Tan Kin Lian's Blog: Misrepresentation about the risk of CDOs

Saturday, November 22, 2008

Misrepresentation about the risk of CDOs

Dear Mr. Tan

After reading the explanations from many financial experts, I realize that the real risk for the minibond is the 150 securities CDO.

Out of the 150 securities, if 11 or more credits events then the investor will loose some of their principal. If 13 or more credit events then investors will lose all of their principal.

The risk for this condition is extremely high because this is equivalent to any 2 credit events out of 23 securities (or any 1 out of 11.5).

Since bank should be much safer than others, it is not unreasonable to assume that on average, the risk of one security is 2 times the risk of one bank Then the risk of 13 or more credit events will be about 23 times (2 x 150/13 = 23.1) the risk of credit event for one bank

Moreover, the pricing statement did not disclose the identities of the 150 securities referenced by the synthetic CDO. This makes it difficult for us to assess the risk. The sales brochures and newspaper advertisements did not even mention the 150 securities CDO.

Can we sue the Financial Institutions for the omitting of these important information in the pricing statement/sales brochures/newspaper advertisements ?

Pang

REPLY
In my view, this omission is material. The investors can sue the financial institution.

It is better for the government to act and take action to enforce the law (i.e. Securities and Futures Act) which requires the seller of securities to provide relevant, reliable and complete information about the securities being sold to the public.

27 comments:

Anonymous said...: I like to offer my views, however contrary they may seems and at the risk they may be censored for the plain contradictory but brutal reality they may present

1. Risk is subjective. It is not objective. Putting a sum in one bank is NOT the same as putting that sume in another, even at the same period of time. So the excuse for any risk to be 'appraised' as extremely high or low is not immediately valid, though its possible it could be taken in as reference.

2. Though I feel its more of the possibility of 'creative copywriting', the 150 securities CDO, if they are missing, they do so for a reason. Financial prints are always vetted by legal consultants or officers. So if they are not there, they must be confident they are not putting them there. Institutions, however big and powerful, are still not that stupid or brave enough to run contravene to established laws. Its the Grey areas they love to tip toe around. Congratulation Investors, you hit upon one.

3. All said and done, Investors have to answer the one tricky question. Why did you sign and pay if you are not sure. And if you are sure, then why are you complaining now. Enough said, sandstorms WILL blow.

4. Let say you are insistent you are absolutely without, or with the minimal of faults, you have to bring it up to legal action. No, Class Actions has not room here. Its YOU versus Bank. For such cases, i think some already mentioned, its going to cost easily in excess of 20,000 for starters, then nearing to around perhaps 50,000-100,000. And at the end of the day, there may be no or, worst, delayed outcome.

Appetite for More Risk anyone?; November 22, 2008 11:02 AM
Anonymous said...: Dear Mr Tan and fellow investors, anyone of you know what are the actual CDO backing the different series of Lehman Minibond?

Thanks; November 22, 2008 12:04 PM
Anonymous said...: For Pinnacle Notes, the title of the prospectus has described the investment as "First-to-Default". I think this is the "first loss piece" commonly referred to by Wall Street.

That is, in tranching the cash flows for the same debt (for credit enhancing purpose), Pinnacle Notes holders are the first to lose their investments whenever the debtors fail to service the debt (partially or fully). In other words, any repayments received first go to senior debtors; any balance then go to Pinnacle Notes holders.

Wall Street gets double digit returns for such a high risk investment. Yet, Singapore investors are paid only 5% plus.

If you go read the cover page of the brochure for Pinnacle Notes, you will notice that none of those words in big fonts mention "First-to-Default". Why is this so when the prospectus has described, in its title, the investment as "First-to-Default"?

God bless Singapore!; November 22, 2008 1:14 PM
adego said...: Pang,
In the 1st place, why did u not ask the bank on this fact?

by signing all the papers, u have consent the fund manager to get into these 150 securities, after the launch date of this CLN.

next, if u check the statistics, throughout the history, it is very rare to see the more than 10% of coporation to fail during any 5-years rolling period.

nobody force u to invest

who can foretell this crisis? more than 90% of economic forecast turn out to be wrong, but the funny thing is, they are not accountable for their prediction, and still get paid decently; November 22, 2008 1:46 PM
Anonymous said...: To anonymous 1102 above,

Risk is subjective, you are right. To A, rock climbing is an highly risky activity. To B, rock climbing may be an everyday activity and he deem it not risky.

However, risk is also comparable/objective (yes, there is something called objective risk, go check it out). Even to B, he would agree that rock climbing is certainly more risky than, say, climbing the stairs.

The issue here, is that many people claim that the relationship managers equated the risk of the credit link notes to fix deposits.

Furthermore, the prospectus do not give an clear/accurate picture of the risks, thus effectively disabling retail investors the ability to make a informed judgment in a reasonable amount of time, before he/she sign on the dotted line.

I am sure you have not read the prospectus of minibonds before. Try reading it. And come back and tell us if you can derive the financial structure and risks of it after reading the prospectus (without all the information available on this blog).; November 22, 2008 2:02 PM
Anonymous said...: Refer to: "...3. All said and done, Investors have to answer the one tricky question. Why did you sign and pay if you are not sure. And if you are sure, then why are you complaining now. Enough said, sandstorms WILL blow...."

'Misrepresentation' is a forgone conclusion as it is described as an 'FD' product. Material information is misrepresented as investment in 5-8 entities not that the 5-8 entities are referenced for speculation. In some cases where equity element is also attached, the dual roles of REs as FTD reference entities as well as reference basket of equity. In simplest form, it is the short of '1 fails still have 5 or 6' or 'these are all very strong companies' but the latter does not conitinue with '...and the likelihood of default is very very unlikely and your capital is not likely to be lost to pay for the 'issued'..."
The fact find & RM recommedation is a poorly structured form making the 'structured product' in the same calibre of 'unit trust' and presume that the investor doesn't require FA/RM's advice about the product. IMHO, it is another evidence of 'misrepresentation'.

Refer to "...If you go read the cover page of the brochure for Pinnacle Notes, you will notice that none of those words in big fonts mention "First-to-Default". Why is this so when the prospectus has described, in its title, the investment as "First-to-Default"?..."

YES, "First-to-Default" only appears in the 2nd page of the 2 pages (4 pages altogehter but the others two pages are the Chinsese version) and that is the smallest of the small prints.; November 22, 2008 2:18 PM
Unknown said...: HI Mr Tan K L

I have been following your writings in your blog after reading of your active involvement in the minibond saga. I must salute you for your generosity in giving your time and effort in all these activities. They are all very noble which is why many have written in to thank and praise you. However, after your posting of what you consider as your personal virtues, I am very concerned for you, not because I doubt your sincerity but for preaching it to others. As you may know, different people have different approach to being virtuous and may not accept your view no matter how good they may be.

Now, on your championing for the thousands of victim investors, I think you have done enough; holding rallies, writing to PM, MM, MAS and the press. Give them time to resolve the issue as I believe they have heard you loud and clear. Instead, take this opportunity to share your experience and knowledge on how to help the tens of thousands of workers who fear losing their jobs or those who are already retrenched. Taking on this more challenging task will gain you more creditability and who knows, you may be our next President if you so decide to put yourself up as candidate for the next election as many have proposed that you do so and even you yourself has given hint to doing so.

Mr Tan, when I read of the government’s announcement in dishing out some $2.9 billions to help the SMEs and individual worker just a few days after giving hint of their action to the media and yet have not responded to your petition, it is clear to me which is of utmost importance.

So, Mr Tan, look at the present situation in its proper perspective and do the right thing for the wellbeing of every Singaporean and you will be fondly remembered, not only by the victim investors, but the tens of thousands who may be laid off in the coming months.

Best regards.

Concerned citizen; November 22, 2008 2:31 PM
Anonymous said...: To adego above,

You are using the wrong statistic. We now know collateralized debt obligations form the bulk of the underlying assets, and CDOs is a new financial instrument only 20 years old.

Hence there is no substantial historic evidence to suggest that less than 10% of the CDOs fail during any 5-year rolling period.

Please be sure of what you are saying before commenting, it is misleading.; November 22, 2008 2:32 PM
Anonymous said...: Good correction, Morgan. Hate those people who don't really know but think that they know, and end up making a fool of themselves.; November 22, 2008 2:50 PM
Anonymous said...: adego,
you sound like a broken record again.
the old folks , uncles and aunties and educated are not as educated as you in finance. The old folks don't even know what you are talking about and so are the educated. Yes , nobody forced them but in the first they didn't know of the existence of structured notes until they were prospected and 'persuaded. These folks didn't walk into the bank and announced that they heard, studied , read everything about the NOTES and they were excited and couldn't wait to invest in the Notes. "Quick, quick, I must have the Notes or I will die"
They were prospected, pulled to one side , enticed, seduced, goreng, conned, induced until they lost their will of resistance and paralysed before being made to put their thumb print.
What history of finance,crises, economics? are they birds, pigs or donkeys. What they would ask is, good or not?, safe or not?, galanteed or not? Ok, ya lah big sign board cannot toh. Same like buying life insurance these folks would ask that way.They are trusting and depend on the advisers. Unfortunately, all the advisers and insurance agents and RMs as long paid on commission, conscience can take the back seat.
"Gooood, Ah soh, hor. Pow chek, pow sek, pow tan, pow nhei, except boh pow si.You see , so big this bank, how to toh?; November 22, 2008 3:17 PM
TeE said...: Fact is, many idiots (i.e. RMs, and even bankers) don't even know what they are talking about.

Even if they know (like our government), they attempt to leverage on the public's general ignorance about risk, probability and statistics to mislead people.

What a bunch of despicable people.; November 22, 2008 4:28 PM
Anonymous said...: "Anonymous Morgan Wu said...

To anonymous 1102 above,

Risk is subjective, you are right. To A, rock climbing is an highly risky activity. To B, rock climbing may be an everyday activity and he deem it not risky.

However, risk is also comparable/objective (yes, there is something called objective risk, go check it out). Even to B, he would agree that rock climbing is certainly more risky than, say, climbing the stairs.

The issue here, is that many people claim that the relationship managers equated the risk of the credit link notes to fix deposits.

Furthermore, the prospectus do not give an clear/accurate picture of the risks, thus effectively disabling retail investors the ability to make a informed judgment in a reasonable amount of time, before he/she sign on the dotted line.

I am sure you have not read the prospectus of minibonds before. Try reading it. And come back and tell us if you can derive the financial structure and risks of it after reading the prospectus (without all the information available on this blog).

2:02 PM"

First off, You said yourself many 'claim'. You didnt say they can 'PROVE'. Ah magic word!

I did go thru the prospectus.
I said this before, some might have missed it, i repeat here again.

The Prospectus (and/or any other articles provided before, during or after signing), I feel, is good enough to inform the reader, if not, LEAST good enough to ALERT the reader he she is NOT well informed enough to proceed ahead.

My other question still remains unanswered after soo long.

Can anyone raise their hands here, who went back to raise query, feedback or complain AFTER they signed and paid up. This can be any time after, as long its before the bad news.

This is in fact the second tricky question they would have to face in any formalized proceeding, legal or otherwise, after my First stated initially.

IF they fail this 2 questions completely, then its as good as, well, you know what.

"Anonymous Anonymous said...

Refer to: "...3. All said and done, Investors have to answer the one tricky question. Why did you sign and pay if you are not sure. And if you are sure, then why are you complaining now. Enough said, sandstorms WILL blow...."

'Misrepresentation' is a forgone conclusion as it is described as an 'FD' product. Material information is misrepresented as investment in 5-8 entities not that the 5-8 entities are referenced for speculation. In some cases where equity element is also attached, the dual roles of REs as FTD reference entities as well as reference basket of equity. In simplest form, it is the short of '1 fails still have 5 or 6' or 'these are all very strong companies' but the latter does not conitinue with '...and the likelihood of default is very very unlikely and your capital is not likely to be lost to pay for the 'issued'..."
The fact find & RM recommedation is a poorly structured form making the 'structured product' in the same calibre of 'unit trust' and presume that the investor doesn't require FA/RM's advice about the product. IMHO, it is another evidence of 'misrepresentation'.

Refer to "...If you go read the cover page of the brochure for Pinnacle Notes, you will notice that none of those words in big fonts mention "First-to-Default". Why is this so when the prospectus has described, in its title, the investment as "First-to-Default"?..."

YES, "First-to-Default" only appears in the 2nd page of the 2 pages (4 pages altogehter but the others two pages are the Chinsese version) and that is the smallest of the small prints.

2:18 PM"

Thanks but from my understanding least, as long as theres no clear cut evidence of intentional foul play, in black white or colour (of cos one can expect the FIs wont be dumb enough to stoop to THIS level), Misrepresentation is going to be one of the HARDEST thing to prove.

Not only that, or rather BECAUSE of that, it is going to be one of the MOST EXPENSIVE proceedings to undertake.

Hey by then, it is now also happening to be one of the LONGEST proceedings to carry out.

Looking from the cases and field reports so far, i havent come across a clear-cut case, so going to Court is big risk, but thats just me, to some others, well, Good luck!

As for the rest:

"Anonymous Anonymous said...

Good correction, Morgan. Hate those people who don't really know but think that they know, and end up making a fool of themselves.

2:50 PM"

"Blogger TeE said...

Fact is, many idiots (i.e. RMs, and even bankers) don't even know what they are talking about.

Even if they know (like our government), they attempt to leverage on the public's general ignorance about risk, probability and statistics to mislead people.

What a bunch of despicable people.

4:28 PM"

I know this might sound this nasty, but if you think about it, right on the other side of the coin your statements strangely tho aptly describe the Investors. I am sorry, but yes they do.; November 22, 2008 5:43 PM
Anonymous said...: "the old folks , uncles and aunties and educated are not as educated as you in finance."

"These folks didn't walk into the bank and announced that they heard, studied , read everything about the NOTES and they were excited and couldn't wait to invest in the Notes. "Quick, quick, I must have the Notes or I will die""

"They were prospected, pulled to one side , enticed, seduced, goreng, conned, induced until they lost their will of resistance and paralysed before being made to put their thumb print."

"Same like buying life insurance these folks would ask that way.They are trusting and depend on the advisers."

"Unfortunately, all the advisers and insurance agents and RMs as long paid on commission, conscience can take the back seat."

I am as sure as the Court, your lawyers and THEIR lawyers, that you would be able to prove your statements. Easily.

Thanks.; November 22, 2008 6:02 PM
Anonymous said...: Haiz... To anonymous@ 1802 above,

I certainly hope you are not someone i know.

This blog serves to collect opinions and ideas on how to advance the case and help the needy. It is quite pointless for you to harp on how difficult it will be for the misled investors to obtain justice.

Please stop your rhetoric on not supposing to proceed without understanding things first and caveat emptor. Use your common sense, we do a lot of things everyday without FULLY understanding it. Did you understood how your car works before you drive it? Did you understood how a MRT system work before you board it? Most of us don't, but we place our trust on SMRT and Toyota, that their products will deliver. Trust is what makes the world go round,not caveat emptor.

If everyone's going to avoid a transaction just because they do not understand it fully, nothing will get done. Please don't tell me you understood all financial instruments you brought. Its impossible, the most you understood 99%. We still place some trust on the financial institutions to deliver. It is the trust that is betrayed here. And please don't misunderstand me, i am not saying we got to trust everyone blindly. But i believe most here will agree, that DBS is a name we could, and should trust (note the past tense here).

I used the word claim because, like you said. It has not been proven yet. But like i said before, anyone with common sense can see that the majority of the investors are misled. I do not wish to go into why. Someone wise once said, "Some people, the moment the fact is placed before them, they see it immediately. Some people, they can spend their lifetime searching, but they just don't see it". And i am not referring to intellectual capacity here. Its either you get it, or you don't.

And i said before, Singapore as a society should start moving forward and discuss ethical issues. The law cant cover everything. Its a grey area here. The banks should wake up. If they compensated the investors the moment this minibond issue came to light, their reputations will be so solid that Singaporeans will be flocking their branches, and doing what we could together to protect local banks from the credit crisis. Whats happening now? Singaporeans avoiding their own national bank. Reputation cannot be brought by marketing.

And i now understand why Mr Tan discourage anonymous posts. Its very tiring to reply to someone anonymous, and seriously, your words holds no credibility. Why are you afraid to be responsible for what you want to say?; November 22, 2008 7:50 PM
Anonymous said...: "Why did you sign and pay if you are not sure. And if you are sure, then why are you complaining now"

"Can anyone raise their hands here, who went back to raise query, feedback or complain AFTER they signed and paid up."

Commenting on above, well, believe many of us here thought we have fully understood the terms and risks but only to realise our interpretations were incomplete or inaccurate after LB collapse. In fact, believe a number of us called up FIs and were still assured that the product PS9/10 was not affected when LB collapse, affecting minibond, DBS HN5 and JB3.

Lastly, is the FI legally required to publish the final reference list of the underlying assets after the fund is formed ?; November 22, 2008 9:24 PM
Anonymous said...: "Anonymous Morgan Wu said...

Haiz... To anonymous@ 1802 above,

I certainly hope you are not someone i know.

This blog serves to collect opinions and ideas on how to advance the case and help the needy. It is quite pointless for you to harp on how difficult it will be for the misled investors to obtain justice.

Please stop your rhetoric on not supposing to proceed without understanding things first and caveat emptor. Use your common sense, we do a lot of things everyday without FULLY understanding it. Did you understood how your car works before you drive it? Did you understood how a MRT system work before you board it? Most of us don't, but we place our trust on SMRT and Toyota, that their products will deliver. Trust is what makes the world go round,not caveat emptor.

If everyone's going to avoid a transaction just because they do not understand it fully, nothing will get done. Please don't tell me you understood all financial instruments you brought. Its impossible, the most you understood 99%. We still place some trust on the financial institutions to deliver. It is the trust that is betrayed here. And please don't misunderstand me, i am not saying we got to trust everyone blindly. But i believe most here will agree, that DBS is a name we could, and should trust (note the past tense here).

I used the word claim because, like you said. It has not been proven yet. But like i said before, anyone with common sense can see that the majority of the investors are misled. I do not wish to go into why. Someone wise once said, "Some people, the moment the fact is placed before them, they see it immediately. Some people, they can spend their lifetime searching, but they just don't see it". And i am not referring to intellectual capacity here. Its either you get it, or you don't.

And i said before, Singapore as a society should start moving forward and discuss ethical issues. The law cant cover everything. Its a grey area here. The banks should wake up. If they compensated the investors the moment this minibond issue came to light, their reputations will be so solid that Singaporeans will be flocking their branches, and doing what we could together to protect local banks from the credit crisis. Whats happening now? Singaporeans avoiding their own national bank. Reputation cannot be brought by marketing.

And i now understand why Mr Tan discourage anonymous posts. Its very tiring to reply to someone anonymous, and seriously, your words holds no credibility. Why are you afraid to be responsible for what you want to say?

7:50 PM"

Morgan, i recall you now. You are the young one writing essays about righteousness of society! Ha thats a fun read.

anyway, i dont care whether i wish to know you or not, but if i am investor, i sure hope you are not assisting me on my pursue.

You are not objective, you lack broad perspectives, you make greenhorn assumptions, you draw on improper analogies..WHICH you use to shoot yourself in your foot (many times), you try to sound confident when you are trying your luck. ok enuf of that.

I say at the current going, UNLESS we have a stand-up Defector (erm, not just one we need least a half dozen), there will be no chance of Compensation. Forget about Authorities, they are running in the opposite direction while pretending to run the finish line. its a Camera trick thing

Then again, we'd all know the reality by Dec 2010. cheers; November 22, 2008 10:20 PM
Anonymous said...: "Anonymous Anonymous said...

"Why did you sign and pay if you are not sure. And if you are sure, then why are you complaining now"

"Can anyone raise their hands here, who went back to raise query, feedback or complain AFTER they signed and paid up."

Commenting on above, well, believe many of us here thought we have fully understood the terms and risks but only to realise our interpretations were incomplete or inaccurate after LB collapse. In fact, believe a number of us called up FIs and were still assured that the product PS9/10 was not affected when LB collapse, affecting minibond, DBS HN5 and JB3.

Lastly, is the FI legally required to publish the final reference list of the underlying assets after the fund is formed ?

9:24 PM"

if you read my posts herein carefully, you will realise a number of counters for your queries.

in fact you alrdy answered a number of yours

"...many of us here thought we have fully understood the terms and risks but only to realise our interpretations were incomplete or inaccurate after LB collapse..."

you thought, you realise ...AFTER

"..believe a number of us called up FIs and were still assured "

you called, was still assured ...any records?

"..is the FI legally required to publish the final reference list.."

ever hear of phases such as "Terms and Conditions applies", "Details available", etc etc, these are Creative Copywriting we call them

But to be really brutally honest, i seen the Prospectus (and other ad articles), I myself am already quite sharply alerted by the time i finish Page 1, so...; November 22, 2008 10:28 PM
Anonymous said...: To 1.14pm,"Wall Street gets double digit returns for such a high risk investment. Yet, Singapore investors are paid only 5% plus".

This was done purposely to deceive you and caught you unaware. If the coupon rate offer was double digit , many people will not fall into it. As the return is high, investors will tend to be more careful in studying and question it before deciding to invest. The 5% is just to catch you unaware and thought that it is just a bond tied to the few reference entities.; November 22, 2008 11:06 PM
Anonymous said...: I don't think people who knows me will use 'greenhorn' to describe me.

As for whose's analogy makes more sense, i will leave it to the public to decide.

And too bad, i am not managing your money. If i am, i am sure you will not have sleepless nights.

Well i won't want you to be my client anyway.; November 22, 2008 11:40 PM
Anonymous said...: To 10:28PM,

You talked too much and you did it totally at the wrong place. No one is lacking any bit of what you have said. This forum should be for investors to discuss and help one another to go through this difficult period. Though not welcome, I believe your views are heard but unfortunately, none of them are useful. Try telling the Hong Kong investors the same thing. If this all looks so bleak, why do you think the Hong Kong Legco is probing the banks? Let's see what is the outcome of that. I like to be able to wipe off the grin off your face. There are a lot of people that are suffering in this saga and none of them deserve any discouragement from you. If you have the guts (like you sounded), go to Hong Lim Park during one of the session and tell the people what you said here.

WS; November 23, 2008 12:24 AM
Anonymous said...: After reading the comments in Tan Kin Lian's blog, I now know why the Minibonds and Pinnacle Notes were not sold in the USA.

LB and MS know that they would never be able to stand up against US lawyers and the Senate and Congressional hearings should US investors lose their money buying these structured notes and an investigation is launched.

LB and MS have chosen their markets well, taking advantage of those jurisdictions like S'pore/HK and Taiwan where they can get away with daylight robbery!; November 23, 2008 1:11 AM
Anonymous said...: Make it a law in future for any 'terms and conditions' must be signed by investors jointly with another witness (spouse-family members of ..).

Make compulsory 'term & conditions ' MUST be Colour BOLD, Italics and Underlines for all investment Documents.

Just like all the S&P for tender documents, ie That must be read and fully explained to successful bidder.

Without signing or intialisation next to the statement by investors, legally speaking, it is not acceptable in court .; November 23, 2008 7:56 AM
Anonymous said...: by exposing so many argument in cyberspace, seem all are like CyberLawyers and argue in Cyer Court. Wondering any Cyber_Judges are reading these argument and Give us CYBER_JUDGEMENT for these poor lost_FD_CDOs_toxiced_investors a fair judgement?

Ha ha there is a word, call ' CHOW TAK Fai, Hou Say Kai'.

aren't we all provide many points for bank's defence lawyers so many points to defence?

10,700 victim now it spreads and spreads..soon 1 million cyber readers around the world would be infected...

Nail the Master of Master- EX-DBS CEO...ow hiding in USA-NEW YORK.

Come out and tell your side of the stories...Barstttard

WTF; November 23, 2008 8:12 AM
Anonymous said...: " Anonymous said...

Make it a law in future for any 'terms and conditions' must be signed by investors jointly with another witness (spouse-family members of ..).

Make compulsory 'term & conditions ' MUST be Colour BOLD, Italics and Underlines for all investment Documents.

Just like all the S&P for tender documents, ie That must be read and fully explained to successful bidder.

Without signing or intialisation next to the statement by investors, legally speaking, it is not acceptable in court .

7:56 AM"

Future, Yes

This case, No.

THATS the bad news.; November 23, 2008 10:28 AM
Anonymous said...: "Anonymous Anonymous said...

After reading the comments in Tan Kin Lian's blog, I now know why the Minibonds and Pinnacle Notes were not sold in the USA.

LB and MS know that they would never be able to stand up against US lawyers and the Senate and Congressional hearings should US investors lose their money buying these structured notes and an investigation is launched.

LB and MS have chosen their markets well, taking advantage of those jurisdictions like S'pore/HK and Taiwan where they can get away with daylight robbery!

1:11 AM"

Smart one you there

Its more less a fool-proof trap.

Rather, a fool-attracting trap.; November 23, 2008 10:32 AM
Anonymous said...: "Anonymous Anonymous said...

by exposing so many argument in cyberspace, seem all are like CyberLawyers and argue in Cyer Court. Wondering any Cyber_Judges are reading these argument and Give us CYBER_JUDGEMENT for these poor lost_FD_CDOs_toxiced_investors a fair judgement?

Ha ha there is a word, call ' CHOW TAK Fai, Hou Say Kai'.

aren't we all provide many points for bank's defence lawyers so many points to defence?

10,700 victim now it spreads and spreads..soon 1 million cyber readers around the world would be infected...

Nail the Master of Master- EX-DBS CEO...ow hiding in USA-NEW YORK.

Come out and tell your side of the stories...Barstttard

WTF

8:12 AM"

If you worry about our current discussions giving them bullets

Dont fret, they already have cannons in place BEFORE they launch the products; November 23, 2008 10:35 AM
Anonymous said...: Dear Mr. Tan

I refer to 23 Nov. Sunday Times article "Rethink how sinking funds are managed" by Tan Hui Yee. He wrote "Among the other 12, at least one had insisted its fund managers guarantee capital protection, which probably lowered potential returns but, in the light of the financial siuation now, was a wise call."

I got the impression that Hui Yee seems to think that "gurantee capital protection" means that the capital is guaranteed.

My understanding after reading the many postings in your blog is that there is a big difference between "capital protected" and "capital guaranteed". One can lose a significant part of one's initial capital even if the investment is capital protected. Whereas capital guaranteed means that one's investment capital is guaranteed; ie. you get all your initial capital back.

I have many non-English speaking friends who told me that their RMs told them that their investments in Minibonds and Pinnacle Notes are "pao pern" which loosely translated means "guaranteed prinipal" or "guaranteed capital". This I feel is incorrect and misleading. What could have been meant by the RMs is that the investment is "capital protected", which means that there one could still lose a significant part of one's initial capital.

I would appreciate if you or any one reading this posting could please translate "capital protected" and "capital guaranteed" into Chinese/Mandarin, as this could determine if there was any misrepresentation by the FIs/RMs.

Now, we hear of "guarantee capital protection" by the Town Councils. This is even more confusing. I would like to know what exactly the TCs understood by "gurantee capital protection"?; November 23, 2008 12:36 PM

Saturday, November 22, 2008

Misrepresentation about the risk of CDOs

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