Tan Kin Lian's Blog: Keep sadness and hatred to themselves

Tuesday, November 04, 2008

Keep sadness and hatred to themselves

Dear Mr. Tan,

I refer to the plight of a small group of investors who uses their CPF funds, namely the SRS retirement fund, to purchase Lehman Brothers minibonds.

I am sure many of these investors were literate in stocks but not sophisticated
enough to understand the instruments used in a complex structure like minibonds especially back in early 2006. In those days when subprime and CDO problems have not surfaced, only Lehman Brothers and maybe the distributors knew how good a product Minibonds are.

And i know several of these investors keeping the sadness and hatred to themselves. Maybe they were literate and they believed in the brochure and had not read further. Some i heard are government servants and they dont want to voice their feelings. I wonder why citizens in First World countries should hide their feelings.

Back in the early launch of the minibonds I and II, retirement funds were allowed to be invested. Shortly thereafter all later series of minibonds were not
allowed to be invested with retirement funds.

Most of these investors receive mailers (like that attached) from the distributors in their letter box. Some of them receive it month after month . Looking at the brochure itself you can tell the strong powerful entities are in bold. The small prints if there is, will refer you to refer somewhere else (you got to get) from the distributors where they will elaborate on the "junk" CDO. The brochure also shows the investor sitting safely on the shoulder of a strong gaint. Isnt all these misleading.

One investor told me, after looking at the quality of the reference entities of the brochure and since he has not invested in bonds before(when most of his investments are in risker stocks), he decided to use his long term old age retirement funds (SRS) to buy some safe bonds. Yes altho he did this all on his own accord but knowing SRS is allowed for minibonds , he was more confident of the product and immediately sign up to purchase the bonds. His intention and objective of using retirement funds are definitely safe and security and long term.

This is definetely not appropriate to allow retirement SRS funds to be invested in something unsafe that can have $0 value. Something totally not right to call quality bonds when they are not bonds at all . A brochure that shows you sitting on the shoulder of a safe strong gaint. That is all totally misleading.

I think a caring government ought to debate on whether this group of investors who are educated but prefered something safe with retirement funds but was misled by the brochure and have kept quiet because they are afraid the government is not happy if they were to voice their opinion. I think we should ask why retirement funds was allowed for bonds I and II and why they were removed for subsequent minibonds and who should bear this responsibility.

Miss W

26 comments:

Anonymous said...: One investors told me that for those that invested 5 or 10k, they gave up.; November 04, 2008 10:26 PM
Unknown said...: That is true. The fight is long and hard. The FIs have unlimited resources. The documentation had been worded to protect the FIs. It is so clear that many small investors have been deceived by attractive and misleading brochures. But our authorities keeping totally silent when securities firms told investors that they didn't sell them the products and are not obliged to comply with FAA. Now only those who have lost huge sums or very well-educated are still fighting.

Abandoned and betrayed; November 05, 2008 12:43 AM
bsd said...: MAS should stand up to take leadership over this fiasco.. before the general public loses more trust and confidence in our banks; November 05, 2008 3:36 AM
Unknown said...: Miss W,
Very well said. Exactly the same reason why many did not show up in Hong Lim Park, why many did not sign the Petitions, why many did not send in the complaint, etc.

Why, because they are very, very sad.

Why, because they have already lost precious, hard-earned, life-savings.

Why, because, after losing their precious savings, they do not want to lose their jobs, if they are working in the government service, government-linked companies, stat boards, the military, even the banks and FIs !!!

Why, because unkind, uncaring commentators in mainstream media are deriding the victims, without disclosing their own vested interests.

Why, because victims feel betrayed and abandoned by authorities who are hell-bent on protecting the wrong-doers.

BUT, you can be sure that these victims are very, very angry and will NOT forget. They have not lost $10, $100, or even $1,000. They have lost TENS of THOUSANDS.; November 05, 2008 5:29 AM
Unknown said...: Abandoned and betrayed, maybe.

But Learned, definitely.; November 05, 2008 10:23 AM
GOHCT said...: Lucky, we have Mr. Tan here to help else will be even worse.

In US state regulators have Ordered Merrill Lynch, Goldman Sachs and Deutsche Bank buy back at least $12.5 billion in auction-rate securities and pay $162.5 million in fines as part of separate settlements. In Tawian and HK too.

Where over here the World Class Island, where we called a Home. Only Mr. Tan take the risk and working very hard to help those poor 10,000 Lehman Investors.

Not sure why those smart talents always react damm slow.; November 05, 2008 10:56 AM
Anonymous said...: "Back in the early launch of the minibonds I and II, retirement funds were allowed to be invested. Shortly thereafter all later series of minibonds were not
allowed to be invested with retirement funds."

In my own opinion our first-line Guard MAS should have been follow CPF board action to stop this type of very risky products that come with a lot of series from selling to "middle age uncle and untie" in the Bank. Who has the duties to stop the Internaltional Financial Heckers (IFH) from attacking our national reserved?

This time they targeted our middle agae depositors. God knows everything up there.

Goh; November 05, 2008 11:33 AM
Anonymous said...: Seems like HK is always a step ahead of Singapore where DBS still HAVE NOT processed all the investors' complaints yet !

Holders of all Lehman Brothers minibonds with remaining value can expect to get their money by January under a buy-back proposal approved by a bank taskforce last month.

Meanwhile, two minibond investors have received refunds from Bank of China (Hong Kong), TVB (SEHK: 0511) reported last night, becoming the first minibond settlements by a bank since Lehman collapsed in September.

One of the investors did not say how much money was involved, but expressed gratitude to the bank.

Lawmaker Chan Kam-lam, of the Democratic Alliance for the Betterment and Progress of Hong Kong, who helped the investors, said the buy-back was a special arrangement by the bank, made before the minibond values were calculated, after considering the investors’ experience and financial backgrounds.; November 05, 2008 11:57 AM
Anonymous said...: The extent of the fallout of the collapsed Lehman Brothers Structured Investment products have yet to unfold completely.

The strong suspicions are that:
1. Extremely wealthy & influential people including Indonesians/Malaysian politicians may have their hands burnt!
2. Higher level govt people (Supersalary scale civil servants) may have also got burnt.
3. Possibly some Ministers may have also bought these products.
4. HDB Town Councils have also have been burnt.

We have an extremely high profile private banking & wealth management centre in Singapore.
---------------------
The reasons are simple:-
If UBS are being sued by wealthy individuals in the US for recommending Lehman products - why do you think it would not be the same for UBS Singapore - one of the biggest private bankers here?

DBS being the govt bank would have aggressively sold Lehman products to their priority banking clientele which would include high level civil servants & govt ministers. May even have some MAS civil servants!

The public service sector have been very flushed with cash with high payouts - bonuses and salary increments the last few years. Being conservative, they have very little outlet to invest.

The irony here is that the govt by paying themselves way above private sector - have exposed themselves to Lehman's higher yield scam. Whereas we, in the private sector, are so cash strapped that we don't even have surplus cash to invest!

Why Singapore's private banking & wealth management sector can thrive so well is due to being surrounded by extremely corrupt countries. The monies inflow to Singapore is one of the reasons why Sing $ is one of the world's strongest currency & why it is pursuing 2 casino/integrated projects.

The amount of money in private banking & wealth management in Singapore would exceed the S$500m claimed to be lost by retail investors. It won't be wrong to presume that the amounts invested in Lehman products by rich foreign individuals would be around billions.

The recent rule changes to HDB Town Councils investment may have even allowed them to buy Lehman products.; November 05, 2008 12:24 PM
Anonymous said...: If not for the miserable fixed deposit rates, this tragedy involving so many may not have happened.

Singapore has the 2nd lowest interest rates for deposits in the world, after Japan. Wonder why this is so. Maybe someone may care to comment.; November 05, 2008 12:46 PM
Anonymous said...: 'I walked in with my eyes open'

By Gracia Chiang

Mr W. Lai, who owns an IT education business, is one of the 10,000 people who had their fingers burnt by investing in a Lehman Brothers-linked structured product.

But he is not making a formal complaint to the financial institution which sold it to him.

Unlike the hundreds who have come forward to insist that they were mis-sold products like Lehman Minibonds and DBS High Notes5, he has 'never thought of joining the others in lodging a complaint'.

Mr Lai, 25, sank $50,000 into Minibonds.

The money, he said, represents 'no more than a couple of per cent' of his entire investment portfolio.

More to the point, he accepts responsibility for any loss he suffers.

'In my case I don't think there was mis-selling,' he said.

'I read through everything in the prospectus and I didn't just rely on the bankers. However, no one could have thought that Lehman would collapse as it had a pretty good credit rating.'

He conceded that there were probably genuine cases in which products were mis-sold, especially to those who had a low-risk profile.

However, he said, investors 'have a responsibility to read everything and not just sign'.

For now, he is holding on to the hope that there will be a new swap counterparty to replace Lehman in the Minibond programme. If this goes through, it is likely that Minibond holders will get back more from their investments at maturity than if they had been forced to cash out now.

Like Mr Lai, a handful of investors that The Sunday Times managed to track down said they had walked into the deals with their eyes open.

A human resources manager in her late 50s is staring at losses of up to $200,000 but is also not lodging a complaint.

She bought $100,000 worth of Lehman Minibonds in July last year based on a recommendation from a relationship manager. She also bought $100,000 of DBS High Notes5, after a friend told her to buy them.

'I blame my friend, but then he also lost money,' she said.

She is not complaining about mis-selling because 'I walked in with my eyes open'.

'At DBS, the relationship manager did tell me that the only time I could lose my money was if there was a credit event, but he also said that all the banks listed were rated AA. But I didn't quite realise that I could lose all my money.

'This is partially my fault. I can read but I didn't read. I knew I might lose some money, but who can predict these things? When we have decided to invest this sum over here and another sum over there, we don't really read the documentation. The decision is made within two seconds.'

As to how she felt about losing her money, she said: 'I know it's painful but I didn't really lose any sleep over it. If you think too much about it, you will feel worse. So be it.

'If I were so upset, I would go and fight like everyone else, but it would take up so much of my time and energy.'

Another investor, Ms Joyce Lou, 40, has also decided that taking out a complaint is not worth the effort.

The financial adviser has $5,000 in Minibonds and $5,000 in Pinnacle Notes, another product which has plunged in value.

'I think everyone should be responsible for his own money. I admit, I should have found out more,' she said.

She added that her profession would also work against any claims of mis-selling.

According to the latest figures from the Monetary Authority of Singapore, one out of every four investors who bought a financial product linked to Lehman Brothers has lodged a formal complaint of mis-selling.

DBS Bank, for example, has received around 450 to 500 complaints of mis-selling. About 1,400 people here invested over $103million in its High Notes5.

But Mr David Gerald, president of the Securities Investors Association of Singapore, warns against jumping to the conclusion that the majority of investors are not bothered by the loss.

'There may be a number of reasons why they have not put up their hands yet. Some of them may think it's still early days and they are waiting to see what the financial institutions will do. There could also be some who feel that they invested with their eyes open or that the amount invested is not much.'

A chief executive of a financial institution said he knows of pockets of 'responsible investors who are facing up to the facts and who are not intending to do anything'.

He estimates that these account for some 10 to 20per cent of his clients.

However, he was not able to let The Sunday Times contact them, citing client confidentiality and 'not wanting to stir up something'.

Other industry sources said it was unlikely that such investors would openly confess to having made a bad investment decision, as it would be not only embarrassing but also harmful in the event that they changed their minds about lodging complaints.

In any case, those who have decided not to complain are determined to move on.

Financial adviser Ms Lou said: 'I'm not going to die because of this $10,000. I invest money that I don't need to use for the next two years at least, so there's no impact on the way I lead my life.'

Year-end vacations will go on as planned and Ms Lou is 'shopping around' for a trip to Australia.

IT entrepreneur Mr Lai is also not about to cancel his four jaunts to Hong Kong, Australia, Japan and Korea.

As for the human resources manager who may end up $200,000 poorer, her advice after this fiasco is: 'Put your money in fixed deposits. It's safe.'

This article was first published in The Straits Times on November 2, 2008.; November 05, 2008 1:22 PM
Anonymous said...: Dear all ,

Following is published in newpaper Today (dated 5 Nov 08), page B2 :
The subject title is ' DBS : Still kinks in complaints process '
“….Mr. Gerard Ee …told reporter :” Total silence is not acceptable…I know they’re all working long hours. But to hear people saying that …(after) five weeks, I haven’t heard a reply, that is not acceptable…” “ So, we’ll go back and find out where are the kinks in the system…and make sure it progresses more smoothly “.

I have the following questions:
- The above-mentioned is the finding from Mr.Gerard Ee , what about the experiences from the other two well regarded persons (i.e. Mr. Huang and Mr, Low)?

- Does the MD (of MAS) know about the progress‘? Does he satisfy with this ‘slow speed’?

- Does the MD (of MAS) know how efficient the RMs (of FIs) were when they completed deals on ‘selling complex structured products’ ?

.........Chee; November 05, 2008 1:33 PM
Anonymous said...: I hope the town councils which lost in such Notes will own up,
& declare whether they have been misled, for sake of transparency.

If they have been misled, then that shows that even educated ones can be misled.

If they have not been misled, then why have they chosen to invest public funds into such investments (CDOs)?; November 05, 2008 1:52 PM
Anonymous said...: I agree - Betrayed. And lost of trust for financial institutions, I will steer clear of them as far as possible and warn my children too
My last 15 years savings just been robbed.; November 05, 2008 2:30 PM
Anonymous said...: Change of swap counterparties

I thought weeks ago, there were total of three Foreign banks having operation in s'pore are interested to offer . MAS also mentioned that announcement be made within weeks. So far there is no news.
My investment is not from DBS but other FI, from the newspaper report, the meeting session by FI/ Mr. Ee(independant party)/ investors does not help at all . It is just a SHOW to let the public know - FI IS CARING

Chinese saying "Da Tai Ji"; November 05, 2008 5:36 PM
Anonymous said...: PLEASE GET REAL!!
SRS IS NOT PART OF CPF ACCOUNTS!!!
STRUCTURED NOTES ARE NEVER APPROVED BY CPF !!!; November 05, 2008 6:50 PM
G C said...: I have commented in Mr. Blog that based on my own experience there is no such thing as educated and non so educated or totally uneducated investors. Let be honest investors are investors.

In this financial fiasco, the chances of mis selling and improper handling is highly probable.

As in my case though I was not a victim, but as I commented before they are many risk adverse investors like me who always place my extra money in the traditional safe FD and now out of sudden there are nice brochure with nice misleading products name, you tend you trust the RM who has always friendly to serve you. So you trust the RM as much as usual when ever you go to renew your FD.

In manay many occasion I was too, tempted to divert from FD to this structured products simply with a return just higher than FD.

Now, not many investors will have the resources and time to source around and find alternative. They simply just trust the RM and they believe in their recommendation.

It is therefore my opinion that this kind of complex products should not be make available to the masses. It is simply not suitable to the simple investors who have all this while believe in FD as the traditional mode of saving.

If I am not wrong this kind of structured products is the new creation recently and it was such a complex financial products even a financial professor could not or find it difficult to fully understand.

It is time to seriously think of banning this structured products to the masses over the counter.

G C Tham; November 05, 2008 7:51 PM
Anonymous said...: BSD,

NOT ONLY CONFIDENCE IN BANKS ARE LOST, CONFIDENCE IN THE GOVERNMENT ALSO. WHAT A JOKE, THEY ASK YOU TO SAVE & INVEST FOR RETIREMENT AND DON'T RELY ON THEM BUT THEY ALLOW HIGH RISK PRODUCTS TO SWALLOW UP GUILLABLE PEOPLE LIKE US. NOW THEY WASH HAND. LET THE NEXT ELECTION RESULT TELL....I'M SUFRE MANY ANGRY & SAD PEOPLE WILL REMEMBER THIS DAY.; November 05, 2008 9:09 PM
Anonymous said...: Thank you Miss W for pointing and sharing this information with us. This along with the knowledge that even Town Councils have invested in these products will be useful and form material facts in class actions suit against the financial institutions.

I have gained much useful information in this blog.

Chew Boon Keng; November 05, 2008 9:20 PM
Anonymous said...: This DBS HN thingy, seems to be more like fraud then anything else. I find it no difference from some con-man trying to sell magical healing stones. I wonder did anybody report this to the police or CAD?; November 06, 2008 3:42 AM
Anonymous said...: Barack Obama made history by becoming the first black U.S. President.

Don't think it is impossible for Singapore to form 2 teams of World Cup Team. No matter how small, there are always a chance.

Everything is possible. Better to wakeup early rather than regretted.; November 06, 2008 7:44 AM
Anonymous said...: Town Councils who bought these Lehman affected products should reveal details of their exposure.

Public funds have been lost and should be accounted for. Those responsible for investing public funds in such risky products should be dealt with. Keeping silence is not acceptable!

HDB resident; November 06, 2008 9:27 AM
Anonymous said...: "Keep sadness and hatred to themselves " ??? When the banks con old and young out of their CPF money by buying technology funds in the year 2000, many lost more than 80% of their savings. There was also mis-selling. There was an outcry and many kept hatred to themselves too. But all that was forgotten. Old folks and young started buying from the monsters again when market rebounded. You see, people never learn their lesson. They will forget their pain and will buy from the one who con their money. In a few years time, all these Minibonds saga will be forgotten. Just watch. That's the Singapore way of earning money, by coning others with poor memory.; November 06, 2008 10:24 AM
Anonymous said...: this civilisation will not grow up and learn from mistakes, if the only thing u know how is pointing fingers and feel sad and depress.

if the mass(mess) continue to behave this way, we will soon reach the climax of cultural revolution.; November 06, 2008 9:09 PM
Anonymous said...: I don't understand MAS is the regulator and why are they allowing the sale of some products no need to be regulated by them? I understand that these type of product are meant for high networth client with an asset of $2million otherwise an investment of $200K with no proof of $2 million asset requirement. Does it mean that rich people can afford to have their asset wipped out, Just because they are RICH. Then why have a regulator. MAS is not protecting the interest of the investor. That's why the bank can sell anything because indirectly MAS has given them the go ahead. If anything happens, to the bank, MAS is responsible not the bank. I have a $300K investment in structured note not yet matured. It is the same problem as those affected - mis-sold to me . Up till today, the bank has still not given me a copy of the Application Form which I have signed upon purchase. I am still waiting. I can understand why some people keep quiet and not want to complain to the bank or MAS is because this kind of thing is very lengthy. People do not have the stamina to hang on as well as privacy. They rather swallow the bitterness and consider themselves unlucky to have bought this note and made losses.

I wonder what MAS plans to do under such circumstances.; November 06, 2008 9:55 PM
Anonymous said...: Where over here the World Class Island, where we called a Home. Only Mr. Tan take the risk and working very hard to help those poor 10,000 Lehman Investors.

Would Mr. Tan be involved if he is still the CEO of NTUC... I wonder; November 08, 2008 12:32 PM

Tuesday, November 04, 2008

Keep sadness and hatred to themselves

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