July 10 (Bloomberg) -- DBS Group Holdings Ltd., banned by Singapore from selling structured products, was sued in the city-state by 204 investors over losses on securities linked to failed Lehman Brothers Holdings Inc.

The clients want DBS’s High Notes 5, which are tied to Lehman Brothers, to be declared void and get their money back, Siraj Omar, a lawyer at Premier Law LLC, which represents the investors, said by phone today. The group incurred losses of about S$17 million ($12 million), the Straits Times reported.

The Monetary Authority of Singapore this week banned DBS and nine other financial institutions that sold products linked to Lehman from selling structured notes. The central bank was investigating claims by investors who say financial institutions misled them in the sale of the securities.

“DBS is confident that the case is without merit and we will defend it,” Karen Ngui, a Singapore-based spokeswoman at DBS, said by phone today, referring to the lawsuit.

More than 1,000 retail investors bought S$104 million of DBS High Notes 5 from DBS, according to the monetary authority. The total issue size of the Lehman-linked products in Singapore was S$508 million, of which S$373 million was sold to about 7,800 retail investors through nine distributors, the central bank said.

Hong Kong

The monetary authority banned the financial institutions from selling structured notes for a minimum of six months to two years. The ban will only be lifted after the central bank is “satisfied” that the institutions have taken steps to improve their processes for offering financial advisory services.

In Hong Kong, the city’s regulator said a proposal by a group of banks to buy back notes linked to Lehman Brothers would be unfair to investors, the South China Morning Post reported last week.

Hong Kong’s Securities and Futures Commission is also seeking a court order directing Lehman Brothers’ local unit to turn over documents on the offering and marketing of structured notes known as “minibonds.”

Lehman, once the No. 4 U.S. securities firm, filed for bankruptcy protection on Sept. 15, falling victim to the global financial crisis that has generated $1.47 trillion of writedowns and credit losses.

To contact the reporter on this story: Andrea Tan in Singapore at atan17@bloomberg.net

Last Updated: July 10, 2009 04:04 EDT