The unnamed investors claimed in a High Court writ that securities and banking regulators did not have the legal power to agree to the rescue package with a group of banks.

   Under the scheme, which was agreed upon in July, banks said they would repay mini-bond holders 60 to 70 per cent of the value of their investments.

   But the pact has been criticized by some investors who wanted the buyback scheme to cover the entire principal amount of their investments.

   Investors claimed the bonds were either missold by banks because the risks of the share derivative products were not properly explained or they did not understand the products.

   Sixteen banks, including the Bank of China (Hong Kong) and Bank of East Asia, agreed with the Securities and Futures Commission and the Hong Kong Monetary Authority to buy back the bonds at a discount. About 29,000 mini-bond holders under 65 were to be given back 60 per cent of their original investment while those over 65 were offered 70 per cent.

   Friday's legal challenge came nine days after a mainland Chinese woman, Cheung Chun-ping, filed a High Court writ against the Bank of China (Hong Kong) to try to recover 10 million Hong Kong dollars she claimed to have lost on mini-bonds. Cheung said she was misinformed about the risks of the investments and is seeking the return of the money she lost plus costs and damages.

   Also last week, the Hong Kong government's chief executive, Donald Tsang, promised to strengthen investor protection.

   'We aim to strengthen investor protection in every aspect from investor education, authorization of investment products, disclosure requirements, sales practices and conduct of intermediaries to financial disputes resolution,' he said.