Tan Kin Lian's Blog: Collective legal action (1)

Wednesday, October 29, 2008

Collective legal action (1)

Approach recommended by Mr. Glenn Knight

1. I have met with several investors and found that a collective action is difficult.

2. I proposed that the investors should come forward and to say how they have been ‘misled’ and by which party meaning the banks or the other financial institution. I will then these people according to the financial institution who sold them the product.

3. For each group, I will choose one client who will sue alone but who will be backed financially by the others of the same group. My estimate is about S$80,000 for each client for the suit. The case will be heard in the District Court.

4. If the client wins the case, it will be a crucial victory. I will then use this case to settle with that financial institution on behalf of the other investors, provided of course that this is agreed by the financial institution. In that way, all similar cases can be settled.

5. If I am not able to act against any financial institution due to conflict, I can arrange for another lawyer to act (e.g. Mr. Raymond Loo).

6. If I should lose the case, the amount involved would be on a scale basis (provided in the books) of S$40,000 say for a trial that would last 4 days.

7. In the event that there would be an appeal to a High Court Judge in chambers, then I will have to charge another S$30,000. But if I should lose the appeal the party would have to bear costs of S$15,000

Glenn Knight
Bernard & Rada Law Corporation
50 Robinson Road
#08-00 VTB Building
Singapore 068882
DID: (65) 63947 852
Main: (65) 68999 888
Fax: (65) 6338 5377
Web: www.brllawcorp.com

43 comments:

Anonymous said...: I guess the estimated legal costs based on a loss reflects only the litigator's legal fees. What would be the total costs assuming the FI engages a SC ( likely)and the court awards costs. Tks.; October 29, 2008 9:13 AM
Anonymous said...: Can we categorise by FIs and do a class action for each of these. Taking the High Notes 5 as an example, it was sold by DBS alone and the manner which they mis-sold to the investors was quite similar. Will I be correct to assume that if we go in as a group (rather than an individual) and describe our similar experience in the manner that we were sold on the product, we will stand a better chance. The crux here is to prove to the court that we were all mis-sold. They may be able to discredit the evidence of one single individual, but would definitely be in a tougher position to try dicredit the evidence of the group.; October 29, 2008 9:42 AM
Anonymous said...: Why is a collective action difficult ?; October 29, 2008 9:58 AM
symmetrix said...: I assume that we are going for 100% compensation in this legal action.

Re Mr Glenn Knight's para 4. What if the FI does not agree to apply the same ruling to all investors? Then the class action suit would have no effect at all.

Should we lose the case, besides paying for court fees, damages, SC's fees etc, can we be counter-sued by the FI for damaging their reputation?

- VSL; October 29, 2008 10:25 AM
Anonymous said...: What about the alternatives of filing a police report and another to the CAD?

If MAS is reluctant to carry out an investigation then we may have to leave it to the police and CAD.; October 29, 2008 10:25 AM
Anonymous said...: This will be the last option. If 200 investors per FI, each has to pay only S$200 each which is very small compared to say 50,000 invested.

In fact, investors should consider legal action against 1 bank, 1 finance company and 1 brokerage as test case first, There is no need to sue all 9 in one go.; October 29, 2008 10:52 AM
Anonymous said...: I agreed with 9:42 AM, for DBS HN5investors, as a group we can proof to the judge collectively that
DBS sales team is using a consistent and planned sales tactics to mis-led the investors.
As individual, the proof may not be strong.
Mr Knight's comment may refer to the case of MiniBond.; October 29, 2008 10:57 AM
Anonymous said...: A class action suit is probably not applicable for the group. This is because for a class action, all investors have to have the 100% same exact story, especially on how they were sold the products in order to classify under one class action.
Because each investors' circumstances in which they were led to buy the product are different eg. some were approached by the FIs when they wanted to renew their FDs, some were approached directly by the RMs (especially those in the premier accounts group) and persuaded to buy, some went on their own to buy thru the dealers etc., a class action suit will hold no power in court.
Please think twice before using a class action suit as the probability of losing the case is high.; October 29, 2008 11:18 AM
Anonymous said...: I agree with Glenn Knight that collective action ie. class action is difficult in this case due to the fact that different investors bought the product in slightly dieeferent ways. It is not like the SIA crash in Taipeh 10 years ago where the passengers sued SIA via a class action as they were all together at the same time and in the same place and experienced the same plane crash.

I feel Glenn Knight's approach is logical and stand a better chance of winning compared to class action.; October 29, 2008 11:30 AM
Anonymous said...: How much would it cost to apply to High Court for a Court Order ( aka MANDAMUS) against the MAS?; October 29, 2008 11:30 AM
Anonymous said...: I think the non vulnerable group using the mis-selling route will have a tough time trying to prove financial illiteracy. The circumstances will be so specific to each individual that I doubt a class action suit makes sense.As for the vulnerable group particularly if they are not literate and have been enticed to use up their live savings and even recommended to open a CDP account for the first time in their lives by the RM, there is no need for represntation by lawyer. The FI will pay up in full on the spot!

I think a class action group based on misrepresentation and unethical and unprofessional conduct by the FI ( e.g limiting their own risk exposure to LB and their ilk whilst at the same time merrily selling the toxic product to the mass market ) has better odds though it will be costly ( the FIs will defend it at all costs and lengths since this if successful will impinge on their reputation ) and we unfortunately, will for obvious reasons, not have the blessings of the authorities. For the latter reason we may also have difficulty getting someone to take on the case since it will not be an ordinary plaintiff's action and will no doubt be conveniently labelled as unpatriotic and perhaps even something political whereas it is just a cry for justice and more accountability.; October 29, 2008 12:23 PM
Anonymous said...: AHEM how does anyone know for certain if SOME lawyers hadnt been bought out by the institutions to encourage and THEN on second thots discourage legal action. wont the INSTITUIONS considered using their bulk to stifle talks of action - i mean dont they have legal cases in and out on a regular basis for open contracts.. i wont use the term intimidation, but rather, effective persuasion

how does anyone know that SOME lawyers couldnt have received some sort 'external advice' and decided to grow cold feet

have ANYONE ever consider another law house just for a second opinion, EVEN for the sake of a second opinion LEAST

or is EVERYONE making the same mistake of again listening to just one mother goose talk of its golden eggs and taking it for biblical truth; October 29, 2008 12:42 PM
Anonymous said...: I do think 12:23PM's opinion makes sense.

Besides, mis-selling, misrepresentation by the FIs and the issurer (particularly for HN5), reputation and ethical responsibility should be the weapons most of investors should use.

As a matter of fact, when HN5 and some minibond series were issured, CDO has been well known to be very risky, banks were required to disclose their CDO positions. How can FIs still sell such products to retail investors?

Besides, if the FIs (particularly DBS) have lower their own exposure to CDOs while selling HN5 and remaining HN2's exposure CDO, what kind of responsibilty should DBS bear?; October 29, 2008 12:53 PM
Anonymous said...: To Anonymous 12:42pm

A small group of us did some homework on our own and seek out 2 other lawyers for legal advice on this case, none of them advocate class action suit as it might not hold water. So it seems Glenn Knight is right.
We are still doing more due diligence and will talk to more lawyers to get more advice and will post the info later.; October 29, 2008 1:26 PM
Anonymous said...: I am interested in the legal action since things are going nowhere.; October 29, 2008 1:30 PM
Anonymous said...: Glenn Knight,

I have a better and cheaper idea.
Singaporean investors do nothing and wait for the HK authorities to complete their investigations and the HK investors to settle with the banks there. I believe the HK authorities will be find evidence of wrongdoing on the part of the banks to force them to settle.

It is simply too embarassing for Singaporean investors to get any less than those in HK.....our govt has to something. Also, if there is wrongdoing found at the HK side, surely it will compel our own authorities to investigate and produce evidence that will help our investors.; October 29, 2008 1:31 PM
Anonymous said...: I would be prepared to part with S$5k to fight against one FI that sold HNs in the manner described by Mr Knight, provided he assures us that the total cost including appealing to high court will not exceed S$5k> mr. Knight should also address the issue of a counter-suit by the FI.
Could Mr. Knight respond please.; October 29, 2008 1:36 PM
Anonymous said...: This is 12.23

I forgot to add that apart from the FIs we may also consider taking legal action against HSBC the trustee for benigned dereliction of duty in not monitoring the deteriorating financial condition of the sole credit default swap party, not providing periodic valuations of the collateral, not conducting an independent assessment of the switched mortgaged property ( Minibond Series 1,2,&3 )but accepting prima facie the representations and warranties of the issuer that the substitute collateral is of the same "quality", possibly allowing a "married transaction"- the insurance premia paid to Minibond by LB without first determining if pricing was transparent as well as equitable. Note that such action may have to be under common law as contractually ( we won't know until we can sight the Trustee Agreement )they may have no obligation to do so. Also, this product is not covered under the regulations for unit trusts. This indeed is the crux of the issue and where MAS has been glaringly disappointing. Such products should not have been permitted to be mass marketed.; October 29, 2008 1:53 PM
Anonymous said...: To 1.31

This is 12.23 again

Wouldn't count on it! 2011 is still far away and 66.6%of Silliporeans have pecuniary amnesia. Besides, surely you must have noticed that the predilection to atone for mistakes and say sorry is not part of their makeup. Unless of course it's a honest mistake; October 29, 2008 2:04 PM
Anonymous said...: Can anyone land any insight on the bonuses and dividends the affected institutions would be handing out or have handed out in respective

if salary, allowances and commission structures are possible, that be better; October 29, 2008 2:18 PM
Anonymous said...: 12.23 again...

For those contemplating a class action suit and also for the DBS HN group meeting DBS senior management tom refer to attached for a ready reckoner of events which may support the case that the fox hunted with the hare: Incidentally, there may also be a slimmer case for those who invested in funds managed by wholly owned or management controlled AMs which invested in CDOs whilst their parent was busy extricating themselves from this sector. Slimmer because the AMs usually have autonomy of action and at least in their case the defence that it was a case of bad judgment is plausible. As they were not promoting CDO products or were they???

For professional investors only
At-a-glance guide: The changing face of the financial sector
20 October 2008
The past 18 months have seen some of the most dramatic changes witnessed in the financial sector for many years. We take a look at the most significant events and consider what is ahead for equity markets.26 June 2007Bear Stearns hedge fund bailed outUS investment bank Bear Stearns was forced to provide USD 1.6billion of new finances to bail out its High Grade Structured CreditFund after it ran into trouble due to rising subprime defaults. 9 August 2007BNP Paribas halts withdrawals from three ABS fundsFrench lender BNP Paribas was forced to suspend three funds investing in asset-backed securities as liquidity dried up in the credit markets. 14 September 2007Northern Rock deposits guaranteed by the UK governmentThe UK government said it would guarantee all of Northern Rock’sdeposits after investors rushed to withdraw their money from themortgage lender. Northern Rock, which was unable to finance itsday-to-day operations when credit market liquidity dried up, waseventually taken into public ownership in February 2008. 12 December 2007Fed announces creation of Term Auction FacilityWith the credit crisis worsening and year-end funding pressuresbuilding, the US Federal Reserve announced the creation of a temporary Term Auction Facility so that banks, starved of fundingfrom the credit markets, could obtain short-term funding direct from the central bank against a wide array of collateral. Central banks announce foreign exchange swap linesThe Fed agrees to temporary reciprocal currency arrangements (swap lines) to provide funds to the European Central Bank, the Bank of England and the central banks of Switzerland and Canadato help alleviate pressures in the credit markets.16 March 2008Bear Stearns acquired by JPMorgan ChaseAfter several days of speculation that it faced severe fundingproblems, Wall Street’s fifth-largest bank, Bear Stearns, was acquired by JPMorgan Chase. The takeover was engineered by theFederal Reserve, who backed the deal by funding USD 30 billion ofBear’s less liquid assets. 13 July 2008 IndyMac taken into public ownershipThe assets of California-based mortgage lender IndyMac Bank were seized by regulators amid concerns it may not be able to meetwithdrawal demands, after depositors took out more than USD 1.3billion in 11 days.7 September 2008Fannie Mae & Freddie Mac taken into conservatorship Fannie Mae and Freddie Mac, which between them own orguarantee around half of the USD 12 trillion US mortgage market,were taken into so-called “conservatorship” by the US government after concerns they were not adequately capitalised sent their shareprices plunging. 15 September 2008Lehman Brothers Holdings Inc. files for bankruptcy protection Lehman Brothers Holdings Inc. was forced to file for bankruptcyprotection after failing to find a buyer or gain protection fromthe
Federal Reserve. Lehman’s balance sheet became overstretched asa result of high levels of borrowing undertaken to hold complexsecurities based on the US housing market. Merrill Lynch acquired by Bank of AmericaMerrill Lynch was acquired by Bank of America for USD 50 billion.Merrill Lynch had written down more than USD 40 billion ofmortgage-related debt in the past year, and there were concerns itwould be the next institution to lose the confidence of investors andcreditors. 16 September 2008Reserve Fund “breaks the buck”The NAV of the USD 60 billion Reserve Primary Fund fell below the USD 1-per-share paid by investors –known as “breaking the buck” –because of losses on Lehman Brothers Holdings Inc. debt. The USTreasury announced on 19 September that it would insure moneymarket funds against losses for the next year to prevent a collapse ofconfidence in the sector. 17 September 2008AIG rescued by the Federal ReserveThe Federal Reserve announced a USD 85 billion rescue packagefor American International Group, Inc. (AIG), the largest USinsurance company. AIG was badly hit by the collapse of the UShousing market, resulting in rising levels of defaults on themortgages it insures.HBOS acquired by Lloyds TSBIn a deal engineered by the UK government, HBOS agreed to be acquired by Lloyds TSB for GBP 12.2 billion. HBOS, the UK’sbiggest mortgage lender, had found it increasingly difficult to securefunding as concerns mounted over its exposure to the weakening UKhousing market.18 September 2008Central banks pump liquidity into the marketGlobal central banks announced coordinated action to ease the funding crisis. The US Federal Reserve released USD 180 billion tocentral banks in the UK, Europe, Japan, Switzerland and Canada,which they were then able to make available in their own countries through short-term loans, cash auctions or other distribution mechanisms.19 September 2008US government proposes bail-out plan for banksUS treasury secretary Henry Paulson announced comprehensivemeasures designed to boost confidence in the financial system. The so-called Troubled Assets Relief Program (TARP), which was finallyapproved by Congress on 3 October following an initial rejectionon 29 September, allows the Treasury to buy up banks’ bad debts –restoring the health of their balance sheets. The TARP also gives the Treasury new powers to take stakes inbanks and allows the Federal Reserve to pay interest on the bankreserves it holds, giving it the scope to substantially expand itsbalance sheet. Regulators announce temporary short selling banRegulators in the UK, US and Europe announced temporary bans on the short selling of financial stocks, in response to concerns bank price falls had been exacerbated by short selling.; October 29, 2008 2:24 PM
Falcon said...: Does anyone know whether any judge in Singapore has also bought these toxic minibonds? This may help your case.; October 29, 2008 2:53 PM
Anonymous said...: I support law suit too. After losing 100K, I am willing to fight to get it back. Minimum the bank need to know I cannot be bullied this way.; October 29, 2008 3:12 PM
Anonymous said...: Govt should sue L.Bros. The ultimate Culprit of all.
Why let's victim waste another round of hard earn money and months and months of delay..torture...
God bless; October 29, 2008 3:28 PM
Anonymous said...: I support mr knight's suggestion to go on the proceedings based on one individual backed by the rest of us as a test case. no harm to cough out say another S$1000 or S$2000 since we are already risking the total loss of tens of thousand.
Mr. knight was well known as a white collar crime buster in the past with CAD. He has all the experience and knowledge in dealing with such cases. I believe has must have certain confidence in winning. I would like to join in this action if mr knight can gather enough people ensure no "cost overrun". Perhaps this could be one of mr knight's major case that could make history in our financial sector. Mr. knight could be taking a reputational risk for himself since he take the initiative to make the proposal. However, I think he will do his best to prove the return of the "Knight"!!; October 29, 2008 5:16 PM
Anonymous said...: I am also willing to pay a few thousands to seek justice too.; October 29, 2008 5:54 PM
Anonymous said...: I'm prepared to pay up to 2K to fight it out with the FI; October 29, 2008 8:08 PM
Anonymous said...: In HK, govt is helping to fund the victims to take legal action against the FIs.(The govt will inject capital into the consumer legal action funds if necessary).

In spore, the advice from the auth is not to take any legal action.; October 29, 2008 8:32 PM
symmetrix said...: Pls look at today’s Straits Times, There is a 1-pg article on what PM says about this debacle. He supports MAS position wholesale. Basically, MAS has not and will not vet such products in future. It appears that no organisation in sg is going to do this job of ascertaining the merits/demerits of CLS. The onus lies on the investor. I have written off sg banks for all financial activities, except for plain vanilla savings/FD a/c.

I am very sad at this state of affairs. AVA is doing a fine job of vetting food products/medicines etc before allowing them into sg. Why can’t MAS (or some other newly formed govt body) take on this role for financial products? Both are "health" products of sorts - one is for physical health, and the other is for financial health.

-VSL; October 29, 2008 8:59 PM
Anonymous said...: Yes, I'm in support.; October 29, 2008 9:15 PM
ph he said...: Mr knight,
A quick estimate means that we need around 60 investors per group to pay S$ 1,000 - S$ 2,000 to start a case. Is that right? Btw, who to sue - distributor, issuer etc? As we are aware, there are often a few distributors selling the same product.; October 29, 2008 9:35 PM
Anonymous said...: Don't really understand what Mr Knight means in para 6 when he says that if he loses the fees would on a scale basis (provided in the books).

Solicitor's professional fees for contested trial litigation are not 'provided in the books' nor are they in the form of a scale. The $40,000 mentioned is it Mr Knight's fees? Then it should be on an agreed basis or to be decided in what we call a taxation hearing between Mr Knight and his client.

If the $40,000 is what the losing client has to pay the bank's as legal fees again parties can agree on what the costs should be or else there would probably be a taxation hearing. It is not 'scale fees' or 'provided in the books'(unless we are talking of court hearing fees)

Further if there is an appeal from a District Court trial, the appeal hearing in the High Court, I believe will not be in chambers but will be an open court hearing.

Perhaps Mr Knight can clarify.; October 29, 2008 10:05 PM
Anonymous said...: Blogger Falcon said...

Does anyone know whether any judge in Singapore has also bought these toxic minibonds? This may help your case.

2:53 PM

Even if he or she does, he or she will very likely keep very very quiet.

the last thing he/she wants is to lose his/her investment, look silly AND then lose his/her professional respect from his community by heading the recovery charge ...ALL in one go.

Anonymous said...

I support law suit too. After losing 100K, I am willing to fight to get it back. Minimum the bank need to know I cannot be bullied this way.

3:12 PM

i think someone was more less rite, its the BACKBITE effect thats scary.

not only the initial sue party has to take the risk of digging into own pockets to fund a crusade, they actually have to a REALLY REALLY deep assessment what if they LOSE, and the other party might counterclaim, YET TO COUNTERSUE

a 5k upfront can later really tsunami into a pretty insane (possibly indefinited) sum once the donor adds his/her name to the primary sue invoked

do you really wan to open a pandora box

think twice. Heck think THRICE; October 29, 2008 10:20 PM
Anonymous said...: or just one lawyer capitalising on the situation to make some money

if you win, he wins

if you lose, he still wins

case of throwing in good money after the bad?; October 29, 2008 10:25 PM
Anonymous said...: Now even town councils are stuck with products linked to LB. Any one know what's their position? Are the town councils lodging complaints to the FIs too or they have admitted to buying such risky investment using public money?; October 29, 2008 10:42 PM
freeier said...: lets be frank, i respect glenn knight and am aware of his long respectful career, but in a real legal case its going to be extremely technical and in singapore there are just no lawyer technical enough to take up that role. dbs is going to hire queens counsel from hk or uk and that is going to add to the cost of the losing case..

lets be realistic.. fight on the right turf.; October 29, 2008 11:32 PM
Anonymous said...: To 10:42 pm

Don't think so. The chairman of the town councils has PHD. Do you think they will be sucessful?; October 30, 2008 1:28 AM
Anonymous said...: To anonymous 10:25pm

That is a very disrespectful and tasteless comment you made on the lawyer and was uncalled for.

Many other lawyers approached by TKL did not want to take up the case, why ? Because the banks are their customers and they want continued business with the banKdits to make their big fat dollars ! These lawyers are very mercenary ! They have fat pockets but no hearts.; October 30, 2008 1:58 AM
Anonymous said...: If MAS has not and will not vet such products in future, then their million dollar salaries should be reduced !! Why tax payers have to pay them for doing nothing ??? Might as well get a FT to do the same job at a fraction of their price !!

I agree with VSL (8:59PM) that we should just write off sg banks for all financial activities, except for plain vanilla savings/FD a/c !!; October 30, 2008 2:04 AM
Anonymous said...: If the town councils were genuinely mis-sold, they should lodge a complaint too since those funds are public money!; October 30, 2008 2:48 AM
Anonymous said...: Anonymous said...

Now even town councils are stuck with products linked to LB. Any one know what's their position? Are the town councils lodging complaints to the FIs too or they have admitted to buying such risky investment using public money?

10:42 PM

this is a HUGE BURN BIN

DO you think anyone is going to speak up, much less DECLARE, they are into this

tho i kinda bit doubt any public entity into this, they are very timid and usually stick with FDs strictly, even if theres a loss it should quite a very small, calculated risk fraction

even if theres some tussle, this is very likely a very very VERY private AND PROMPT settlement affair betw the agencies and the institutions involved, probably only 2 pax per affected organization will ever be involved, the Chair and his/her Treasurer..who do u think will hold a public press conference on this; October 30, 2008 3:49 AM
Anonymous said...: For those who bought from the brokerages, may be class action is possible? Since all responded to misleading advertisement and there is no selling process?; October 30, 2008 11:34 AM
Anonymous said...: Can we ask the government to help us to sue them?
Can we ask public prosecutor to represent us?
Can we ask the authorities for legal aid?

The rest of world's authorities and watchdogs are helping their people as this product is designed to cheat. They way they sell and their intended targets are also criminal. Everyone can see it except our MAS.

Amazingly there are still some brained-washed locals, banks shareholder, RMs and apple-polishers going around shouting "GREED, high returns, buyers beware".
All blindly support the men in white but never do any research and never bother to understand the whole process from inception, to sales process to the opening of the can of worms upon the product collapse.
All these are wrong.

Like what our authorities and banks who borrow these words from Mr Tan. "We must DO the right things". Please "DO" and not talk only.

Stanley; October 31, 2008 5:53 PM

Wednesday, October 29, 2008

Collective legal action (1)

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