The Consumer Council is contemplating helping investors who have purchased Lehman minibonds take legal action to protect their interests.

The council's Management Committee of the Consumer Legal Action Fund chairman Johannes Chan said they have selected 50 cases for further scrutiny out of 3,683 complaints received as mediation is deemed not effective.

"We have not made much progress with mediation. Therefore, we will start preparing for legal action. We don't want to wait until all mediation efforts are proved futile," he said.

More than 60 percent of the complainants among the selected cases, which involve 14 banks, are aged 60 or above. The total amount of money involved is HK$42 million with each of the cases involving HK$100,000 to HK$5.7 million.

The council's chief executive, Connie Lau, said most of these investors complained that they were misled and were not fully informed of the risks involved and the full content of the products.

Chan said they do not have a timetable as to when to launch the legal action, stressing that they have a heavy workload.

The council will consider various factors, such as the age of the complainants and whether they have an established investment history, before launching the lawsuits.

"If complainant is an elderly or a vulnerable person who is illiterate and has no investment history, then it will be easier to convince (the court) that he or she was misled. This is one of the criteria we use," Chan said. "If the case involves a university graduate who invests in the financial market everyday for more than a decade, it will be difficult."

He added that handling such a large number of complaints is challenging to the council.

Chief Executive Donald Tsang pledged two weeks ago that the government will inject capital into the council's Legal Action Fund, which has a reserve of HK$16 million, whenever necessary.

Chan said extra government capital is necessary if legal action is to be launched.

Lau said it is difficult to estimate how much the complainants can get back if they win the lawsuit as the decisions by the court may differ from one case to another.

Chan said evaluation of the financial products is necessary to calculate the compensation.

The complainants need to pay up to 50 percent of their compensation to the Legal Action Fund. But they do not need to pay if the lawsuit is unsuccessful.

Peter Chan Kwong-yue, who helps the investors, said about four of them are planning to seek damage from the Small Claims Tribunals, which cap compensation at HK$50,000, as soon as next week.

Legislator Kam Nai-wai, who has also been providing help to the investors, said those seeking compensation above HK$50,000 will have to seek damage from the District Court or the High Court.

(HK Edition 10/31/2008 page1)