Tan Kin Lian's Blog: Town councils should take legal action for mis-selling

Wednesday, November 19, 2008

Town councils should take legal action for mis-selling

This letter has been sent to Straits Times, Today and Zaobao.

Editor
Forum Page
Straits Times

Eight town councils have invested a combined sum of about $16 million in the credit-linked notes, including the minibonds, pinnacle notes, high notes and jubilee notes. Some of these notes are worthless. Others have lost a large part of their value.

The funds of these town councils belong to the residents who pay the conservancy charges. The town councils have the fiduciary duty to invest these funds carefully.

I suggest that the town councils explain if, when making the investment, they were aware that the credit linked notes carry the risk of the entire loss of the principal on a credit event involving any one of 5 to 8 reference entities, and the additional risks of the defaults of a certain number of 100 to 150 underlying assets, cormprising of collateralised debt obligations, subprime mortgages and other risky products?

Were the town councils aware that the risks of these credit linked notes are many times of the risk of default of a single entity? Does the return of around 5% commensurate with this high risk?

Were the town councils misled by the financial adviser who sold the notes or by the mis-representation contained in the sales materials or prospectus. If this is the case, I suggest that the town councils should take a legal case against the distributor for their negligence or bad advice and to seek fair compensation for their losses.

As the sums involved are quite large, the town councils should take the appropriate action to discharge their fiduciary duty to the residents.

If the town councils succeed in their action, the outcome will indirectly benefit over 10,000 helpless individuals who were also misled into investing in these credit linked notes.

Tan Kin Lian

98 comments:

Anonymous said...: I think town councils are just like us, being misled to think that these products are relatively safe. Nobody is silly enough to risk the whole principal for that 5%pa profit.
I hope the government will seriously look into this big matter. Otherwise in no time, we will see hike in conservancy fees.

Jasmin; November 19, 2008 12:17 PM
Anonymous said...: Indeed the sums investment are by no means small. On HINDSIGHT the investment made by the town council looked like a bad move. But in terms of weightage allocated to these investments within the portfolio, I would argue that the allocation was prudent.

It was responsible as it practiced 'divesification'.

This is my 2cts.; November 19, 2008 12:31 PM
Anonymous said...: who did these town council buy from?

did the person representing the town council bought from a FA he/she knows personally?

this information ought to be made public now that money has been lost.; November 19, 2008 12:34 PM
Anonymous said...: This is a great letter. This is to shutup the naysayers who said why complain over a failed investment. Even with BIG OPEN-EYE, the town councils can fall into mis-selling.

- OTB -; November 19, 2008 12:37 PM
Anonymous said...: Mr Tan,

So everyone is being MISLED by the average 20something Relationship Manager??? Some PAP MPs were reported to have lost their money in such Notes too. So they are also MISled??? So they should also take legal action???

FOR GOD'S SAKE, PLEASE WAKE UP!!!; November 19, 2008 12:48 PM
siewkhim said...: Kin Lian,

By doing this openly, you may be making additional powerful enemies who are financially and politically protected.

It will make your other job more difficult and problematic for the "victimised" investors.

I think you are threading on very dangerous grounds.

Suggest to do it close doors.; November 19, 2008 12:52 PM
Anonymous said...: Suggest add following to the penultimate paragraph:

"If Town Councils act assiduously in their fiduciary duties by threatening or taking legal action against residents for lateness in paying their conservancy charges, I now expect these same town councils to act by taking action against those who fraudulently or otherwise, misled or misrepresented their financial products resulting in substantial losses of residents' common funds.Disciplinary action should also be taken against the officials responsible for thoughtless ineptitude in rudimentary investment analysis and decision making".; November 19, 2008 12:57 PM
Anonymous said...: Mr. Tan,

I agree with siewkhim's view. Please consider carefully.

A close door option may be a better approach.; November 19, 2008 1:20 PM
Anonymous said...: Dear Mr Tan'

This is a GOOD letter.No improvements needed. Town Councils ought to be accountable to us - the one who PAYS and PAYS.; November 19, 2008 1:21 PM
Anonymous said...: Mr Tan

First you must know whether the Town Councils (TCs) agree that they have been misled. If they also think that they go in "with their eyes open", then of course case closed. Then you must think how to respond to this.

So before asking TCs to take legal action, you must first ask them to clarify on the above in your letter.; November 19, 2008 1:32 PM
Anonymous said...: Dear Mr. Tan,
For once, Siewkhim is giving a good advice. You may be seen as try to stir up the emotion.

It would be better to do behind closed door with the strategy committee.; November 19, 2008 1:39 PM
Anonymous said...: no need close door. We are responsible citizens for check and balance (since there is no strong opposition party for this work).

- OTB -; November 19, 2008 1:46 PM
Anonymous said...: You know what is my greatest fear? When election time comes along, the garmen throw a few goodies to us, all is forgotten and they continue with their rule.; November 19, 2008 1:46 PM
Anonymous said...: We were branded "greedy" for the extra return just to hedge against inflation investing in these toxic products. Ha, see who has joined the club!; November 19, 2008 1:47 PM
Anonymous said...: Dear Mr. Tan,
Please do not be discouraged by some people who try to stop you by citing political pressure. The whole nation is watching what you are doing for the helpless, and in fact the political pressure is on the other side.
One thing you may want to add in your letter is that by investing in those toxic structured products such as high notes and minibonds, are these affected town councils breaching the guidelines that allow them to invest only in safer bonds, equities and unit trust funds? As we all know that structured products are actually not bonds or equities or unit trust funds and are highly risky.; November 19, 2008 1:51 PM
Unknown said...: MM staed that as investors, we should read the prospectus and be aware of the risks and therefore can blame nobody. So likewise, the town council should also have known about the risk and deliberately invested in the product. This deviate from the role the town councils are playing. How can the town council 'gamble' away our monies without the apporval of the residents? There must be accountabilty on the person / team in charge. However ,if town councils had seek financial advice and were made to believe that the structured product are safe, then it had happened similarly to us, the laymen. It is clear-cut case of mis-representation. Our monies can never be recovered but I felt that heads must roll. I hope MM and the relevant authority can see the point and take necessary action.; November 19, 2008 2:03 PM
symmetrix said...: Dear Mr Tan KL,

Your idea of writing to the press is good, but I suggest you pls let someone else drive it. I may be selfish here, but I feel that you are needed more to lead the fight for the rights of the thousands of small retail investors.

Granted, town councils, commercial institutions etc may have also been misled but they had "experts" to advise them. Retail investors had none of this "luxury".

It would be better if residents of the affected town councils write to the press instead. Thank you.; November 19, 2008 2:08 PM
Anonymous said...: What about adding

The size of the surplus funds and the inability of the town councils to find safe avenues of investments, shows that something is wrong -- that the funds collected are in excess of the amounts needed to maintain the estates.; November 19, 2008 2:08 PM
Anonymous said...: Mr. Tan, You are treading on thin ice.You will be stepping on someone's toe. I believe they are trying to hush it up.Forget it . I suggest you focus on the ordinary investors . We are near there.; November 19, 2008 2:09 PM
Anonymous said...: Dear Mr. Tan

May I suggest the following to replace the para "I suspect that the town council were probably misled...." by

"It would be enlightening if the Town Councils would shed light on how they began to invest in these credit linked notes. Did the Town Council actively search for such instruments to "diversity" their portfolio or did the banks knock at their doors. In either case, it would be useful to know how the investment team in the Town Council came to the conclusion that such products are suitable. If there is mis-selling, it is the fudiciary duty of the Town Council to pursue further".

for your consideration...; November 19, 2008 2:10 PM
Anonymous said...: I don't think close door is the right approach. This concerns thousands of affected constituents and 10K affected noteholders. It is better to be transparent in the discussions.

The letter is good, I see no amendments needed.; November 19, 2008 2:15 PM
Anonymous said...: This is a great letter, please send to Lianhe Zaobao also; November 19, 2008 2:19 PM
Anonymous said...: Why closed door approach?
What happens to democracy?; November 19, 2008 2:26 PM
Anonymous said...: Is the Straits Times going to publish this letter ? - Hope so!
Even if they do, is our two TC's going to say that they were misled by the RM's FIs and hence going to seek compensation ? - unlikely !
Why?
Looking at those comments (which i will call them 'justifications') given by our MPs for and on behalf of the TCs, the Message is clear : don blame your TCs folks, because :
1. they are also victims of this unforseen financial crisis. (hindsight is irrelevant : they went in with eyes opened but unforseen circumstances occurred!)
2.They had been prudent with your money, only lost 6.7% /2.6% out of the 35% that they are allowed to ( be grateful it's not more !)
3.overall there are still accumulated surpluses in these TCs
(so this loss of $14M is immmaterail !)
4.They ought to buy these structured products in order to preserve value of your money as inflation is higher that FD int.( so they are good financial adviser
doing a neccessary job!)
Conclusion : looks like our TCs is going to accept
1. that they went in 'with their eyes opened'
2. 'buyer aware' applied
3. that they are resigned to their bad luck brought about by the financail crisis
Of course, hopefully, i am wrong about this.
Don know if there is any legal and policy implications, just to say that this event of TCs losses which only surfaced recently may not neccesarily be a good thing for investors seeking compensation from FIs. If the two biggest 'investors' with biggest 'losses' in Singapore is not complaining, why should you ?; November 19, 2008 2:33 PM
Anonymous said...: Why not sent it to each town council? Or that PAP co-ordinator

Friend asking -- TKL gave up on petitions is it? Why not petition town councils he say.; November 19, 2008 2:33 PM
Anonymous said...: For our cause against those big bullies,
all of us should help to write to Town councils, all print medias, post in blogs and MPs.

ch; November 19, 2008 2:36 PM
Singapore Kopitiam - Voices of Singaporeans said...: Dear Mr. Tan:

Thank you for your proposal to write to the 8 Town Councils concerning their losses of investments in toxic credit-linked products. The rate-payers certainly have the rights to seek answers from the 8 Town Councils and to press for recovery of these ill-advised investments.

In preparing your Letter-to-the Editor, you might want to consult the excellent postings at Singapore Kopitiam Forum:

(1) 8 Town Councils' losses scorecard
http://forums.delphiforums.com/n/mb/message.asp?webtag=sunkopitiam&msg=13511.1

(2) 8 PAP TCs lost $16 mil in investments
http://forums.delphiforums.com/n/mb/message.asp?webtag=sunkopitiam&msg=13373.1

(3) Who cares when town councils lost money?
http://forums.delphiforums.com/n/mb/message.asp?webtag=sunkopitiam&msg=13529.1

(4) Town Council Revelation of losses
http://forums.delphiforums.com/n/mb/message.asp?webtag=sunkopitiam&msg=13517.1

(5) Town Council ignorant about risky bonds
http://forums.delphiforums.com/n/mb/message.asp?webtag=sunkopitiam&msg=13571.1

(6) Town councils lost $12 million
http://forums.delphiforums.com/n/mb/message.asp?webtag=sunkopitiam&msg=13309.1

(7) Town Council losses: Who's accountable?
http://forums.delphiforums.com/n/mb/message.asp?webtag=sunkopitiam&msg=13534.1

(8) Town council lost $12M ??? ...Who cares!
http://forums.delphiforums.com/n/mb/message.asp?webtag=sunkopitiam&msg=13505.1

May I suggest that the letter be sent to the Straits Times and copied to all 8 Town Councils for their responses?

Regards,
Victor Sun
Singapore Kopitiam - Voices of Singaporeans
http://forums.delphiforums.com/sunkopitiam; November 19, 2008 2:37 PM
Anonymous said...: In today's The New Paper, someone said:

"When more and more people think that a product is low risk, the bubble situation may arise where a low risk product might explode in your face and become a high risk product.'"

Huh? Lim Bei Liak Bo Kui!; November 19, 2008 2:44 PM
Anonymous said...: 1.47pm,
Only Ignorant idiots say investors, (including the town councils, professors and MP's, of course)are greedy. But they themselves put their money in CPF special account earning the same interests as investors instead of Fixed deposits or the ordinary account. And they elect these MP's; November 19, 2008 2:51 PM
Anonymous said...: Town Council definitely must pursue as it is their responsibility. Otherwise, the respective MP must pay from their own pocket. Is this fair Teo Ho Pin, to start with your own pocket! Surprising to hear that Ho Pin argued that the residents should call themselves lucky! I think he owes the people an apology!; November 19, 2008 2:57 PM
Anonymous said...: The number is not correct - 10,700 are the DBS HN5, ML Jubilee3, LB Minibond all series & Pinnacle CLN 9 & 10.

There are more testng the water now such as DBS HN2 & Pinnacles CLN 1,2,3,5,6 & 7.

It can easily add up to 15,000.

Institutional buyers concern, it is reported that Holland-Bt Timah TC lock $3m in Pinnacle CLN 6 and PS 6 can only permit not more than 2 REs in reference portfolio of the underlying assets to fail completely (judge from the recent auction of the three Islandic banks which could only reaslise an extremelly low 1.25%, 3% & 6.625% of the par value); November 19, 2008 2:58 PM
Singapore Kopitiam - Voices of Singaporeans said...: Dear Mr. Tan:

Regarding your 2nd draft, the information mentioned in the first paragraph is not accurate. There are 8 Town Councils losing $16 million in toxic investments.

May I suggest you replace the first sentence "The Holland-Bukit Panjang Town Council and the Pasir Ris-Punggol Town Council have invested a combined sum of $12 million in the credit-linked notes." by "The Holland-Bt Panjang Town Council, Pasir Ris-Punggol Town Council, Ang Mo Kio-Yio Chu Kang Town Council, Hong Kah Town Council, Tampines Town Council, Aljunied Town Council, Marine Parade Town Council, and Tanjong Pagar Town Council have invested a combined sum of approximately $16 million in the credit-linked notes."

Regards,
Victor Sun
Singapore Kopitiam - Voices of Singaporeans
http://forums.delphiforums.com/sunkopitiam; November 19, 2008 2:59 PM
Anonymous said...: Dear Mr. Tan,
Instead of writing to the press, it will be better that you turn this into a petition for all Singaporeans to request the Town Councils to respond.

Please take care.; November 19, 2008 3:03 PM
Anonymous said...: Dear Mr Tan,
Earlier on you fight for 10,000 individual,which is commendable.
Now you try to find fault with the top men in the TC . This is unwise.
Let someone else do it.
You are a very nice man please dont get into troble.; November 19, 2008 3:08 PM
Anonymous said...: Just look at page 3 of TODAY paper and see how arrogant Dr Teo is. Instead of being apologetic, he is now asking the residents to "be thankful" - for what? for voting him in and making such blunders!; November 19, 2008 3:10 PM
Anonymous said...: I suggest Mr Tan do a petition as well. Many residents would want the lossess investigated and accounted for.; November 19, 2008 3:11 PM
Anonymous said...: How about doing all?
1) Writes to all the press
2) Writes to the town councils
3) Petition to the ministry in charge of town council
4) Hold rallies in Hong Lim Park
5) Writes to MPs to bring up in Parliment.

Just don't let them sweep under the carpet and gives us MAS Selamat accountability.; November 19, 2008 3:16 PM
Anonymous said...: Hi Mr. Tan, please proceed as soon as you can.

All the points you raised are valid. In fact, these points should be raised by the MPs who are responsible for all “checks and balances” and they are sitting in this specific Parliament session.

You can also ask residents of Pasir Ris-Punggol to provide you list of board members who involved in approval of Investments, including these ‘risky credit-linked notes’.
Then you can approach those board members who have solid financial knowledge.Their inputs will be part of a chapter, titled “Negligence or Wilful mis-selling? “, in yr new book.; November 19, 2008 3:19 PM
Anonymous said...: I know you mean well and your angle is to help the current batch of investors whom you are helping. But I doubt the TC's will ever admit to being misled. It's just not politically correct within the party to admit their own folly or shame. Look at the arrogant way they put it: "you should be thankful....bla bla bla".

I would prefer to Petition the President to do his job to call for an investigation on how these monies were lost through such investments and to review their risk categorisation. Petitioning to the PAP- PM would be a conflict of interest anyway. These are public funds and rightly so, these losses have to accounted for to the people of Singapore as a majority of TC's have been involved in varying amounts.
The SS; November 19, 2008 3:45 PM
Everlearning said...: Dear Mr Tan,
Now that all Singaporeans know about most of the Town Councils bought into these dubious structured financial products, we are waiting to see and hear what will be the follow-up of this matter.

It is very obvious that either they keep in their passive mode (do nothing about it) or join with us to ask for compensations from the banks or financial insitutions.

Obviously, they cannot write-off these losses because the public funds are not minimal sums ($12 millions or $16 millions).; November 19, 2008 3:54 PM
Anonymous said...: Dear Mr Tan

Please consider carefully, those who are affected would want you to go ahead. I as one of the victims hope that you can protect yourself because we need you and do not wish you get into trouble.; November 19, 2008 3:56 PM
Anonymous said...: I do applaud you for what you are doing for normal citizens like us. Thread carefully though.; November 19, 2008 3:56 PM
Anonymous said...: Dear Mr Tan

What SiewKhim said is right, please consider carefully. Those who are affected would like you to go ahead, as one of the victims, I would like you to protect yourself because we need you, please do not get into trouble.; November 19, 2008 4:03 PM
Anonymous said...: Dear Mr.Tan,

I am here fully support you and all the investors. Ignor those people who critized on you. As long as you know yourself well that you are helping the helpless investors.

Now, I saw how HK had handle this matter with efficiency. Singapore is far behind HK. All of you must act faster toward sue the bank.

Town Council should also join your group to act together. The money from town council are from the people.

Such a big amount can help so many poor and needy people. It were lost in this way, so sad.; November 19, 2008 4:41 PM
Anonymous said...: If what we do is considered radical and extreme by the government and ruling party, then there is no democracy in singapore. We are just crying out for help for something unfair done to us.; November 19, 2008 4:46 PM
Anonymous said...: Dear Mr Tan,

It may not be a good idea for you to put your name to this letter to the press, as you may draw further flag from the authorities. I share the same setiments as VS Lingam (2.08pm)

Perhaps a resident from one of the TCs involved can send this letter and, as a concerned resident whose money has been "wasted" away, justify his action in querying the TCs.

$16 million is not a small sum. Can the members of the TCs cough out this amount to compensate the residents?

I am not sure whether the press will publish this letter as I note that none of the letter against the authorities have been publish but a letter against you was published this week.

Concerned Investor; November 19, 2008 4:52 PM
symmetrix said...: Town Councils need to answer the flwg simple question:-

Were they told that these investments were low-risk?

If the answer is YES, then they were misled. Hence Town Council must take remedial action to recover their loss, either by seeking compensation from the FI or the legal route.

If the answer is NO, then they knew that these were very risky investments. So why did they invest in them for only 5% interest versus total loss of investment? There are other safer ways to diversify.

Town Councils must come clean on this.; November 19, 2008 4:57 PM
Anonymous said...: Mr.Tan,perhaps before sending the letter to the press, let your readers sign like as in a petition so that you won't be so affected. We Singaporeans have a right to know, in addition, your letter will carry more weight and so The Straits Times will publish it. They can't ignore not to publish the letter if more than ten thousands ppl sign it. I will definitely sign it.

Whatever you are doing, it is for Singapore. I believe most of us are all praying for you (I do) and God is looking out for you. You have shown me what courage to pursue the truth is. You are an epitome of what integrity is about. Doing the right thing inspite of unknown danger.

Indeed I am concerned. Do you know Teo Ho Ping in Today paper,said that we should be thankful? It is inappropriate for a minister to comment like that after losing $8 million of hard-earned money. I believe he lack the financial prudence and foresight like you to invest in this toxic product. Hmm, what he said just make Singaporeans' blood boiled. At least, he should be gracious and say sorry for making mistake. We Singapoeans are not unreasonable. We understand that no one want to invest to lose money. Hmm, I have a feeling our govt is going downhill. Just look at how arrogant our ministers are, asking us to be thankful when they lost $8 million. If they think they are entitled to lose our hard-earned money since they made profits in previous investment (dangerous comment), I think they are not fit to be ministers. If they continue like that, I will not vote for them again.
I am now afraid the old Chinese saying will come true, Wealth do not last 3 generations. The effort of our predecessors Dr.Goh, Lee Kuan Yew and other great leaders are being squandered by current ministers like Teo Ho Pin who think it is alright to lose money, very worrying.; November 19, 2008 5:35 PM
Anonymous said...: Mr.Tan,

Town councils are obviously misled.
But I do not think they will complain or claim they are misled.
As to them, supporting MAS and the government is more important than the public's interest.

Therefore, I support 3:03PM's suggestions and ask the TCs to disclose their finaicial advisors' report. Did they suggested the TCs buy the products as low risk products or as high-risk products to seek for the highest return? If TCs bought the products as low-risk products, they are obviously misled to buy the actually high-risk products and FIs should compensate the TCs.

XH; November 19, 2008 5:41 PM
Anonymous said...: Dear Mr.Tan,

Pls send the letter to publish. You work with courage. There must not be any fierce there.

If you think whatever is right. Go ahead and do it.

Many investors are count on you.
I am sure, you can, you will success.
政府这次真的失算了。明明是可以争取民心的机会现在反而让人民感觉社会公义的失去。; November 19, 2008 5:43 PM
Anonymous said...: 股市 > 財經新聞 > 國際財經
寄給朋友友善列印
低風險變高風險英國AIG苦主擬控巴克萊等4大銀行誤導
2008/11/17 13:55 鉅亨網

【鉅亨網編輯查淑妝‧台北綜合報導】英國一批投資者指控巴克萊財富、匯豐、Coutts和瑞銀等4間大銀行，指它們在推銷美國國際集團(AIG)一個基金時誤導，將該基金聲稱是「存款以外的一種低風險投資」，結果害他們損失高達25%投資本金。

《香港文匯報》引述《星期日泰晤士報》報導，有 500名投資者已向這 4間大型銀行發出公開信，指它們在推廣「Premier Access Bond Enhanced」時誤導，指該基金實際是投資於通用汽車等美國大企業發行的「AAA」和「AA」級債券，債券價值因信貸危機暴跌， AIG擔心資金流失引到崩潰，今年 9月已停止該基金運作。

該基金共有5500名投資者，平均每人持有約 100萬英鎊。該500人組成網上組織「AIG苦主」，表示其中一人投資達7000萬英鎊。

他們說：「若銀行拒絕賠償損失，將提出集體訴訟，索賠10億英鎊。」

巴克萊財富表示會嚴肅處理誤導指控，並徹查事件；Coutts和匯豐都表示正與受影響的戶商討；瑞銀則未有置評。
Hi all i download this from yahoo finance pls 5,500 investor lost 25% of their investment they want to sue the the FI for mis-selling. What abt all of us.; November 19, 2008 5:43 PM
Anonymous said...: Dear Mr Low Thia Khiang and opposition members in parliament of the Republic of Singapore.

If you are reading this blog, i urge you to do something like what is proposed, to demand of the ruling party to be accountable to their actions re. the Town Council fiasco. This is the right thing for the opposition party to do!

It is incorrect for Tankin lian to approach the opposition party as this will politicise the situation and make it as though tan kin lian wants to join politics.

It is incorrect also for Tankin lian to send this letter to the government. He is a mere citizen and has little power to challenge the Town Council machinery.

IT is the time for the opposition party to use their rhetorical skill, their logical powers of debate and demand action. When individual investors are burnt we can let Tan kin lian handle. When Town Council is burned, tan kin lian is not the correct party to act. If Oppostion don't speak up, how can we vote for you again in future? You should step down as well..

regards; November 19, 2008 5:56 PM
Anonymous said...: Yes, it is a shame that Straits Times only published letter that criticised you but not the letters that criticised the govt. It is not a fair newspaper.

I now realised the danger of one-party. It seem that no minister is voicing their concerns in this saga but instead said be thankful. Yes provided the one party is honest, transparent and not arrogant. If they think just because they helped to propel singapore to success, now they have the right to waste the effort of our previous ministers? Last time, I was against two parties, now I think it is a danger to have one party in Singapore. Of course the oppositions must be capable. But sad to say, our current oppositions are weak, it seem that they are not doing much to help to voice out but only Mr.Tan is helping the investors. To build a credible oppositions party, there must be people of high calibre to match the PAP. I now realised the danger of one party is that some ministers are afraid to voice their opinions that differ to the leader as it will affect their promotion. Who want to offend the big boss? Sad, I thought there are some good ministers in pap, but they are not speaking out for the poor investors.; November 19, 2008 5:59 PM
Anonymous said...: Dear Mr Tan
I have nothing but sincere high praise for you. You are indeed my Hero.

Everyday I feel sad for all the ordinary people in Singapore whether old or young, educate or uneducated. It seems now that it's more advantageous to be uneducated. In this particular financial crisis situation in Singapore, the irony is that being educated has now backfired on us when many of the people have spent thousands of dollars to obtain higher education.
Taking away ordinary people's hard earned money was easy (because Singaporeans for many years have trusted the financial institutations and system). It seems like Robin Hood is stealing from the average/poor income earners to give to the rich/banks. Common Singaporeans (unlike the American society which is very litigious), are not litigious, we do not know how to sue and we don't have lawyers. Banks are producing documents for customers to sign, many sign out of the big word 'TRUST'. How many really understand all the technicalities and financial jargons used in the documents although educated. Are Singaporeans now called upon to engage a lawyer whenever they go to a bank. Even opening FDs, a customer would have to sign a document consisting of several pages of small prints. This trust I think has now been shattered for many. Are we building a society of mistrust? I am certain our town councils also went into it out of trust.; November 19, 2008 6:38 PM
nhyone said...: What has happened is not interesting.

What is interesting is how much more of the TC's investments are in such now-risky structured products.

News report said stat boards have 14% in CLN, but it didn't reveal the amount.; November 19, 2008 6:40 PM
Anonymous said...: Mr Tan,

Forget about writing to the press on this one. I know you are doing the right thing but the elites will not allow you to get away with it. The political machine will come out in full swing to discredit you, cast doubt on your motive,and it will be very ugly. Our society will not be able to give you the support to stop them, and you may find yourself the loneliest person on this island. Just look at all the comments --- how many are willing to post their names!

Even ST has allowed personal attacks against you be posted in its forum pages. Consider why the editors allow it to be printed? They are part of the establishment.

The way our society are structured will leave your efforts furtile. Continue to champion the plight of individual invstors and the elites will find it hard and politically damaging to fault "Robin Hood".

nicholas loh; November 19, 2008 7:09 PM
Anonymous said...: I believe TC went in like average investors, they know the 6 or 8 reference entities but not the "underlying" 100over companies or CDO assets that are unknown at the time of investingin. So no matter how you "walked in with eyes opened" you still hit the lamp post.

B.Y; November 19, 2008 8:32 PM
Anonymous said...: Mr. Tan,

If you ever run for president, you have my vote.

I am sure you will not just attend ceremonies, shake hands, go for official holidays etc. You will be a REAL president! Ask lots of questions as what the one before this one did.; November 19, 2008 9:00 PM
Monsoon said...: Since Susan Long has exposed NKF Durai, how about encouraging her to investigate and write an article on this? or has she left? Where is Lee Han Shih? He is one guy who call a spade a spade. Singapore need more of such people give us a viable alternative to the current establishment which seem to be out of touch with the reality on the ground. It has become a them and us mentality.; November 19, 2008 9:06 PM
Anonymous said...: Hello folks,
The MPs in the affected town councils will not ask for compensation. Those money lost are YOUR money not THEIR money. See the clear picture. In addition to that, they want to maintain good relationship with the FIs in order to build OUR DREAM FINANCIAL HUB!!!!!; November 19, 2008 9:18 PM
Anonymous said...: All town councils should open their accounts for inspection by residents if requested.; November 19, 2008 9:23 PM
Monsoon said...: Dear Mr Tan - Beyond the issue of minbonds, you are teaching us fellow Singaporean to learn to stand up and not be afraid of the authority when we are upright and we speak the truth. On the other hand, the authority is afraid now because they are denying the truth.
The authority has many ways to counter you and I am sure they will not let this pass lest they lose their authority. They will try to retake the initiative from you.

To retreat is something they hope you will do like when you decide not to push further after the Income agm, it's a waiting game and hoping you will do something they can pin you up against.

How about getting a permit to organising a bicycling event at the ECP? It should be non political but to improve our health and take our mind off the stress due to the losses incurred by so many investors?; November 19, 2008 9:29 PM
Anonymous said...: Mr Tan,

Please recalculate the percentage of their potofilo.

It should be percentage of allowed invesment amount but not percentage of total amount. Then you can see much higer portion was invest in these CDO products and the only reason to explain the high allocation is they believe it is a very low risk product.; November 19, 2008 9:45 PM
Anonymous said...: A lot of pple i notice was really focused on

1. Personal Justice and Refund
2. Authority Investigation and FI response
3. Several Ministers Response
4. Town Council Involvement

Have anyone ever spare a second and think

WHY WOULD THE MEDIA RELEASE THE TOWN COUNCIL INVOLVEMENT AT THIS STAGE?

Ok some might say

i. They have been slowly counting up their losses
ii. They realize paper cant wrap up fire

But have anyone seriously think why would they make such announcements KNOWING fully well of the several Ministers' responses before that

What prompted them to release such info, and most imptly, WHY

There could be 2 primary reasons:

A. They might also want to get a piece of action at the Refund pie
B. The Almost Unthinkable: They are prepared to take the loss as is

Its easily understandable why they would they want to get into the Refund pie.

BUT what if, just what if its The Unthinkable Plan B??

What if they are ready to forsake those losses, WHAT DOES THAT IMPLY FOR THE INDIVIDUAL INVESTORS

Could they, even as full fledged public organizations have found no better means, legal or otherwise, to have recover those sums!??!

If they cant get back 12million+-, what about the personal investors??

has anyone really thought into that

I had and I feared the worst.; November 19, 2008 9:51 PM
Anonymous said...: 9.18PM,
you are right. Town council will not pursue the case because the money isn't theirs. It is ours.
They bochap but the affected constituencies must not let it rest.
They must query the MPs and hold the MPs accountable.; November 19, 2008 9:51 PM
Anonymous said...: Dear Mr Tan

Some editorial amendments,

"Eight town councils have invested a combined sum of about $16 million in credit-linked notes, including minibonds, pinnacle notes, high notes and jubilee notes. Some of these notes have become worthless. Others have lost a large part of their value.

The funds of these town councils belong to the residents who pay the conservancy charges. The town councils have a clear fiduciary duty to invest these funds carefully as well as be answerable for their actions.

The town councils should explain if, when making the investment, they were aware that the credit linked notes carry the risk of the entire loss of the principal on a credit event involving any one of 5 to 8 reference entities. Were they also aware of the additional risks of the defaults of a certain number of the 100 to 150 underlying assets, comprising collateralised debt obligations, subprime mortgages and other risky products?

Were the town councils aware that the risks of these credit linked notes are many times that of the risk of default of a single entity? Is the return of approximately 5% commensurate with this high risk?

Were the town councils misled by the financial adviser(s) who sold the notes or by any mis-representations contained in the sales materials or prospectus. If this is the case, I suggest that the town councils should take legal action against the distributor(s) for their negligence and/or bad advice and seek fair compensation for their losses.

As the sums involved are quite large, the town councils should take appropriate action to discharge their fiduciary duty to the residents. They should act to protect the interests of the residents under their care.

If the town councils succeed in their action, the outcome will also indirectly benefit over 10,000 helpless individuals who were also misled into investing in these credit linked notes. However, regardless of that, the town councils do have a duty to ensure that they look after the interests of their constituents.; November 19, 2008 10:03 PM
Anonymous said...: don't you think something wrong with these credit-linked products - normally when a credit event happens, credit protection sellers like many affected investors here, should be able to lay claim on assets like those toxic houses in America, however these products have probably be structured to the extent that now protection sellers here get zero.; November 19, 2008 10:50 PM
Anonymous said...: the announcement came at a time that provides a small window of timeframe for parliament. if it was released on during the immediate aftermath of sept 15, then many NMPs and other particpants can prepare many questions in advance. i imagine we should be able to see a good ending for 10,000 investors because potong pasir and hougang has not lost money, surely PAP must win the losses back, otherwise it is a loss of face. having said that, i think MM must feel really bad, as if given a black eye by the announcement, because he coined the phrase "going in with eyes opened wide". if only he was briefed about the losses before his comments.... or was he?; November 19, 2008 11:17 PM
Anonymous said...: Dear Mr Tan,

Would you consider running for Singapore presidency in the next elections?; November 19, 2008 11:29 PM
Anonymous said...: Wonder besides saying each town council can use up to xx% of the sinking funds in shares/bonds... as reported by the minister, should ask what are the detailed guidelines for investment ? Can't be no strict guidelines when it is dealing with our citizens' money right ? Was there guideline that investment must be principal protected ? Did TC violate the guideline ?
BH; November 19, 2008 11:41 PM
Anonymous said...: Dear all,

Besides Mr.Tan, we also need people like Susan Long, Tan Sai Siong, Lee Han Shih, Toh Thian Ser.... We need their supports to write some articles forcusing on the ‘toxic structured products sold to retail bank customers’!; November 20, 2008 12:03 AM
Singapore Kopitiam - Voices of Singaporeans said...: Hi Mr Tan:

Thanks for your excellent work.

Those investors losing their investment money on minibonds, DBS High Notes, Pinnacles, etc. should also pressurize their respective Town Councils that lost money in credit-linked notes to recover the Town Council's investments from the Financial Institutions. These are their rights as residents in the constituencies governed by the Town Councils

The more people act on these, the better chance to recover the investments.

Regards,
Victor Sun
Singapore Kopitiam - Voices of Singaporeans
http://forums.delphiforums.com/sunkopitiam; November 20, 2008 12:09 AM
Anonymous said...: We all including the Town Councils have been duped by these unscrupulous chow angmos financial engineers in their scam financial products. The Town Councils should step and bring these people to court like what they have done in the US. The Town Councils should be more savy in their investments vis-a-vis the 10,000 thousands (eyes wide open) investors!! Stand up for Singapore & for justice!!!; November 20, 2008 12:11 AM
Anonymous said...: Anon 9:51 wrote:

"Have anyone ever spare a second and think

WHY WOULD THE MEDIA RELEASE THE TOWN COUNCIL INVOLVEMENT AT THIS STAGE?"

When I saw your question the first thing that came to mind was "Is the papers trying to sabotage the govt?" like tossing a lighted cigarette at a fuel depot?; November 20, 2008 12:11 AM
Anonymous said...: One point my uncle who "invested" in the minibonds told me. He was not being greedy he protested, but he had no choice but to try to maximize whatever savings he had because he cannot expect the government to help him. If he did not invest, his money would not be enough. I was struck by what he said because it is true: many retired with inadequate savings to last their old age and they do not have any sympathy or help from the state. My uncle invested and now his money is gone. So all he can do is wait for old age and death.; November 20, 2008 12:19 AM
Anonymous said...: I think it may be useful to advance the planned meeting at Hong Lim Park next Saturday to this Saturday 22 November.; November 20, 2008 12:20 AM
Anonymous said...: The release of information about the losses by the Town Councils and MAS are part of an overall political move to show that these are legitimate products. The move is to defeat the arguement that these are illegal products which should never been sold to the investing public in the first place.

Politically, there is no way that a legal action will be allowed to succeed in the Singapore's courts. The Singapore courts are fair 99% of the time. However in the 1% of the time that the decision has significant political implications, then there will be executive guidance on what the "correct" decision should be.

Hence while there is considerable anxiety to do something now, it would be best to wait for a precedent to be established in another jurisdiction e.g. Hong Kong. If there are a series of sucessful law suits across the world where banks are made pay compensation, then it will make it very hard for the Singapore courts to rule against such compensation. The last thing you would want is for a Singapore court to set the legal precedence for such cases.

At the same time, sucessful action overseas would put pressure on the Singapore government to act in a way which is consistent with what has been established internationally. Your blog and speeaches at Hong Lim are therefore crucial since there would be an effective media blackout on such news.

Really appreciate your time and effort to help those who have lost money and ensure that there is a fair outcome.; November 20, 2008 2:46 AM
Anonymous said...: Many bankers are having sleepless nights.
But one fellow who left DBS and enjoy wife with his 'missed family' is laughing his way to swissbank for most succeesful penetration of TOXIC CDOs to Singapore...

The Ex-CEO....
SUMMON HIM; November 20, 2008 4:49 AM
Anonymous said...: Can we pin our hope on the town councils involved to join-force with the retail investors to form a larger and louder voice?
But if the gahmen chooses to close both ears, even more bombs dropped are also fruitless.

Jasmin; November 20, 2008 7:30 AM
Anonymous said...: When retail victims suffer, it is bec they are greedy, ignorance, stupid, deserved it, go in knowingly, etc............
When TC loss and suffer, it is:
"We have to be realistic. It’s easier to say things with hindsight, but it’s not so straightforward."

Double standard???; November 20, 2008 7:55 AM
Anonymous said...: While I don't challenge TCs diversified portflio in their investment, I will question why the 'Structured products' involve CDS(Credit default swap)& Synthetic CDO Securites are chosen (DBS HN5, LB Mininbonds, ML Jubilee 3 & Pinnacle CLN 6,9 & 10 as reported, not sure if there are many more not disclosed. PS CLN 6 has yet to trigger the credit event, how about other PS series?) and the CDS contract is basically used by HEDGE FUND in the direction of speculation, hedging and arbitrage and in short BETTING. Since when TC's fund managers become HEDGE FUND manager & BETTING agent?; November 20, 2008 9:36 AM
Anonymous said...: Mr Tan
I agree with Nicholas Loh and a few others.You are wading into dangerous waters.Look at what happened to certain individuals in the past.'They' just need to ferret out some insignificant matter from 'your past' and 'you will be cast in bad light',worse still a small error may become a criminal offence.Politics is dirty!I think the Town Council saga is already in the public's consciousness. Whether further action is taken by them will be publicly scrutinised. Any wrongdoing becomes self-evident.'They' dig their own grave!; November 20, 2008 10:05 AM
siewkhim said...: Kin Lian,

Let's hope for the best.; November 20, 2008 10:48 AM
Anonymous said...: I doubt TC would claim to be misled. That would have shift the blame to the FI which is not align with current policy direction.

Why would the TC keeping so much money? If 16m is 0.6% of investable amount which are capped at 35% of Total. The total would be 7billion?!

It really anger the people when the "Dr." is unapologetic and tell people to be THANKFUL. It sure make those who voted him feel like Taiwanese who had voted for Chen Sui Bian.; November 20, 2008 11:18 AM
Anonymous said...: Dear Mr Tan,
Hope you have not missed comments from "Anonymous 2:46AM", which gave us a very pragmatic view of likely action/outcome should TCs take any action. Got to think what TCs will do/ not do after this sudden disclosure of their losses? There will be implications on affected investors' claim against FIs, whether it is through arbitration or court case. Through arbitration, it's on case-by-case basis, and outcome can be arbitrary, and is what the FIs wanted? Court case, as Singaspore courts is so efficient, decision may be out even before HK case is decided. Then HK will have to follow Singapore's precedent, not the other way round. It's anybody guess if it would fall into the 99%or the 1% categories as mentioned by Anonymous 2:46AM.; November 20, 2008 1:20 PM
Anonymous said...: sinking fund Definition:
A fund into which a company sets aside money over time, in order to retire its preferred stock, bonds or debentures. A fund into which a company sets aside money over time, in order to retire its preferred stock, bonds or debentures. In the case of bonds, incremental payments into the sinking fund can soften the financial impact at maturity. Investors prefer bonds and debentures backed by sinking funds because there is less risk of a default.

"Sinking fund is less risk of a default" is of paramount importance.

Sinking fund is taught in the 1st day's lesson in Business studies, Accountancy & Estates management disciplines and
Why do they miss out what is 'sinking fund' that their academic qualifications do not suggest:

Dr Teo Ho Pin - PHD (Bldg)(Heriot-Watt U)
Dr Amy Khor - BSc(EM)(NUS) & PHD (Land Mgt)(U of Reading)
Ms Grace Fu - B Acc & MBA (NUS)
Ms Cythia Phua - BSc (EM)(NUS)
Mr Liang Eng Hwa - B Com(Hon)(U of Melbourne)
Mr Md Fisahl Ibrahim - BSc(Real Est)(NUS) & PHD(Mgt Sc)(Manchester)

Why the sinking is in Structure Product embeded CDS(Credit default swap) & Sythethic CDOs?
Not able to comprehend?; November 20, 2008 1:24 PM
Anonymous said...: "So all he can do is wait for old age and death."

Investors, ponder this option. really; November 20, 2008 3:42 PM
Anonymous said...: Thanks for the Chinese reported elsewhere. This is very important to every investors because this is a reference for them. It seems that all the bank around the world are doing Mislead action to mislead the investors to invest into the high risk bonds.

So, all the investors pls group together to prepare to sue the bank.

The below sentences are right:

若銀行拒絕賠償損失，將提出集體訴訟，索賠10億英鎊.; November 20, 2008 5:55 PM
Anonymous said...: anonymous (2.46am),

If the court rules in favour of financial institutions, the Singapore Judiciary looses its stand in society as an impartial forum. If the court rules in favour of the victimised investors, MAS looks bad. Either way, PAP government looks bad.; November 20, 2008 10:02 PM
Anonymous said...: To some heartlanders, a package of chicken rice or fried kway teow cld be kind of a birthday celebration that they can only hv a few times in a year.
Just imagine, $16 Mil can buy how many packages of such things that can bring alot of joys to the children of the poor ???; November 20, 2008 10:26 PM
Anonymous said...: To make it more effective in getting Town Councils to act, perhaps residents (especially those who have bought such products, so they are also indirectly affected and any positive outcome will also benefit them) can lodge such requests/complaints with their respective MPs for them to try to recover the losses should there be potential mis-selling.; November 21, 2008 10:24 AM
Anonymous said...: Good news. Zaobao published Tan's message today :

http://www.zaobao.com/yl/yl081121_506.shtml

市镇会或可采取法律行动
（2008-11-21）

● 陈钦亮
　　据悉，有8个市镇理事会共投资了约1600万元在雷曼迷你债券、富峰债券、HN5等等多种信用联结票据（credit-linked notes）上，其中部分债券和票据现在已一文不值，其余的价值也大为降低，因而蒙受了重大损失。

　　市镇会的资金来自居民所缴交的杂费，市镇会肩负信托责任，必须小心地投资这些资金。

　　我建议，有关的市镇会应解释，当它们进行上述投资时，它们是否知道，这些信用联结票据所承担的风险包括：当涉及联保这些票据的5至8家银行或金融机构的其中任何一家如果违约而拖欠还债时，整个票据将终止，投资者将损失所有的本金；此外，这些票据所包含的债务抵押债券（CDOs）、次贷抵押贷款和其他高风险产品，也另外再涉及了100至150种抵押资产的违约拖欠债务的风险。

　　有关的市镇会是否当时就已经知道，这些信用联结票据原本牵涉的风险，就已比其中任何一家联保金融公司或银行违约的风险，还大了很多倍？而这些票据所承诺的约5%左右的回报率，是否值得投资者冒这么大的风险？

　　这些市镇会当时是否受到售卖这类票据给它们的财务顾问的误导，或者受到促销文件或产品说明书上的文字的误导。若是如此，我建议，市镇会应该针对这类产品的分销商的疏忽或错误咨询，采取法律行动，并要求分销商们赔偿市镇会蒙受的损失。

　　由于上述投资亏损所涉及的款项相当大，市镇会应该采取适当的行动来履行它们对居民应尽的信托责任。

　　如果市镇会的法律行动成功，其结果料将会让1万多个受误导而投资于这类信用联结票据的无助的散户投资者也间接获益。; November 21, 2008 10:36 AM
Anonymous said...: Instead of encouraging TCs to sue banks, this seems like a veiled attempt to criticise TCs for not performing the fiduciary duty expected of them.

Head or tail, the TC loses.; November 21, 2008 12:16 PM
Anonymous said...: I am sure no Town councils will not complaint because these are not their money. If they complaint, their PAP boss will be unhappy and they may lose job. Which town council will dare or care to complaint?

Just collect more from resident if needed, why risk one's own rice bowl when it's not your money?; November 21, 2008 12:25 PM
Anonymous said...: Ultimatly the MP should be responsible. If no one take action against the loss, then vote them out the next time lah!

Why elect someone that lose your $16M and tell you to be thankful for it with an arrogant face?; November 21, 2008 12:27 PM
Anonymous said...: Actually let's just cut to the chase: the Town Councils can do the following. 1. Complain to MAS and the FIs 2. try to get back the money they have lost orare likely to lose 3. do nothing. The silence from the Town Councils is deafening. What are they waiting for? Even if they say, we will do nothing. Too bad chums but we lost the money, tha would be doing something in the face of disaster. As it is they are just sitting there repeating, we did nothing wrong, we see no evil, hear no evil, do no evil. Are they waiting for instructions? Now let's not say that folks and residents are angry with them. Let's just ask the town councils, what do you propose to do? Surely that is not beyond PhDs to answerr?; November 21, 2008 3:37 PM
Anonymous said...: It would be a great shame if the TC's don't act to recover the money, which belong to the public at large. If they knew the very high risk nature of those products before investing then they themselves should be held responsible. If they were misled into buying those products then they must act to recover the money. To say it is ok for them just because it is not their personal asset is totally unacceptable.

Perhaps we need a partition to get them to act.; November 22, 2008 12:02 PM
Anonymous said...: The Town Councils wouldn't act on the loss because the tone was already set by the bosses, it is only 0.6% loss mah, relax, thank them for making overall gains instead, you silly citizens of singapore.

Secondly, by not acting, the Town councils will give support to the official line that "it's life, high risk high loss" don't you ever grumble, you greedy investors, accept the losses!

Thirdly, as commented by someone already, the lost money is nothing personal. In their heads, the town council thinks, "it's somebody elses' money, who cares, as long as i keep my steady job and don't give trouble to my Masters".

REX; November 26, 2008 11:45 AM

Wednesday, November 19, 2008

Town councils should take legal action for mis-selling

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