HONG KONG (AP) — Hong Kong legislators yesterday accused regulators of failing to monitor banks that sold billions of dollars worth of Lehman Brothers-backed bonds whose value is in doubt after the US investment bank failed.

More than 40,000 Hong Kongers have bought Lehman-related investment products through banks, with the total outstanding value of the products estimated at HK$20.2 billion (US$2.6 billion), according to figures provided by the Hong Kong Monetary Authority.

Hundreds of disgruntled investors have protested recently.

Billions of dollars in souring debt forced Lehman Brothers Holdings Inc., once the fourth-largest investment bank in the US, to file for bankruptcy last month amid the world's worst financial crisis in decades.

Last week, the Hong Kong government announced a scheme under which local banks and distributors of Lehman-backed bonds would buy back the products at a value to be decided on.

He Guangbei, chief executive of Bank of China (Hong Kong) Ltd. and chairman of the Hong Kong Association of Banks, said the banks welcome the proposal and are studying how it can be implemented.

Financial Secretary John Tsang, however, said the government will not reimburse investors.

"It's not fair to the taxpayers," he said.

In a full-day hearing yesterday, Hong Kong lawmakers questioned if officials had made sure banks properly explained the risks the Lehman-backed bonds carried. Investors — among them retirees who invested their life savings — have complained that bank salespeople were misleading.

The chief executive of Hong Kong's de facto central bank, Joseph Yam, said the Hong Kong Monetary Authority had asked banks to classify as high-risk bonds that involved complex collateralized debt obligations, or CDOs, after the US sub-prime crisis began last year.

Pro-government legislator Lau Kong-wah questioned if the move came too late.

"Many people had already bought the bonds. Some citizens shifted their life savings, all their timed deposits to these bonds.

"You only told people these are high-risk products at the end of last year. Isn't that belated awareness of the problem?"