backed by now largely worthless collateralised debt obligations and credit default swaps. They allege Bank of New York Mellon and HSBC failed to protect the 34,000 Hong Kong buyers of the complex derivative instruments linked to the failed US investment bank.
The lawsuit is trying to claw back the $1.6 billion held in collateral by HSBC and BNY Mellon to be released to investors. The investors claim HSBC is the issuer, trustee and custodian of the minibonds and BNY Mellon is custodian of some assets held within the structured products whose value has been slashed since Lehman's collapse. HSBC says it was trustee but not issuer of the minibonds and did not know whether it was custodian.
It is understood that 34,000 Hong Kong investors bought $1.79 billion of minibonds from 23 local banks and brokers. A special committee of Hong Kong's legislative council and the jurisdiction's Securities and Futures Commission are investigating allegations of mis-selling.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Don’t mention the rules: the fight against prediction market abuse
For the CFTC to regulate new venues effectively, it must first redefine insider trading
Can the US FRTB revamp make the IMA great again?
Banks are finally presented with a viable internal models framework under Basel III’s market risk rules
UK rethinking tougher capital rules for US bank subsidiaries
US endgame draft would trigger UK Basel III trap floor for foreign banks, but PRA is reviewing
EBA proposes drastic overhaul to supervisory data reporting
Revamp will cut back the number of datapoints and integrate overlapping reports
CFTC wants to regulate prediction markets. Is it up to the task?
Former officials echo state gambling authorities’ concerns over agency’s ability to police betting risks
EBA seeks to allay Simm divergence concerns
EU validator pledges to co-ordinate with global regulators, but retains ability to act alone “if needed”
FRTB models find salvation in US Basel III proposal
Changes to P&L attribution test and NMRFs make IMA viable for US banks, risk managers say
US blows the floors off Basel III
Barr criticises “downward deviations” in US rule; Bowman rejects “blind adherence” to global standards