Tan Kin Lian's Blog: Fair Compensation

Friday, September 26, 2008

Fair Compensation

Dear Mr. Tan,

What is a fair amount of compensation that the distributing financial institution can offer to the investor? Can we expect them to compensate us fully for our loss of hard earned savings?

REPLY
If this matter goes to Court, either on an action taken by the Government or by the investors, the decision will be made by the judge.

However, the parties may agree to make a settlement on their own, without asking the judge to decide. In that case, each investor should decide on the amount that they are willing to compromise.

If you are offered compensation at 50% of your loss, will you accept? I am sure that the investor will like to have the loss fully compensated, but it is unlikely that the distributing financial institution will agree.

Can you send an email to me at tkl@tankinlian.com. State your name, telephone number, amount invested and the amount that you will accept as a fair compensation (i.e. that you will be willing to fight in court, if you are not offered. Remember, legal expenses can be quite costly).

Do not send email on any other matter to tkl@tankinlian.com as I shall NOT be replying to emails from this account.

18 comments:

hongjun said...: I personally feel 50% is fair. Both sides should bear responsibility.

hongjun; September 26, 2008 7:37 PM
Anonymous said...: Anything lesser than the capital sum is disastrous to the old folks. The capital sum might be these people's life saving. Looks like they have to learn eat grass. This is unthinkable.; September 26, 2008 7:40 PM
Parka said...: I've studied some basic business law before, although I not in the legal field.

If there's a fundamental breach in contract, the contract will be void. The defendant has to restore the victim back to as if the agreement has never taken place — 100% compensation.

The question is therefore is this a fundamental breach of terms of contract.

Frankly speaking, I'll settle nothing less than 100%. Just because of their fault, we're also to blame?

For this reason, die I also will look at for that fundamental breach of terms.

The fundamental breach here is the failure to point out that Lehman Brothers can create a credit event also.

I invested US15K, which really is nothing to me because I'm still young. But there's nothing I hate more than the lack of business integrity and ethics.; September 26, 2008 8:56 PM
Anonymous said...: Mr Tan,
if our government is willing to take actions to sue FIs, force them to buy back garbage notes from victims,just like what the New York Attorney General is doing: http://www.foxbusiness.com/story/markets/industries/finance/cuomo-sue-merrill-lynch-settles-wachovia/

i cannot see necessity for individuals to pay legal costs. pls correct me if i am wrong.

thanks; September 26, 2008 8:58 PM
Anonymous said...: My retired parents put most of their hard-earned savings into what they perceived as safe investments - capital-protected as long as they keep to maturity. Minibond 50K, Pinnacle 150K.
I'd be happy if they get back 80% (without legal fees); or 100% (if legal fees required - assuming no more than 40K).; September 26, 2008 9:39 PM
Anonymous said...: I invested S$80K worth of Minibond series 3.

This amount is my budget to last 5 years later in life.

I am willing to get back 75% nett, quickly within 4 months, let bygones be begones, and move on in life.; September 26, 2008 9:49 PM
Everlearning said...: My DBS Allstars Capital Protected Fund (S$) brochure has an illustration on a $50,000 investment chart that shows eight senarios of payout. It shows clearly that no matter what happened to the Fund, at maturity I will receive my capital in full.
I took up this Fund in March 2004 and had my first payout after six months. This Fund falls on the Worse-case scenario and I am holding it to maturity to get back my capital.
I do hope DBS will honour this agreement as it was printed in the coloured brochure.; September 26, 2008 10:23 PM
Anonymous said...: We thought the minibond is safe because the S$ investments are SRS eligible and bought using CDP account.; September 26, 2008 11:45 PM
Anonymous said...: This comment has been removed by a blog administrator.; September 26, 2008 11:46 PM
Anonymous said...: This is disgusting that many have to suffer loss because of the the banks and their consultants. it is unfair especailly to those who put their life saving into it and instead of enhancing they incurred loss.
This is unforgivable. The banks must bear full responsibility. You investors should not settle for less than your principle.
MAS should be wiser and has a clean up job to do.; September 27, 2008 12:18 AM
Anonymous said...: I am handicapped and earn only about $600 per month. I was told that the minibond is very safe and invested $10,000 of my life savings. What should I do now?; September 27, 2008 12:20 AM
Anonymous said...: I feel that MAS as the FI regulator in Singapore should do more in protecting the interest of Singaporean investors.
MAS assured the customers of AIA in the recent AIG event. However, little measure or none were done for credt linked securities. Did MAS approved these securies before they allowed FIs to sell these to retail investors.; September 27, 2008 11:25 AM
Anonymous said...: "With our Minibond Series 3 credit-linked to six major financial institutions, you can enjoy the returns you deserve with peace of mind."

Quoted from the brochure of Minibond Series 3. Lehman Brothers is not one of the 6 Reference Entities.

In the cover of the booklet given to me after I signed up for the product, there is a part "Pricing Statement dated 3 January 2007 (Registered by the Monetary Authority of Singapore on 3 January 2007)".; September 27, 2008 6:13 PM
Tan Kin Lian said...: Most of the investors replied to my email account and to this blog that they expect 80% to 100% compensation. A few replied that 50% is fair.

I hope that the investors will take the following points into account:

1. The advertisement did highlight that under a credit event, the investor can lose up to 100% of the principal.

2. The investor did sign a lot of documents (which they are not aware about) covering the distributor.

We can argue that the distributor has a sense of duty to make sure that the recommended product is suitable for the investor. But the investor has to bear some responsibility as well (as said by MS).

I hope that the expectation of the investors can be moderated.; September 28, 2008 5:15 PM
nhyone said...: The auction-rate securities case is different.

The sellers sold this as equivalent to money market like investments. They do this by supporting the auction market. When they stopped doing so, the market just collapsed.

This is a clear case that the buyers were misled.; September 28, 2008 6:46 PM
nhyone said...: I took this from a comment from Lion Investor's blog: http://finance.thestandard.com.hk/en/business_news_view.asp?aid=72231

HSBC has the discretion to,
1. liquidate
2. hold till maturity
3. sell part of the assets at best prices if the situation allow

It looks like the underlying securities still has some value.; September 28, 2008 6:52 PM
Anonymous said...: We expect 100% less legal fees.

We invested $200,000 in the DBS High Notes 5 because we were repeatedly told it was very safe. We did not receive a prospectus when we signed the form.
We were told that if we would lose the principal if we withdrew the amount before 5.5years.
My mother is 66 years old and I have not told her what has happened. She would not be able to sleep.; September 28, 2008 9:52 PM
Anonymous said...: It is very sad to know so many people are losing their many years of hard earned life savings. Hope MAS could quickly do something to help these people recover their money.; September 28, 2008 10:19 PM