Tan Kin Lian's Blog: Match investors' needs

Monday, November 17, 2008

Match investors' needs

Nov 17, 2008

THE Monetary Authority of Singapore (MAS) may require financial services companies to sell products that better match investors' needs and include clearer risk labels linked to the investments, Finance Minister Tharman Shanmugaratnam said in Parliament on Monday. 'If an investor has been sold a product that's clearly unsuitable, if there are clear-cut cases of a mismatch, then the financial institution will ensure the investor gets proper restitution,' he said. 'That's the way we ensure there's trust in the system.'

Mr Tharman was replying to questions on the MAS probe into complaints by retail investors who said they were misled into buying structured products linked to the now-bankrupt Lehman Brothers Holdings.

Individual investors in Hong Kong, Singapore, and Taiwan have demanded refunds from banks selling them structured notes linked to Lehman.

DBS Group Holdings, Singapore's biggest bank which said late Oct most of the securities are now worthless, has estimated compensation to investors in cases where the bank didn't meet the 'standards' it upheld could amount to as much as $80 million.

Lehman's bankruptcy on Sept 15 sparked protests by investors in Hong Kong and Singapore seeking compensation for the products sold by DBS and other financial services companies.

'What's far more useful is to ensure good disclosure: simple, clear, good disclosure,' said Mr Tharman, adding that the monetary authority will study 'all' investor complaints.

He also said the note buyers should bear the responsibility of the investment outcome if there's no mis-selling by the banks, though he said his 'sympathies' lie with the investors, reported Bloomberg news.

http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_303359.html

18 comments:

Anonymous said...: Dear all ,

Two TCs invested 12 milllions in minibond and related structured products.Please read the following:

两市镇会投资1200万元在雷迷等出事结构产品（2008-11-17　3.55pm）

　　（综合讯）市镇理事会的累积基金也受金融海啸波及，两个市镇会投资1200万元在雷曼迷你债券和其他因金融危机而被迫终止的结构产品上。
　　荷兰－武吉班让市镇理事会白沙－榜鹅市镇理事会分别投资约6.7%和2.6%的可投资款项在雷曼迷你债券、星展高升短期债券5（DBS High Notes 5，简称HN5）、富峰债券系列9和10票据（Pinnacle Notes Series 9 & 10）和美林Jubilee联赢票据3（Merrill Lynch Jubilee Series 3）。
　　国家发展部高级政务部长傅海燕在国会回答官委议员欧生优丽有关市镇会累积基金的投资准则时提供以上数据。
　　针对欧生优丽有关债券和票据市值的提问时，傅海燕说，所有的信息已公开，这批票据已被强制提早赎回，价值有待信托机构结算。《联合早报网》; November 17, 2008 4:54 PM
Anonymous said...: This is good news.
Now bank headache already.
How to match these mis-match?
No one is the right mind will buy toxic especially low risk investors.

Pch; November 17, 2008 4:55 PM
Anonymous said...: OK,

Enough talk, action please and fast before the economic situation deteriorates further and the FIs become increasingly reluctant to admit liability.; November 17, 2008 5:23 PM
Anonymous said...: Actually if one read carefully

This is REALLY bad news dressed up as good news.

Especially the last few portions.; November 17, 2008 5:37 PM
Anonymous said...: Hi Mr. Tan,

Just quoting exactly what the Finance Minister said: “…..What's far more useful is to ensure good disclosure: simple, clear, good disclosure…...”

Please initiate another Petition to Mr.Tharman and attach the simple brochures
and the complicated Prospectus/pricing statements.

After studying the brochures, Prospectus/pricing statements and interview a certain percentages of victims (who are educated and listed in the Petition), Mr. Tharman (or his Team) should be able to draw fast conclusion regarding 'simple, clear and good disclosure' on those ‘toxic structured products’.; November 17, 2008 5:42 PM
Anonymous said...: Channel News Asia reported on 2 town councils losing $12 millions. http://www.channelnewsasia.com/stories/singaporelocalnews/view/390407/1/.html
Gosh they are claiming that it is 0.6% but it is a LOT of money. Hmm, they should just put in fixed deposit to earn 1%. Now everything is GONE. Please spare a thought for the lower income and middle income. It is an insult especially if they think that it is only 0.6% ONLY. We trust our government to manage our money Wisely yet they are losing SO MUCH. Aiya, Temasek even WORSE, lost BILLIONS of dollars. Can I trust my govt to do their job well. I think it is time that they be more prudent. Perhaps MAS and Town Councils should consult Mr.Tan Kin Lian who has the foresight to know that Structure deposits are TOXIC products. I have more respect for Mr Tan than our MAS and SOME govt officials now.; November 17, 2008 7:44 PM
Anonymous said...: S$12M in troubled products, read this:
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_303360.html

2 town councils have invested S$12 million. According to the senior minster of state. I quote

"She noted that investments in stocks, funds or securities must be on the advice of a qualified person, such as an investment adviser holding a licence under the Securities and Futures Act, and an approved bank or a merchant bank approved as a financial institution under the Monetary Authority of Singapore Act."

1) Are we to assume that the 2 TCs have invested based on advice of a qualified persons? and are we to conclude that the TCs are fully aware of the high risk involve in these structured prodcuts and yet choose to risk public funds on these highly risky products? Where is the accountability?

2)Are the TCs suffering the same fate like most, if not all, investors and are mis-sold or mis-represneted by their 'expert' financial advisers? If the TCs are mis-sold, why are they keeping quiet and not seeking justice/compensation?

We shall ask these questions to our TCs, MPs, CDC Mayors.

tatejw18; November 17, 2008 8:08 PM
Anonymous said...: Kudos to Mr Tan KL, your efforts and perseverance have brought results. At least now MAS confirmed that it has started to probe into possible mis-selling by the FIs. This is the beginning and we should monitor the outcome closely. If there are indeed mis-selling, then it is time to ask the FIs for refund to all investors. Good work Mr. Tan.; November 17, 2008 8:23 PM
Anonymous said...: I think it is unwise that the town councils have 35% of sinking funds for investing in bonds and equitites. Apparently, they have lost big time. If every year they lose like that, the money is easily gone. It is no different from Gambling! They don't know what they are investing, and so now $12 million is gone like that. I think they should read Mr.Tan's blog and this sad thing will not happen. $12 million can do alot of things.; November 17, 2008 8:54 PM
pisces said...: 'simple, clear, good disclosure,' .

Does banks' selling approch and selling material (leaflet and prospectus) meet the above requirements?

mini bond is a 'simple' name, giving investors 'clear' idea about the product, but does it provide investors with 'good disclosure' ?; November 17, 2008 10:31 PM
Anonymous said...: Mr. Tharman said these note buyers should bear responsibility of investment outcome if there's no mis-selling by the banks. Shouldn't those town councils likewise should pay back all losses as these are public money right? Looks like our highly paid TC is no different with our original uncles and aunties. If losses of TC is covered by government, what about the original investors? Double standards, fair or not!; November 17, 2008 11:29 PM
Anonymous said...: If highly capable TC considered investment of $12 million into these minibonds, high notes, etc were wise decision, you expect original investors to be even wiser that TC?; November 17, 2008 11:48 PM
Anonymous said...: Mt Tharman, prove to our satisfaction that there is no mis-selling. But do not leave out, ever, the testimonies of investors concerned.; November 18, 2008 12:12 AM
Anonymous said...: There was blatant mis-selling by the RMs and the FIs. MAS and Mr. Tharman would not dare to investigate. If they do it would reveal his hands off policy is flawed and MAS is inefficient and guilty of conflict of interest or poor internal control just like the FIs.; November 18, 2008 12:49 AM
Anonymous said...: Town Council are clearly Mis-Sold the minibond and high notes.

As I understand, since Dec 1st 2007, Town Councils were permitted to invest a small percentage of their surplus in low risk instruments to help them to grow their sinking funds.

As we all know and the banks have also admitted, these products are high risks. So Town Councils with their eyes opened also cannot see that they are high risk. They also thought that they were low risk and thus permitted to invest public funds.

This would make MAS job very easy now. They can now open their eyes and ears and investigate Town Councils.; November 18, 2008 11:29 AM
Anonymous said...: The losses by the town councils need to be investigated. How could their panel of financial experts allow public funds to be invested in such risky instruments for only 5% return?; November 18, 2008 12:04 PM
Anonymous said...: We shld try to garner support from these TCs instead of pushing them to a corner hence building a strong defence mechanism. If we cld encourage them to speak the truth that they were misled to invest in these toxic structure product then it is a force to be reckoned with. We shld focus on how and what led them to invest in these products.; November 18, 2008 12:46 PM
Anonymous said...: track down the Master of all the Masters. Importing Toxic CDOs; November 18, 2008 4:23 PM