Five holders of soured Lehman Brothers' financial products took their reclamation cases to the Small Claims Tribunal yesterday,the first time any such investors have resorted to legal measures to seek compensation.

The five investors, aged 50 to 71, each spent about HK$40,000 to purchase the products from Citic Ka Wah Bank, Mevas Bank and Wing Lung Bank, all of which they took to court.

Legislator Kam Nai-wai, who is assisting the investors, said that six investors had planned to launch the lawsuit, but one of them withdrew after settling an agreement with the Bank of Communication.

Kam said about 30 other investors in the defunct products haven't decided whether to resort to legal action against the banks.

Four of the five investors who applied before the tribunal yesterday had purchased Lehman Brothers minibonds, and the remaining one had bought the bankrupt firm's structured products.

One of the investors, Chan Kwai-on, 70, bought his minibonds from Citic Ka Wah Bank. He said he had told the bank during a financial-assessment exercise that he could not accept a high-risk investment.

"I made it very clear," he said. "But the bank staff kept saying that the product was just US dollar bonds with a fixed interest rate. The staff said the product would be safe unless the United States collapsed," he said.

Nearly 44,000 Hong Kong investors purchased Lehman-related products with a total value of HK$15.7 billion.

The Hong Kong Monetary Authority (HKMA) announced last week that it had referred some investors to mediation and arbitration services provided by the Hong Kong International Arbitration Centre (HKIAC).

Parties in disputes can seek arbitration - a legal process that results in an award being issued by the arbitrator - after mediation fails. But they can also skip right to arbitration.

Chan Bing-woon, chairman of the Hong Kong Mediation Council, which is set up within the HKIAC, urged investors to familiarize themselves with the role of mediators.

"The mediators are just third persons facilitating communications between the parties in disputes," he said. "They represent the interest of neither side. It would be wrong for investors to perceive that the mediators are fighting for their (the investment holders') justice."

Chan added that investors can still seek mediation services even though they have filed an application with the court.

(HK Edition 11/07/2008 page1)