SINGAPORE/HONG KONG (Reuters) - Investment banks already under fire for risky lending practices in Western markets face another barrage of criticism over selling a raft of currency and commodity derivatives that have now turned toxic.

Companies from Chinese power generators to Mexican tortilla makers, some already reeling from the global financial crisis, are being hit a second time by these trades, including complex products that seemed to offer easy money or zero-cost hedges.

Now that many of those deals are coming back to bite them, some companies are lashing out at their bankers. Such attacks may be unfair, but the reputational damage to an industry already a scapegoat for global woes may not be easy to undo.

At the core of the issue is the companies’ intent: Were these firms lured into instruments they thought would effectively protect them against downside risks? Or did company executives take a punt on the market by exploiting the gray area between a hedge and a speculative bet, circumventing risk controls?

Caveat emptor -- buyer beware -- goes only so far, and some experts say this may only be the beginning of a parade of a accusations, and potential lawsuits, as volatile forex markets and a sharp dive in commodities roil corporate trades.

Still, investment bankers point out that many buyers were perfectly aware of what they were getting into.

“If people were not properly informed of the risks they were taking by a person selling the product, then I think the seller should be responsible,” said Beijing-based Philip Partnow, a managing director at UBS.

“If people were properly informed then the buyer made a decision made on appropriate information and the buyer has to be responsible.”

BIG HITS

When done right, the complex derivatives now coming into the spotlight can be a proper hedge against exposure to a certain market or currency. When done wrong, they’re speculative bets that can go terribly and quickly bad when the markets move against them.

In South Korea, nearly 100 smaller firms filed a class action lawsuit this week against over a dozen banks -- including Citi C.N, Standard Chartered's STAN.L local unit and HSBC HSBA.L, as well as a number of local banks -- seeking to nullify currency deals that threaten to sink them.

The “knock-in, knock-out” currency trades they bought allowed them to sell dollars at a fixed rate as long as the won remained in a set range. But in late September, the won fell as much as 30 percent, forcing them to sell dollars below the market rate.

In a more extreme case, Hong Kong-listed CITIC Pacific 0267.HK racked up losses of up to $1.9 billion tied to a forex derivative called an "accumulator," which in simple form allowed the buyer to collect a premium if currency rates remained steady -- "money for nothing," according to brokerage

CLSA.

But the Australian dollar dove sharply, exposing CITIC to deepening losses. The company blamed executives and its internal controls, not its bank, but bankers may find it increasingly difficult to sell accumulator products in the near term.

In Mexico, where companies including tortilla maker Gruma GRUMAB.MXGMK.N are reeling from forex hedging losses as the peso sinks, the central bank has said irresponsible bankers are partly to blame for selling unsuitable instruments.

“The investment banks, which accepted as a counterpart a company that has nothing to do with the kind of products they were dealing, well, it seems to me there was a lack of professionalism, to put it lightly,” Mexican Central Bank Governor Guilllermo Ortiz said in a radio interview last month.