Tuesday, November 11, 2008

SCMP:Time to reconsider class action lawsuits

http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=B9JBGSP78WP8&linkid=3e7f0a20-5c7e-451d-aff0-65d68033f226&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d

11 Nov 2008
Frank Ching is a Hong Kong-based writer and commentator. frank.ching@scmp.com

Hong Kong lacks a legal tool that is available to people in the US and Australia, as well as certain European jurisdictions – that of the class action lawsuit. A class action lawsuit is one where a large number of people collectively bring a claim to court. One advantage is that a single class action lawsuit aggregates a large number of individual claims into one representational lawsuit. It can save time and money.

The situation stemming from the bankruptcy of Lehman Brothers is a case in point. Some 43,000 local people have invested in Lehman products, mostly minibonds. The court system cannot possibly handle thousands, or even hundreds, of cases.

There are also many small investors who cannot afford to go to court, or the size of their investments simply does not justify the legal expenses involved in a court case.

Being able to take a class action lawsuit makes a huge difference. It enables individuals, who only stand to recover a small amount, to act together and assert their legal rights. Often, an individual cannot take legal action because the costs would be greater than the amount he or she could recover.

Hong Kong has never allowed class action lawsuits, primarily because it is almost always done on a contingency fee basis. That is to say, lawyers do not get paid if they lose and get a percentage if they win.

In principle, there is nothing wrong with this system. The fact that lawyers do not get paid if they lose means that even individuals without deep pockets can afford to be part of a class action lawsuit, because there is no outlay of money involved. If they lose the case, they haven’t lost any additional funds and, if they win, it is a windfall that they could not have expected otherwise.

Another criticism sometimes made is that class actions combined with conditional fees result in greater litigiousness. But this may simply reflect the fact that more people have access to legal justice as a result of this avenue being opened.

The fact that lawyers aren’t paid if they lose means that they are much more likely to pick only cases that they believe have merit. It should not result in many frivolous cases, because the lawyers themselves would stand to lose.

Critics also point to the fact that, in US style class action lawsuits, huge amounts of money is sometimes awarded by judges to the plaintiffs.

But this, like the contingency fee system, is something that can be governed by legislation. Surely, legal minds in Hong Kong’s Department of Justice, the Financial Services Bureau and the legislature are capable of devising legislation that will enable Hong Kong to benefit from class action lawsuits and, at the same time, minimise what are considered to be the unsatisfactory features of such actions.

While class action lawsuits have not been widely adopted in Europe, it is interesting to note that certain countries have found this a useful tool in the area of consumer protection. In Austria, for example, consumer organisations have in recent years brought claims on behalf of hundreds or even thousands of people, resulting in a significant reduction in overall costs.

In France, the law allows an association to represent the collective interests of consumers. But, in a lawsuit, each claimant must be individually named, which is not the case with class action cases in the US.

The bankruptcy of Lehman Brothers has already resulted in class action lawsuits in America, one by investors who purchased Lehman Preferred Series “J” stock shares and one by former employees who claim that – contrary to the law – they had not received payment for 60 days.

In Hong Kong, a class action lawsuit would most likely be against one of the banks that distributed Lehman products. There have been so many claims of “misselling” that thousands might benefit – if only such lawsuits were allowed here.

27 comments:

Anonymous said...

yes, sue the hell out of them. We may not win. but we will at least get the satisfaction of seeing the CEOs of these money-driven financial institutions squirm when the lawyers show to the public at the court room how the products were structured to defraud the investors of their hard earned dollars.

I would love to see the CEO of DBS stand trial for high notes 5. Let's see whether he will repeat the remark that DBS would never knowingly hurt investors. I am sure if he repeats it, there will be an uproar in the court room. he will be a laughing stock.

Anonymous said...

Mr Tan,
Is it possible to gather on a no obligation basis, how many investors are prepared for class action via your blog?

Anonymous said...

Again, consider THRICE before going in this way.

Not just the up front costs.

Anonymous said...

What is two or three thousand dollars to expose the scam that the FIs have pulled over us?

By suing the FIs, we are showing the world that Singaporeans are no longer a submissive bunch.

Anonymous said...

what a deal! Pay only 2 or 3 thousand per investor, and we get to see the trial of the century. To get the same amount of entertainment at Las vegas, you would have to fork out 6 times as much.

Sue!

Anonymous said...

Mr. Tan,
Would it be possible that you gather the feedback for class action by asking if there are at least 500 investors willing to go for class action, would the investors participate.

For me, if there is enough numbers like 500 people, I will want to participate. If the numbers are too small, then there is weakness.

Anonymous said...

In filing a class action suit, depending on the merit of the case, the aggrieved party may awarded with compensation. It is a civil remedy.

As I understand from the various comments, there appears to be a systemic mis-representation. If there is good evidence, one may appeal to the Penal Code. One may file a police report and have the CAD investigate the matter. Again number is strength and the authorities cannot ignore the complaint.

Does the Penal Code apply?
In the Penal Code (cap 224) section 11:
11. The word “person” includes any company or association or body of persons, whether incorporated or not.
So the Penal Code applies to any FI and/or any FA, if indeed cheating can be proven.

What constitutes cheating?
Cheating.
415. Whoever, by deceiving any person, whether or not such deception was the sole or main inducement, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit to do if he were not so deceived, and which act or
omission causes or is likely to cause damage or harm to any person in body, mind, reputation or property, is said to “cheat”.

What is the penalty?
Cheating and dishonestly inducing a delivery of property.
420. Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with
imprisonment for a term which may extend to 10 years, and shall also be liable to fine.

Anonymous said...

Further to my comment on the Penal Code, section 423 may also be relevant.

423. Whoever dishonestly or fraudulently signs, executes, or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property, or any interest therein, and which contains any false statement relating to the consideration for such transfer or charge, or relating to the person or persons for whose use or benefit it is really intended to operate, shall be punished with imprisonment for a term which may extend to 3 years, or with fine, or with both.

Anonymous said...

The whole truth will surface in a trial when cross examined by lawyers

Anonymous said...

A lawsuit doesn't have to be a drawn-out ugly affair. I bet the CEOs of the FIs will settle for fear of being embarrassed for foisting such shoddy and risky products on unwary customers.

They will settle, trust me. So, let's sue.

Anonymous said...

Also, don't forget the last thing that the government want is for a drawn-out ugly lawsuit to damage the financial center status of singapore.

So, if the victims sue, it will be settled out of court and behind closed door in no time.

Anonymous said...

Hi Mr. Tan ,

Is such class action lawsuit allowed in Singapore ?

Anonymous said...

12:49 PM,

Actually cost is not an issue. 10000 victims and 50,000 victims in HK and Taiwan just want to feel "shiok" even we lose the case. Just drag the cases on and on and on. We do not mind going case by case. If 10 cases is settled a week, guess how long will the entire saga drag on for. Very good productivity gain for the bankers. May be instead of retrenching, they will employ more staff to settle cases one by one. We are sure their concerned shareholders and their backers would not mind. The whole world will definitely be impressed with the financial hubs here and in HK. Every one will be impressed with these "investment" banks, which, by the way, have morphed into "normal" banks so that they do not have to mark down their rotting assets, another victory for free market.

Anonymous said...

Yes, sue each FI and expose them. Take MAS to court as well - they failed miserably as the gatekeeper

Anonymous said...

The entire world BOYCOTT AMERICAN MAKE products until they come to terms to compromise on Payment, insure and trustee payment for all the TOXIC CDOs...
We Must make American financial CRIMEs known and liable for cheating the poor, the cheated....
WTF

Anonymous said...

funny enough, CNBC, CNN, Bloomsburg and AngMo media NEVER NEVER talk, highlight the Toxic CDOs and mini bond issues which hit the HK, SGP so seriously. They chicken out.
I said, we no trust american bankers and Merchant bankers, under writers for thenext 100 years.
WTF

Anonymous said...

We have some really brilliant quotes here.


"By suing the FIs, we are showing the world that Singaporeans are no longer a submissive bunch."

"To get the same amount of entertainment at Las vegas, you would have to fork out 6 times as much."

"For me, if there is enough numbers like 500 people, I will want to participate. If the numbers are too small, then there is weakness."

"They will settle, trust me. So, let's sue."

"So, if the victims sue, it will be settled out of court and behind closed door in no time."

"Actually cost is not an issue. 10000 victims and 50,000 victims in HK and Taiwan just want to feel "shiok" even we lose the case."



And no one has YET gone anywhere NEAR the Courts door.

Anonymous said...

If 500 investors participate, 1,000each mean 500,000 to start with!

Anonymous said...

*sigh* looking at all these comments, its no wonder these happens

Anonymous said...

Make this the biggest class action suit in the history of Singapore!

Such action alone will make big news impact, never mind the final outcome.

It's worth all the time, money and effort for a big negative publicity on the FIs and MAS. Mass power is strength and will surpass any authority!

We just need one or a few mobilisers for this effort. Tan Kin Lian is a natural choice with a few dedicated ones to assist him in it.

Anonymous said...

"Take MAS to court as well - they failed miserably as the gatekeeper"


Despite all the symptoms,

The Little Red Dot is NOT a Nanny State.

I think that resolves a few disputes to begin with, ahem.

Anonymous said...

Go for a class action suit and make it the biggest in the history of Singapore!

Such action alone will make big news impact, never mind the final outcome.

It's worth all the time, money and effort for a big negative publicity on the FIs and MAS. Mass power is strength and will surpass any authority!

We just need one or a few mobilisers for this effort. Tan Kin Lian is a natural choice with a few dedicated ones to assist him in it.

Anonymous said...

it is vry tedious and hard to sue anyone in USA. There was a case Iris against infringement. before any conclusion USD 2mil already spent. Fellow. what we need is a campaign to BOYCOTT all AMERICAN make products, like AMERICAN EXPRESS. FED EXPRESS, IBM, DELL, Apple, hehe Microsoft. Don't fly BOEING aircraft...F16??(hehe) and what else? oh.. Vigra also...
Can we all do it and make a shocking waves back to US?
BOYCOTT AMERICAN GOODs..until they compensate all TAXIC CDOs in SGP and HK.
What you said friends?
They just close shop and follow the rules...Your Money is gone, BUT BOYCOTT can means a lot!
Don't fly Boeing. Don't use vigra..hehe

Anonymous said...

How about STARBUCKs... Now KOPITIAM lioa...and ROTI KAYA...
Ya ya
NO NBA, NO CNN, NO bush NO Obama...

walau

Anonymous said...

Here we go again


"Make this the biggest class action suit in the history of Singapore!"

"Mass power is strength and will surpass any authority!"

"what we need is a campaign to BOYCOTT all AMERICAN make products...."

"Don't fly Boeing. Don't use vigra..hehe"

Anonymous said...

8.21pm,
pls dont write rubbish

Anonymous said...

I say SUE ! Let the dirty laundry of the FIs be shown to the world !!! When the truth is unveiled in court, let those ministers who made insensitive remarks against the victims eat back their words !!!

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