Tan Kin Lian's Blog: Biggest loss in the the structured products

Monday, October 27, 2008

Biggest loss in the the structured products

I met a couple at Speakers' Corner on 25 October. They invested a total of $1,775,000 in Jubilee Notes 3, Minibonds 3, Pinnacles 3 and 6. The investments were made in their personal name and in their company's name during February to June 2007.

They asked me to look into their faces. Were they greedy people? Were they people willing to take risk?

I felt so sorry to learn about their devastating loss. I told them that I will try my best ot help them to recover some of their loss.

17 comments:

Anonymous said...: If MAS cannot see the seriousness
of this fiasco, whare got hope?; October 27, 2008 9:01 PM
Anonymous said...: Sadly, MAS is having different definition for mis-selling. We have to 'blame and kick' ourself when we are more educated than others!!; October 27, 2008 9:27 PM
Anonymous said...: MAS say they shouldn't be directly involved or held responsible for this mini bond issue.

Investors have to take precaution and do their homework before investing.

And when MAS SELAMAT escaped out of the govt cell, the people of spore were also told to be less complacent and share the blame.

What has it got to do with us?

And when our my maids go on off day and get herself pregnant outside.
Which is totally not within our control.

Why do we need to be held responsible for this stupid iresponsible act and kana fine $5K for nothing?

Now MAS did not do a good job in monitoring the bank, they try to push blame to us again?

The authority always try to bully us when planning all this policy.

Ridiculous.; October 27, 2008 10:26 PM
Anonymous said...: This is clearly not due to greed. If I had more than a million dollars, do I want to put it all in a structured product that pays only 4-5% with the risk of wiping all the capital up? Even idiot would not do it!
Now PM has commented on this matter and the picture is clear, he wanted the FIs to resovlve the matter quickly and fairly. I believe the FIs want to resolve this problem quickly, but fairly or satisfactorily? I don't know.
If the FIs cannot resolve the problem fairly and satisfactorily to all investors, then the investors should know what to do, as the PM has mentioned, they have their reputation at stake. The longer the matter is dragged on, the greater the damage to their reputation. So if the FIs want to play hard ball, then we should continue to complain and protest, try to drag the issue as long as possible, make our voice heard by all, let the world watch this drama evolve, until the FIs feel the pain. We have our money at stake, but they have their long term business reputation at stake. So far we have heard unhappy stories from investors about their meetings with the FIs people. They are acting tough now and this is how they will deal with all of us, never mind the open forum, that's only kind of PR. Be prepared for a long drawn confrontation.; October 27, 2008 10:41 PM
Anonymous said...: for this case the advice is definitely inappropriate if this amount was all they had. There was no asset allocation to spread the risk. At the most 10% would have been allocated to this class of asset, the rest could have been annuity, cash or FD or money market/bond and another 10% on equity
depending on the couple's needs.
The recommendation was not of reasonable basis.All of the couple's eggs went into one basket.; October 27, 2008 11:04 PM
Anonymous said...: If all these are bought through one RM, he must have not done his job to analyse the customer's profile, or he also given the same impression by his top people that these are low risk products. I suspect many RM do not want to "offend" the customer by asking how much total saving they have (they believed it is very sensitive), so they choose for the customer (on the form) "I wish to receive product advise only", so no customer disclosure required. MAS should conduct a sample to check how many sales were done with full Need Analysis, and how many are "Receive Product Advise Only". The results will tell whether there is mis-selling.; October 27, 2008 11:27 PM
Anonymous said...: i ask a simple question

if YOU are MAS Chair

would you focus majority energy on reviving the fast deteriorating economy thats worth many multi Billions

or would you focus your majority energy on trying to pick up the multi Millions pieces at the back to the alley with questionable, at best debatable interpretations

which one will produce the best Dollar-vs-Time well spent ratio

what say you all; October 28, 2008 12:24 AM
Anonymous said...: Product advice is inevitable if commission is the reward.It is fast. This is another reason why old folks were specially chosen by RMs.
However product advice option is going to be the nail that will seal the coffins of RMs and the insurance agents. MAS should wake up to realise that product advice is the cause of this fiasco.So many old people became victims of product pushing.Products were sold wihtout regards to their needs.
Product pushing is so rampant in the financial industry from the bank RMs to insurance agents. It is so sad that the authority we look up to for regulation has not done its job and worse, condone to the malpractices by RMs and insurance agents.; October 28, 2008 12:43 AM
Anonymous said...: Hi 10.41 pm,

As long as there is no general guideline list out how the compensation be done . example X% of each prcduct applied to all FI.(except for very special case)
There will be no fairness at all if case by case handled by FI individually.

There are complaints in today's Zaobao forum , the investor is bullied by the FI durig the interview.

FI do not worry that their reputation will be downgraded. (exclude those local banks having opearation in OTHER countries).

Let us ask ourselves, Which bank do we want to put our saving in after this SAGA. I think 99% of us will have no choice, still decide to deposit with the so-called three local BIG banks as far as risk is concerned.(note: 100% quarantee is upto a few yrs)

PM 's speech apparently is putting pressure on FI and sending the message to public that FI will do SOMETHING . we know that it does not work.; October 28, 2008 7:28 AM
G C said...: I felt terribly sorry for the mentioned investor. I also strongly believe we can never accuse any investor as greedy as all investor wish is to maximize their investment return. While the investors should take their own calculated risk but the regulator should also ensure that suitable products and all investment products should be market with all procedures strictly adhere to. In this structured products,as Mr. has long before comment that he as a man who has vast experience on investments yet he find it very difficult and the return did not commensurate with the attached risk, it is therefore more so difficult for any ordinary investors to understand.

On the other hand if the return is not commensurate with the high risk, why should the Fi's market this kind products to investors. That a big question and the answer can never being found.; October 28, 2008 7:38 AM
Anonymous said...: If I am MAS Chairman I will-

set up 3 teams-
1. To handle and gather truly statistics from all corner, compile and analyst worse scenario.
2. TO investigate how such products being induced, packaged and launch into the market, document it and hire the industries best to provide recomendation and suggest any frault before 15 Nov.
3. TO meet all FI and understand their commitment and time frame of sorting out these mess.

else I will submit my early retirement.; October 28, 2008 7:55 AM
Parka said...: No one in their sane mind will invest their whole basket into one distributor unless they feel that it's very safe.

Unless financial knowledge is severly lacking here. Or they bought were not what they thought they bought.; October 28, 2008 10:37 AM
Anonymous said...: How old are the couples and are they educated? If they fall into "the vulnerable consumers", can they get back 100%?; October 28, 2008 12:37 PM
Anonymous said...: Hi, 12:21,

If I were MAS, I will do what is right to keep my million dollor salary.

If I were the MP, I will do what is right so that I will be nominated again and walk over during the next GE.(This is exactly what is happening); October 28, 2008 12:55 PM
Anonymous said...: To Anonymous 12:24am

Do you think that MAS may be busy reviving the fast deteriorating economy thats worth many multi Billions ???
I thought our MAS so smart, no need to work hard, just follow Hong Kong MAS. Eg. who made the policy to guarantee all bank deposits and who followed later ?Our MAS just let Hong Kong MAS do all the hard work, they just copy (and get paid millions of tax payers' money for sitting around and just copying). I can't think of a smarter corporation !; October 28, 2008 6:50 PM
Anonymous said...: Anon 12:24 AM
said:
if YOU are MAS Chair

would you focus majority energy on reviving the fast deteriorating economy thats worth many multi Billions

or would you focus your majority energy on trying to pick up the multi Millions pieces at the back to the alley with questionable, at best debatable interpretations

which one will produce the best Dollar-vs-Time well spent ratio

what say you all"

I will go all over the world to teach them how to be a financial hub and sing the song of more good years to prepare my reputation and stand in these countries so I can be welcomed by them as foreign talent and given a cushy advisor role when the time comes for me to leave Singapore should I be unable to fix the opposition but instead got fixed instead. This would be my exit strategy should the unthinkable happen.; October 30, 2008 2:07 AM
Anonymous said...: The government has always been telling the people to save for retirement, maximize your CPF. Apart from putting into the FD, where else should we put our money to get a better return. Whether one is well-educated or not, it is not an easy task trying to understand about investing. The bank should give better savings rate to encourage the people to save periodically. The rate offered by bank are so low that people seeking higher return turn somwhere else. Rather than let the people anyhow invest, the government can come out with a special investment scheme that pays higher rate and at the same time protect the capital. At least the investor knows that their investment is in safe hand.; October 31, 2008 1:30 PM