Many people invested a large sum of money, or their life savings, in the credit linked securities, in the mistaken belief that these securities have low risk and are safe. These securities include the Lehman Minibonds, DBS High Notes, Morgan Stanley Pinnacle Notes and Merill Lynch Jubilee Notes.
These investors lost a large part or all of their investments due to the financial crisis. They were shocked that these structured products had high risk, which they were not properly informed.
I suggest that the Government to investigate if there were any wrong-doing on the part of the financial institutions that created or marketed these structured products.
These wrong doings could be in the form of negligence, dishonesty or fraud.
2. Potential wrong-doings
I suggest that the Government should appoint competent people to look into the following areas:
2.1 Were the products created with the aim of defrauding the investing public? Were the drafting of the prospectus, advertisements and other documents carried out with the intent of hiding the true facts from the investing public?
2.2 Were the financial institutions that marketed the product aware about the real risks of the products? Did they train their front line advisers to hide the true facts? Were they negligent in not understanding the true risk? Did they monitor the conduct of their front line advisers to ensure that the products are sold to the right people, based on their risk profile and preference?
2.3 What were the actual charges taken out of the structured products to pay the distributor and the product creator? Were these charges disclosed in the prospectus? Were the charges at a reasonable level, in comparison with the work that has to be done and the risk taken by the parties?
2.4 Were there conflicts of interest involved in the transactions between the various parties? Were the conflicts of interest adequately disclosed? Were the decisions on the pricing of the products made fairly in the interest of the investors? Was there any arrangement to ensure that the pricing is made based on fair market values?
2.5 Does this arrangement fall under certain laws, such as the Trust Act or more specific laws? Was there any breach of any of the provisions of these laws?
2.6 Does the fund manager break any law, if it takes out money from the structured product that are not authorised by the trust deed?
2.7 Were the financial institutions acting in a negligent or irresponsible manner when they continued to market the structured products after the mortgage market crisis unfolded in the summer of 2007?
2.8 Is there a case of misrepresentation when the financial institutions marketed these products as capital protected or capital guaranteed or as “minibonds” when they were not bonds?
3. Call for action
I hope that the Government look into these areas, to see if there were any wrong doing that led to such large losses among the investing public.
If there were wrong doing, the Government can take the appropriate action to bring the offenders to Court and to seek suitable compensation for the losses suffered by the investors.
I hope that the Government can play an active role to minimise the losses of the investors and ensure that the underlying securities are NOT un-wound at fire sale prices.
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09/28 - 10/05
- Greed and exploitation
- How to play Pro-Trader
- Pro-Trader Simulation Game
- In honour of J B Jeyaretnam
- Talk at NUS on 17 Oct 2008
- Minibond in Hong Kong
- Capital protection is not "capital guaranteed"
- Review internal complaints handling and resolution...
- Securities and Futures Act
- Petition to Singapore Government
- Not to be retailed in USA
- Petition to Singapore Government
- Banks deny refund deals for minibond investors
- Question for Member of Parliament
- Immense pressure to sell the structured products
- Meet your Members of Parliament
- Send feedback to NTUC Income
- Proposed Commission on Life Insurance Products
- Posting comments in my blog
- Failure to observe the risk assessment
- Ask your Member of Parliament
- Avoid going to court
- Merill Lynch Jubilee 3
- People to be blamed
- Loss of life savings
- Stop pushing financial products
- Hong Kong helping distressed people
- High commission and profits
- High risk investments
- Compensation to affected investors
- MAS announcements
- For defensive investors
- Hong Kong Government Meets Banks Accused Of Mis-se...
- Loss of hard earned money (2)
- In memory of Mr. J B Jeyaretnam
- Investigation into potential wrong-doings by finan...
- ANZ pays out $200,000 to elderly investor
- NTUC Income Money Market Fund (Flexi-cash)
- European Central Bank - an excellent approach
- Signing of Pettion
- Pressure on sales representatives to market certai...
- Fixed deposit with Singapore banks
- Saved by sound advice
- Pinnacle Series 11
- Tribute to Mr. J B Jeyaretnam
- Minibond Series 5
- Bank staff do not understand financial products
- HSBC Trustee
- High Notes 2
- Comments in my blog
- False Signatures at the Petition
- Mr. J B Jeyaretnam
- Complaint of mis-selling by bank
- FAQ on Minibonds
- Good and bad insurance products
- File a Police report
- Prospectus is too complicated
- Why did the banks continue to sell these products?...
- Loss of life savings
- Goh Chok Tong's comments on minibonds, high notes
- Credit Linked Securities - Wrong doings?
- Taiwan senator requests bank to buy back Minibond
- Diary of a Singapore mind - article on structured ...
- Article: Corruption in financial sector is the kil...
- Experience of investor (3)
- Template: Letter to Member of Parliament
- Investor contemplate legal action
- Sent to 940 Investors in Credit Linked Securities
- Will MAS help the investors?
- Hope for investors in Lehman Minibonds ?
- Unfair exchange rate
- Experience of investor (2)
- Focus list of investors
- Opinion of an investor
- Purpose of Petition
- What is a fair compensation for mis-selling?
- Template: Letter to financial institution (distrib...
- My blog will hit 500,000 visitors by 5 Oct 2008
- Action to be taken on CLS
- Negligent or dishonest acts
- Unable to give individual advice
- Call for volunteers - action on credit link securi...
- Fixed deposits are safe
- Experience of investor (1)
- Sales Materials and Prospectus
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