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Repurchase hope for Lehman investors

Hundreds of Hong Kong investors in Lehman Brothers-backed products may get their money back after a major brokerage agreed to repurchase nearly US$11 million of the investments, possibly worthless after the American firm's collapse.

The deal represents the first major payout by financial companies in the region's ongoing dispute over the products tied to Lehman Brothers Holdings Inc. Investors - among them retirees who sunk their life savings into the products - have faced billions of dollars in potential losses since Lehman Brothers filed for bankruptcy in September, leading to widespread anger, demonstrations and government probes.

The brokerage, Sun Hung Kai Investment Services Ltd, agreed to the settlement as Hong Kong regulators announced late on Thursday that they were reprimanding the firm following an investigation.

The agreement was adopted in the "best interest" of investors, Martin Wheatley, chief executive of Hong Kong's watchdog, the Securities and Futures Commission, said in a statement.

Investors welcomed the buyback offer.

After months of street protests, retiree Ng Shin-fung was relieved by the prospect of recouping some of the US$20,000 he invested in Lehman products through Sun Hung Kai four years ago.

"Giving us back the principal is the best solution," said Ng, 61. "It's a positive response from Sun Hung Kai, but I won't be happy until I really have the money back in my pocket."

Others hoped the move would ratchet up pressure on the host of brokerages and banks that sold the products to follow suit.

"It's a breakthrough," said Peter Chan, head of a group of Lehman investors that's considering a class-action lawsuit. "It shows banks and brokerages have to own up to their responsibility."

Chan said investors would wait to see whether other distributors of the financial products will offer payouts in the coming weeks before moving ahead with a possible lawsuit.

Under the deal, Sun Hung Kai promised to buy back products distributed to clients at a price equal to the principal amount, totaling up to 85 million Hong Kong dollars (US$11.0 million). An estimated 310 investors are covered by the agreement.


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