Tan Kin Lian's Blog: Pinnacle Notes - lodge a complaint now

Sunday, October 26, 2008

Pinnacle Notes - lodge a complaint now

Dear Mr. Tan,
I met the RM of my bank and asked about the Pinnacle Notes. The RM said that there is no problem with the Pinnacle Notes now, and if the reference entity does not "credit event", I will be able to get back 100% of my invested sum.

I asked about the price of the Pinnacle Notes now, but the RM said that I should sell but wait until maturity to get back 100%. Is this correct?

REPLY
You should ask the relationship manager to put the assurance in writing that 100% of the invested sum will be paid back on the maturity date, if there is no credit event involving any of the reference entities.

It is better for you to lodge a complaint now about mis-selling, as the price of the Pinnacle Notes have dropped significantly and you these notes may default before the maturity date. Even if there is no default, you may get less than 100%.

18 comments:

Anonymous said...: It is not enough for the RM to put it in writing, the company(CEO) may still dispute it, get the company to get signature from the CEO to confirm their promise.

HS; October 26, 2008 12:13 PM
Anonymous said...: The RM of X Finance Co enticed me to buy $10,000 worth of Pinnacle Notes Series 6 when I renewed my FD last year. He told me that I could get back 100% of the principal upon maturity in 5 years time when there is no credit event with the 6 reference entities. I will get 5.2% interest yearly. At that time, I do not understand what is a credit event. (I understand it now and paid a heavy price for it) Anyway, I bought the product attracted by the higher interest rate compared to fixed deposit.

I made an enquiry from the same RM on how much will I get back if I terminate the Pinnacle Notes now. I was shocked to hear that only 5% left even though there is no credit event now. I lost $9,500overnight. How could it be? The RM could not give me a satisfactory reply. I do not know what to do now. I am completely lost.

Just retired and below 62.; October 26, 2008 2:19 PM
Anonymous said...: Anony 2:19pm
It is scary.
If the money is invested in good quality securities, how can the value be so low now?
Something is not right? Who could explain this?; October 26, 2008 4:32 PM
Anonymous said...: 4:32PM,
The answer is simple - the money WAS NOT invested in good quality securities but some junk that are quite worthless now; October 26, 2008 8:01 PM
Anonymous said...: So how are these bank scam different from those time-sharing hotel scheme ?; October 26, 2008 9:17 PM
Anonymous said...: I rememebred when I first bought minibond, the "adviser" kept telling me that the money would be invested in "AA" rated securities. So can it be considered as a form of mis-representation or mis-selling? Thanks.; October 26, 2008 10:57 PM
Anonymous said...: "'''''Anyway, I bought the product attracted by the higher interest rate compared to fixed deposit...." it is right that the 5% interest is higher than that of FD. However, please take note that a safe bond offers about 4 to 5% interest rate with low risk. Eg. HDB bond. For this structured product, it should command 12 to 15% high return with such a high risk in it (Loss of entire capital upon Occurrence of credit event in issuer, REs & CDO basket). Only part of the return (a mere 5% interest rate is rewarded to retail investor).
It is same as Mindbonds, DBS HNs & ML Jubilee 3, the misrepresentation by the RA has been established and the breach of FAA is a forgone conclusion.
What actually confuse me is that the RAs to date still insist that the investor can get back 100% capital at the time of maturity if there is no credit events.

Can other Pinnacle Notes holders confirm with their RAs on this area.
Tks!; October 26, 2008 10:59 PM
Anonymous said...: this incident reminds me

those that were conned, were denied being conned

those that were worried about being conned, ARE BEING CONNED that they wont be

this fiasco is much wider reaching than it looks; October 26, 2008 11:41 PM
Anonymous said...: Mr. Tan ,
I have minibond $100k, Pinnacle $100k, If i make complaint now and if end up settle at FIDREC , the maximum claim back is $50k out of $200k. of cause I still have the right to go further by taking legal action. It is not worthwhile as the cost is VERY HIGH and I may not win the case.

Mr.Tan is it the right way to do now to just complaint about MINI bond first . Lodge compalint for Pinnacle later when there is a need , after all ,I still receive interest from Pinnicle.

I beleive some investors may have the same situation; October 27, 2008 5:09 AM
Anonymous said...: Many ctitics include the reporters attribute the mindbonds debacle to 'GREED' and many of them bother to write about the GREED the main cause of the predicament the retail investors are in at present even without any knowledge what a stuctured product is but could not bother to ask if they would misled the readers at large.
Saving acc interst rate has been for long time at a low 0.25 - 0.50% but FD interest rate varies in a much wider range from 3% in 2006 to now at about 1%. These are really super SAFE investment! Even when US Fed rate moved up to 4-5% our saving acc interest rate was at a very very low 0.25 to 0.75%. The bonds which are regarded as SAFE investment are generally at 4%. Eg HDB bond. In ecomomy context, if U want money to be both very safe and liquid, U put your money in the saving acc with the banks. If U can afford not to touch the money for a period of time, we put your money in the safe FD and safe Bonds for higher return than in saving acc. This is in economy text "Opportunity Cost". Any financial planning advice will ask you to go along that path. So it has never been "GREED" that the retail investors are so badly accused of .

Follw the Golden rule that Low risk means Low return and high risk is rewarded with high return, a strucured product which is attached with the enormously high risk should easily command a high return of 12 to 15% offers a low 5% coupon rate to the retail investors. Hi, guys, firstly, where are the other 7 to 10% return? Why the retail investor's return is only 5% which really suggests that it is a SAFE Bond? Or is it deliberate to mislead the investor to believe that it is a safe bond particularly for the éducated' category. So GREED or CHEAT, those who wrote so much about GREED care to comment?

Surely there are more, Dy Chairman of MAS answered to MPs quearies said that the features and high risk status of the product should have been highlighted by the issuer & the distributor under the S & F A & FAA in order for a retail investor to make an informed Decision.....

I have even thought of a case of MISTAKE that the law permits to contract to rescind, but Lawyer told me that there is no such thing and in effect it goes to misrepresentation, miselling and the like.; October 27, 2008 11:08 AM
Anonymous said...: An article written by Zaobao reporter,许丽卿,
(title:贪婪好？published on 26Oct).
".... 对于每三几个月就往银行办理定期存款更新手续的我来说，面对银行柜台小姐游说购买投资产品早已司空见惯，她们从不放过任何一个推销机会，我也从没心软而被说服。不为所动，是因为我从不相信衍生产品适合散户投资者。所以，银行职员将复杂的衍生产品卖给六七十岁的老人或连什么叫投资和衍生产品都搞不懂的低教育者，很不可思议.....

巴菲特都说了，如果要了解债务抵押债券（CDO），需要阅读1万5000字的材料，一个CDO方阵则需要阅读高达75万字的材料才能理解。所以，银行柜台小姐将雷曼迷你债券当一般债券来卖给散户，我一点也不奇怪...."

Negligence - MAS?
GREED - Issuers? FIs? Notes holders?

Why only the notes holders are conferred the 'GREED' animals.

*****Sigh**I was so disappointed by the reports on the 'Greedy note holders' and lost the confidence in the duty of the reporters to report the FACT until I read 许丽卿 's article.; October 27, 2008 3:56 PM
Anonymous said...: Specifically for Pinnacle Notes Holders:

(1) Drastic drop in value

Pinnacle Series 1 Bid Side Valuation (including Accrued Interest on the Notes)
Tranche A: USD [ISIN: SG7I68931443] 7.38%
Tranche B: SGD [ISIN: SG7I69931459] 7.28%
Pinnacle Series 2 Bid Side Valuation (including Accrued Interest on the Notes)
Tranche A: USD [ISIN: SG7J65932211] 8.48%
Tranche B: SGD [ISIN: SG7J66932228] 8.96%
Pinnacle Series 3 Bid Side Valuation (including Accrued Interest on the Notes)
Tranche A: USD [ISIN: SG7L20933433] 17.09%
Tranche B: SGD [ISIN: SG7L19933428] 16.85%
Pinnacle Series 5 Bid Side Valuation (including Accrued Interest on the Notes)
Tranche A: USD [ISIN: SG7M03934316] 15.45%
Tranche B: SGD [ISIN: SG7M04934323] 15.47%
Pinnacle Series 6 Bid Side Valuation (including Accrued Interest on the Notes)
Tranche A: USD [ISIN: SG7M05934330] 9.94%
Tranche B: SGD [ISIN: SG7M06934347] 7.98%
Pinnacle Series 7 Bid Side Valuation (including Accrued Interest on the Notes)
Tranche A: USD [ISIN: SG7N95936343] 9.61%
Tranche B: SGD [ISIN: SG7N96936359] 8.29%
Pinnacle Series 12 Bid Side Valuation (including Accrued Interest on the Notes)
Tranche A: USD [ISIN: SG7R24940511] 70.26%
Tranche B: SGD [ISIN: SG7R26940543] 69.38%
Pinnacle Series 15 Bid Side Valuation (including Accrued Interest on the Notes)
SGD [ISIN: SG7R60940763] 73.95%
Pinnacle Series 16 Bid Side Valuation (including Accrued Interest on the Notes)
SGD [ISIN: SG7R61940770 ] 68.74%

(2)Though have not defaulted yet, the investors will still face the following risks prior to the maturity date:

a) Risk that any of the reference entity may default (similar to the Lehman Brother situation)
b) Risk that the underlying assets may defaults (refer to DBS HN2)
c) Risk that the swap counterparty may default (Morgan Stanley)

All these risks remain quite high, under the current global financial crisis

Mine is Pinnacle Series 7 and in (a) the 6 REs DBS,UOB,OCBC,SingTel,BAC & CityGp; and (c) Swap counterparty Morgan Stanley in both credit default swap & Equity Option - there is an equity option element in this series for a potential Equity Bonus Coupon HAVE NOT DEFAULTED;
but in (b) The underlying assets include a vital CDOs basket consists of 125 Co's CDOs. One of which is Lehman Bro and was told not able to recover the loss. In the list there are Fannie Mae, Freddie Mac, Washington Mutual and The Bear Sterns and I was told that if 9 CDOs were to default it would trigger to credit event.

As at 24 Oct 08, I was told that if the situation at the maturity remains as the same, I shall get back 100% (Though I was also told that the CDO basket includes some Iceland banks which are now in big troubles).
The FI's FA/RM & hotline I called to equire STILL HOLD the VIEW that I could get back 100% captital at maturity if the situation remains as the same. I AM CONFUSED and I DON'T WANT TO BE MISLED ONCE MORE. Can U the notes holders check with your respective FI to confirm.

(3)The CDO Basket has already been downgraded to Grade B and it appears to be in the same situation as DBS HN2 in that DBS's statement warn the investor that an early redemption of the notes may occur if the collateral becomes insufficient to secure the obligations of constellation under the notes. DBS HN2's value has dropped to 12% of the capital investment (refer to http://www.dbs.com.sg/dbsgroup/announcements/20081003HN2_FAQ.pdf).; October 29, 2008 10:30 AM
Anonymous said...: According to UOB Bank, Pinnacle 7 was worth only 5% of the initial investment, as at 24 Oct - more defaults likely to occur! As end September, it was still valued at over 40% of capital investment!!! What a disaster over the last 3 weeks!!!; October 29, 2008 10:34 PM
Anonymous said...: Mr Tan

I am a Pinnacle notes investor and after reading your blog, I would like to consult your opinion on the following, sir:-

The FI told me that there is a basket of CDO and should the number of default be more than the minimum threshold value, it will be consider a Credit Event. The number of defaults allowed depends on the Recovering Rate

The above information given to me is only now when I asked futher regarding CDO basket. During the sales process, the focus of the risk is on the Reference Entities told to me and nothing else on these CDOs basket. I was also told that the CDOs basket is not firmed until the notes is launched.

My question is does this considered a mis-selling case? My final decision of buying Pinnacle notes depends on the known risk exposure to me, which is the Referential Entities and not the CDOs basket.

Thank you for your time and knid attention, sir.

Regards
J Chan; November 02, 2008 11:08 PM
Anonymous said...: I m very very shocked !!

I bought into Pinnacle Notes Series 1 in 2006 through a local distributor bank after seeing its ADs, brochures and also through advise from the bank staff… They told me that Pinnacle Notes Series 1 was linked to the performance of 7 major Asian bonds but never told me about it being linked to CDOs… 2 days’ ago, they forward a letter stating that it is “self-explanatory”. The letter was attached with another letter from Pinnacle Performance Ltd addressed to the distributor local banks but not directly to me. Nevetheless, the contents of the letter was totally “greek” to me!!!

Only through my phone contact with the branch manager that I came to know that the product is linked to the CDOs and 5 “credit events” (what that meant?!) had taken place. Also, the “value” of my investment has dropped to 2% !!! Over the last 2 years, I was never once given information on the status of my investment with Pinnacle Notes…

My questions now :

1. Is this how foreign banks are allowed to “re-package” their products with fantasy offerings and make false claims to entice their customers to buy into the false claims ??!?

2. Isn’t this criminal ?

3. Can anybody comment on my recourse ?; November 14, 2008 12:01 PM
Anonymous said...: How do i lodge a complaint and to who? MAS or the bank that sold me the Pinnacle Note?; November 14, 2008 4:03 PM
Anonymous said...: My mum is a chinese-educated victim above 65 yrs old. She, like many others, were duped into buying PN 6 by the RM with empty promises of "guaranteed" and "stable" when she went to the bank to renew her FD. Her total amount cheated was $100k.
We followed the recommendations given by this website and KL Tan, wrote a letter of complaint of mis-selling, and after a gruelling wait for 1 year, 2 interviews, sleepless nights, the FI only offered my mum 50% compensation. 50% of the PN6 they force us to keep. If we don't accept their offer out of their so-called "goodwill", and go to FIDREC or the courts, this offer won't be open anymore. So basically, they have played a game such that the compensation offered is quite "attractive" but it still makes us feel very pinched and punished for their crimes.

As the FIDREC is only in jurisdiction of amounts $50k and below, I am hoping people (or similar victims) who read this forum can give me some advice.
1. This is retirement money for my mother. She cannot read English, signed the forms without even bringing her reading glasses. I don't know how strong is her case, but the S.O.B RM told her that this is just like FD with a longer tenure. She was completely and innocently duped into buying this crap.
2. Did FIDREC ever help any of you investors obtain a claim greater than $50k or >50%?
3. Is this FIDREC just some other scam by the frakking PAP to show that they are sort of "upholding" the law, helping the victims, yet in fact it is just another puppet organization who is out to pocket some money from the FIs, protect FIs, waste the small investors' time, and cheat their hard-earned money?
4. Has any of the class action suits been successful? How much money do we need to spend to engage a lawyer? Estimated costs if we lose?
5. How likely is PN6 going to enter a mandatory redemption? What is the redemption value for the rest of the PN that have gone through a mandatory redemption?
6. What is the rate of compensation for most victims? Did anyone receive compensation > $50k before? Could everyone share?
7. Do you think we should just accept their offer and let the matter close?; February 22, 2010 3:03 PM
Anonymous said...: So Feb 22, 2010 did you accept their offer. PN 6 has already gone bust and is worthless; May 25, 2010 2:17 PM

Sunday, October 26, 2008

Pinnacle Notes - lodge a complaint now

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