Tan Kin Lian's Blog: High risk is not disclosed in Prospectus

Saturday, November 15, 2008

High risk is not disclosed in Prospectus

Dear Mr Tan,

I am one of the Pinncle Note investors. As I am working in a Financial Institution, I can't be considered as a vunerable group. But honestly, I am not aware of the extremely high level of risk associated with such notes. The risk of default is way beyond the basket of blue-chip reference entities.

I received a letter from the bank that I bought the note, together with a letter from Pinncle Performance Limited informing that credit rating assigned by Fitch has been downgraded to "B-" (Rating Watch: Negative) due to the credit events occured in respect of Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf.

When I bought the note, I was told that the note is credit-linked to these reference entities: Standard Chartered bank, HSBC Bank PLC, Bank of China Limited, The Korea Development Bank, Malayan Banking Berhard, DBS Bank, United Overseas Bank Ltd.

I am really surprised to see Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf. appearing on the letter.

I looked through the Base Prospectus of the notes dated 7 Aug 2006 and I can't find the above toxic entities mentioned.

Is this sufficient ground to argue that the arranger or the FI has misold the product or have not fully disclosed the details of this products? Not sure how many other such toxic entities are associated with the notes. I would certainly have thought twice if the risk is beyond the 7 blue-chip banks as mentioned in the brochure.

REPLY

I believe that you have sufficient grounds. I suggest that you prepare a statutory declaration to support your complaint. Read the instructions in my blog:

http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html http://tankinlian.blogspot.com/2008/10/affidavit-statement-made-under-oath.html http://tankinlian.blogspot.com/2008/10/individual-advice.html

5 comments:

Anonymous said...: Pray ask, why did you NOT raise your claim on Day 2 after you bought your egg, or even Day 30, Day 100

Why do you raise your claim now that the egg turn out to be rotten?

Do you have any records of any sort feedback or complaint raised, however mild or mellowed, BEFORE the egg was reported to be rotten

Do you; November 15, 2008 8:58 PM
Anonymous said...: Likewise, my non-English-speaking, primary-school-educated, ~70 year old mother was deceived into buying a ~$100K PN10 investment when this Wealth Manager fooled her with claims that (1) PN10 is the most suitable low-risk product for a person with a conservative profile, (2) performance of the product is based solely on 6 strong blue-chips like SIA, Singtel, Keppel etc. and (3) the worst case senario is that she will only lose 5% of her Principal.

Can a Wealth Manager be so ignorant that he doesn't know the facts behind the 3 points mentioned above?

If not, then it can only be a conscious & intentional attempt to cheat others of their money.

Its criminal!; November 16, 2008 6:45 AM
Anonymous said...: 8:58 PM,

People did not complain as they were unaware the product is of such nature until it suddenly becomes zero, then the true product nature/risk starts to surface. I only learnt Minibond's true nature from the newspaper writeup and the truth is exactly opposite what was presented to me at sale.

Even an insurance product I bought 3 years ago, now insurance company send a letter to inform the value very low due to defaults of the underlying assets - even insurance products are of same toxic nature with exposure that were not explained upfront.

I hope you do not one day found yourself affected by these first-to-default/swapping/underlying assets craps that were hidden from you during sale. Meantime, stop rubbing salt; November 16, 2008 8:39 AM
Anonymous said...: People didn't complain not because they were 'gaining' but because the promise made by the product's distributors was fulfilled! There were also no alarms sounded for anyone to make an early exit.We, the victims, are now accused of crying foul only when we incur losses but sadly, our fault was being too trusting!If we were misled/misinformed by even a reputable institution, then what is the use of having laws and regulations? Might as well allow the neighbourhood shops to sell financial products!; November 16, 2008 10:21 AM
Anonymous said...: I ask a general question, any one can answer

Did ANYONE ever file any sort of a Complaint or a simple Feedback upon or after signing Purchase Agreement

Even the simplest of memo or email or phone call will do.

Did ANYONE do so

Ok for me personally and thats just me, I am willing to go as far as to accept, Did Anyone even ever entertain the thought to do so.

Nope, NOT after any bad news are ever close to be reported. Before.

Fair enough?; November 17, 2008 1:02 AM