This Petition is addressed to the chairman of the Monetary Authority of Singapore and ask MAS to review the complaint handling process. Specifically, it ask:
1. That the Monetary Authority of Singapore appoints or sets up an independent unit to receive the complaints and to provide assistance to the complainants to write their statement.
2. That the Monetary Authority of Singapore encourage the financial institutions to adopt a collective approach in offering fair compensation to investors who have been misled into investing in these unsuitable investments, according to the category that the investors fall under. These categories could, for example, be determined by the manner in which the investors were advised or approached by the sales representative, or the alleged mis-information given to the investors.
You can click here to read the full Petition and sign it, if you agree with it:
http://www.petitiononline.com/PRCHP1/petition.html
Friday, October 31, 2008
High Notes Investor Group - Press release 30 Oct 08
HNIG Press Release 31st Oct 2008
1. On Thursday 30th October 2008, in response to a petition by the High Notes Investor Group (HNIG), DBS met up with approximately 400 investors of their DBS High Notes 5 (HN5) product in two separate sessions. Session 1 started at 2.00pm and Session 2 was at 5.00pm.
2. Both sessions were originally scheduled to last one hour, but eventually ran for more than two and a half hours each time.
3. Many attendees urged DBS to treat all investorsas a group rather than go through a case-by-case process on the subject of compensation.
4. To buttress the above argument, the HNIG revealed at the forum that they had requested an industry insider who has experience structuring such products to go through the HN5 pricing statement. After a six-hour preliminary analysis of both the document as well as the real-life experiences of investors, it would seem that in HN5, there appears to be SYSTEMIC Failure on three fronts:
a) Failure in the PRODUCT
i) Product was arranged, issued and sold by DBS
ii) Product was leveraged on Credit Default Swaps
iii) Product was secured on CDOs
b) Failure in the SALES PROCESS
i) Product was sold through a large sales force who were inadequately trained, and
ii) Relationship managers who were and are still not familiar with HN5 and customer’s suitability
c) Failure in CUSTOMER TARGETING
i) HN5 was sold to inappropriate customers
ii) HN5 was targeted at customers with little or no knowledge of financial concepts like CDS, CDOs, and Leverage
Because of the failures in the product itself, we are asking DBS to undertake compensation in a blanket or collective manner, and not on a case-by-case basis.
5. DBS was also questioned on the issue of RISK MANAGEMENT – there appears to have been serious lapses in this area that has resulted in a detrimental impact on the customers of HN5.
6. In response to questioning, Mr Rajan Raju, Head of Consumer Banking admitted that the HN5 is “NOT a low risk product”. Further, in response to a pointed question on the actual risks inherent in HN5, Ms Frances Chan, Senior Vice-President revealed that, on a scale of 1 to 10, the HN5 product was a “8 to 9”. We feel that a risk factor as high as this is in no way commensurate with the relatively low returns from HN5 and a locked-in period of 5.5 years. This bolsters our argument of the presence of a Systemic Failure in HN5.
Other Highlights
7. One attendee questioned the rationale for GIC to pump billions of dollars of government reserves into UBS and Citigroup to bail out foreigners while a government-linked bank like DBS is being parsimonious in compensating its customers in a cut-and-dried case of mis-selling and misrepresentation.
8. Many attendees highlighted their long-standing relationships with POSB/DBS, some stretching over a period of more than 30 years. They expressed a deeply felt sense of betrayal by DBS which they said violated their trust in the bank. Many also spoke of their past willingness to buy products from DBS because they saw it as “the national bank” they could have complete trust in.
9. There were detailed questioning on DBS’s ability and competence in giving timely advice on the status of HN5. Attendees referred specifically to a letter dated 31 March 2008 which had actually advised DBS customers to hold HN5 to maturity.
10. At least one attendee made the point that the overall mishandling by DBS of its affected customers will result in an eventual pulling-out of funds from DBS to its competitor banks, with a concomitant negative impact on its share price. The latter had already fallen drastically in recent weeks, a phenomenon which most analysts attributed partly to the fallout from its High Notes 5 debacle.
11. The immediate post-forum reaction of most attendees is that the Thursday sessions have not moved the complaint nor the compensation processes forward in any significant manner. In comments to HNIG, many people expressed the doubt that if DBS had sold HN5 in an irresponsible manner to make money, how seriously could they be taken when they are now in a damage control mode. The basis for such comments arises from bruising encounters customers have had with DBS’s Investor Care personnel in interview sessions where sometimes three to four staffers question a lone customer.
Others felt that DBS in referring Relationship Managers to the Monetary Authority of Singapore (MAS) is missing an important point - in the words of one DBS customer, “If the RM doesn’t know what he is doing, if he is set impossible targets, and if he is rewarded based on commissions, whose fault is it? DBS must teach RMs first”.
12. HNIG is a group of DBS High Notes (HN) investors that has been formed to communicate with DBS and undertake relevant collective actions where and when necessary.
13. HNIG currently has about 300 investors in our contact list and these consist of investors of various HNs. More joined during the dialogue sessions yesterday. HNIG handed out leaflets to request HN investors to turn up at 4.30pm on Saturday 1 November 2008 at Hong Lim Park (Clarke Quay MRT station).
14. For any clarifications, please contact dbs.hns@gmail.com. Our blog can be found at http://dbshns.blogspot.com.
1. On Thursday 30th October 2008, in response to a petition by the High Notes Investor Group (HNIG), DBS met up with approximately 400 investors of their DBS High Notes 5 (HN5) product in two separate sessions. Session 1 started at 2.00pm and Session 2 was at 5.00pm.
2. Both sessions were originally scheduled to last one hour, but eventually ran for more than two and a half hours each time.
3. Many attendees urged DBS to treat all investorsas a group rather than go through a case-by-case process on the subject of compensation.
4. To buttress the above argument, the HNIG revealed at the forum that they had requested an industry insider who has experience structuring such products to go through the HN5 pricing statement. After a six-hour preliminary analysis of both the document as well as the real-life experiences of investors, it would seem that in HN5, there appears to be SYSTEMIC Failure on three fronts:
a) Failure in the PRODUCT
i) Product was arranged, issued and sold by DBS
ii) Product was leveraged on Credit Default Swaps
iii) Product was secured on CDOs
b) Failure in the SALES PROCESS
i) Product was sold through a large sales force who were inadequately trained, and
ii) Relationship managers who were and are still not familiar with HN5 and customer’s suitability
c) Failure in CUSTOMER TARGETING
i) HN5 was sold to inappropriate customers
ii) HN5 was targeted at customers with little or no knowledge of financial concepts like CDS, CDOs, and Leverage
Because of the failures in the product itself, we are asking DBS to undertake compensation in a blanket or collective manner, and not on a case-by-case basis.
5. DBS was also questioned on the issue of RISK MANAGEMENT – there appears to have been serious lapses in this area that has resulted in a detrimental impact on the customers of HN5.
6. In response to questioning, Mr Rajan Raju, Head of Consumer Banking admitted that the HN5 is “NOT a low risk product”. Further, in response to a pointed question on the actual risks inherent in HN5, Ms Frances Chan, Senior Vice-President revealed that, on a scale of 1 to 10, the HN5 product was a “8 to 9”. We feel that a risk factor as high as this is in no way commensurate with the relatively low returns from HN5 and a locked-in period of 5.5 years. This bolsters our argument of the presence of a Systemic Failure in HN5.
Other Highlights
7. One attendee questioned the rationale for GIC to pump billions of dollars of government reserves into UBS and Citigroup to bail out foreigners while a government-linked bank like DBS is being parsimonious in compensating its customers in a cut-and-dried case of mis-selling and misrepresentation.
8. Many attendees highlighted their long-standing relationships with POSB/DBS, some stretching over a period of more than 30 years. They expressed a deeply felt sense of betrayal by DBS which they said violated their trust in the bank. Many also spoke of their past willingness to buy products from DBS because they saw it as “the national bank” they could have complete trust in.
9. There were detailed questioning on DBS’s ability and competence in giving timely advice on the status of HN5. Attendees referred specifically to a letter dated 31 March 2008 which had actually advised DBS customers to hold HN5 to maturity.
10. At least one attendee made the point that the overall mishandling by DBS of its affected customers will result in an eventual pulling-out of funds from DBS to its competitor banks, with a concomitant negative impact on its share price. The latter had already fallen drastically in recent weeks, a phenomenon which most analysts attributed partly to the fallout from its High Notes 5 debacle.
11. The immediate post-forum reaction of most attendees is that the Thursday sessions have not moved the complaint nor the compensation processes forward in any significant manner. In comments to HNIG, many people expressed the doubt that if DBS had sold HN5 in an irresponsible manner to make money, how seriously could they be taken when they are now in a damage control mode. The basis for such comments arises from bruising encounters customers have had with DBS’s Investor Care personnel in interview sessions where sometimes three to four staffers question a lone customer.
Others felt that DBS in referring Relationship Managers to the Monetary Authority of Singapore (MAS) is missing an important point - in the words of one DBS customer, “If the RM doesn’t know what he is doing, if he is set impossible targets, and if he is rewarded based on commissions, whose fault is it? DBS must teach RMs first”.
12. HNIG is a group of DBS High Notes (HN) investors that has been formed to communicate with DBS and undertake relevant collective actions where and when necessary.
13. HNIG currently has about 300 investors in our contact list and these consist of investors of various HNs. More joined during the dialogue sessions yesterday. HNIG handed out leaflets to request HN investors to turn up at 4.30pm on Saturday 1 November 2008 at Hong Lim Park (Clarke Quay MRT station).
14. For any clarifications, please contact dbs.hns@gmail.com. Our blog can be found at http://dbshns.blogspot.com.
Buy Government Bonds through ATM
This information is preliminary. It has not been verified.
Hi Mr Tan,
UOB, DBS & OCBC are working closely with MAS to launch this project in Mar/Apr 2009 (delayed from earlier schedule to launch in Nov 2008).
Under current system, individual investors must go to selected banks to submit paper document to buy Singapore Government Bills & Bonds (SGBB).
The new system will allow individual investors with UOB/DBS/OCBC’s ATM to bid for SGBB through ATM machines.
Investors can bid for minimum face value of $1,000 SGBB, up to $1 mil for Bill and up to $2 mil for Bond for each issue.
The maturity period for Bills are 3 months or 1 year.
The maturity period for Bonds (both zero-coupon or with-coupon bonds) are available for 2, 3, 5, 7, 10, 15 and 20 year-term-maturity period.
MAS will announce the winners of the bidding process and all SGBB will be credited to investors’ CDP account.
(name removed)
Hi Mr Tan,
UOB, DBS & OCBC are working closely with MAS to launch this project in Mar/Apr 2009 (delayed from earlier schedule to launch in Nov 2008).
Under current system, individual investors must go to selected banks to submit paper document to buy Singapore Government Bills & Bonds (SGBB).
The new system will allow individual investors with UOB/DBS/OCBC’s ATM to bid for SGBB through ATM machines.
Investors can bid for minimum face value of $1,000 SGBB, up to $1 mil for Bill and up to $2 mil for Bond for each issue.
The maturity period for Bills are 3 months or 1 year.
The maturity period for Bonds (both zero-coupon or with-coupon bonds) are available for 2, 3, 5, 7, 10, 15 and 20 year-term-maturity period.
MAS will announce the winners of the bidding process and all SGBB will be credited to investors’ CDP account.
(name removed)
Undergraduate reply to Prof Lan
Hi Professor Lan Luh Luh,
I refer to your comments published in the article titled “Structured Products: Let’s not forget about personal responsibility” in TODAY on 2008/10/30.
I read your comments with a heavy heart and really hoped that the reporter has taken your comments out of context. I believe you are the first academic in Singapore to speak out and at the same time advocate caveat emptor.
I do not agree with what you said at all. I disagree with what you said on factual and moral grounds.
1) The returns on the structured products are certainly not double digits. The reporter may have asked you to comment on the wrong structured investment product. From what I have read, the returns on the structured products average about 5%. The returns on this product certainly does not match the risk the investor is undertaking.
I once commented to a friend that if the returns on these products are more than 10%, then the investors have no one to blame but themselves, as the returns would have match the risks.
In this case, the returns clearly do not match the risk. In equities, there is the risk of losing. But the investors have the opportunity to make big gains too. Here, the investors bear the risk of losing everything, but their returns are capped at ~5% no matter how well the market did. Is this fair?
2) "When people make money, nobody complains,” I think it is wrong to state this as an argument. When nothing happens, and the investors receive their ~5% returns every year, is it correct to fault them for not making any noise? I think this is normal human behavior. As the saying goes, when there is nothing wrong, why fix it?
They brought the investment product based on the relationship manager’s (RM) recommendation and trusted their RM’s explanation on how the product should work. And when the product is providing returns, is it correct to fault the investors for assuming that the product is working as it should and that they did not question further how the product should work?
For example, would a child check what are the specific hardware in a computer he just brought (assuming the child does not have the ability to check the hardware himself, and that the child has the power to purchase a computer himself), other than to just use it as it is and trust what the sales people told him? In this case, he will only find out that he has been sold a different hardware configuration only after the computer broke down and the repairman tells him that.
3) The third is on the general investor profile. When I first heard of this, I wanted to find out about the investors themselves before I make a judgment. Hence I went down to Speaker’s Corner personally on the first Saturday gathering to see for myself. I was stunned. The majority of the people I see there are people in their 50-60s who speak little or no English. The moment anyone sees this, statistics nor any scientific measures matter.
It is common sense that the people in the crowd certainly do not fit the risk profile of the investors the structure products should be targeting. If professor Lan has not seen the investors personally, I suggest professor Lan to visit the Speakers Corner this Saturday and see for yourself. More information about the gathering can be found here, http://tankinlian.blogspot.com. I stopped visiting the gathering after the first one as it really hurts to see and hear them.
4) I would like to stress that, from what I heard, the investors “thought” they “know” what they are investing. The risks and downsides were not clearly explained to them. I am almost certain that if the downsides and the true natural of the product was clearly explained, no one would buy them.
5) On caveat emptor. I think this idea is wrong and should not be encouraged at all. Caveat emptor encourage businesses to be irresponsible. I do not think that this is a desirable outcome for our economy or society. Our economy would just cease functioning normally. Everyone would have to spend lots and lots of time double checking and double check again before they buy something. Common goods that are purchased everyday on the basis of trust would have double checked, as the consumers know they have no one to turn to if something goes wrong, and that they are on their own. Is this desirable?
Our society would become one engulfed in suspicion, of anything and anyone. No one would help one another and no one is interested in one another. Everyone for themselves. Is this sort of society a desirable one to live in?
The examples I used are extremes, as I am trying to illustrate a point here. Let’s not assume caveat emptor is “correct” and just use it as it is. The question to ask should be, is it right and desirable in the first place to “advocate” something like caveat emptor even if it is an accepted reality that buyers should check their purchases? Who coined it anyway and under what circumstances was it invented?
Just imagine if the Chinese told the affected “too bad, you brought the milk yourself, no one forced you to buy my milk. It’s your business that your babies are being poisoned”, what will happen? And isn’t the melamine milk incident a perfect platform of advocating caveat emptor too? Think about it, why didn’t the Chinese do that?
To me, the MAS is equivalent to AVA. Its role is not there to check if the food taste good or not. Its role is to check whether if there are harmful substances in the food. I believe the AVA scientists do not have a easy time trying to determine whether something is harmful or not too. But they do their best, and when things happen, the products get redrawn, an apology issued and people get treated. A person financially ruin is akin to getting poisoned. Especially if what taken away from them are lifetime savings they intend to live on when they are old.
6) I know that the banks got themselves covered legally. Even a disclaimer from a local broker’s analyst report is longer than the actual report itself. However, it is a moral issue here, and not a legal issue. I believe if the banks were to buy back the products at cost right now, which many has the ability to do so without hurting their bottom-line, the amount of goodwill this action generated will last for multiple generations. This beats years and any amount of advertising. It’s like the 1982 Chicago Tylenol murders, and the banks are in the shoes of J&J now.
I believe professor Lan’s viewpoint may be slightly legalistic, considering your legal background. However, I urge professor Lan to be empathic to investors who have lost their savings.
I would like to stress that these are my personal opinions, and is not an attempt to show any form of disrespect. I am not personally involved any of the affected structured products.
Yours sincerely,
Morgan Wu Min-han
Undergraduate, SMU
I refer to your comments published in the article titled “Structured Products: Let’s not forget about personal responsibility” in TODAY on 2008/10/30.
I read your comments with a heavy heart and really hoped that the reporter has taken your comments out of context. I believe you are the first academic in Singapore to speak out and at the same time advocate caveat emptor.
I do not agree with what you said at all. I disagree with what you said on factual and moral grounds.
1) The returns on the structured products are certainly not double digits. The reporter may have asked you to comment on the wrong structured investment product. From what I have read, the returns on the structured products average about 5%. The returns on this product certainly does not match the risk the investor is undertaking.
I once commented to a friend that if the returns on these products are more than 10%, then the investors have no one to blame but themselves, as the returns would have match the risks.
In this case, the returns clearly do not match the risk. In equities, there is the risk of losing. But the investors have the opportunity to make big gains too. Here, the investors bear the risk of losing everything, but their returns are capped at ~5% no matter how well the market did. Is this fair?
2) "When people make money, nobody complains,” I think it is wrong to state this as an argument. When nothing happens, and the investors receive their ~5% returns every year, is it correct to fault them for not making any noise? I think this is normal human behavior. As the saying goes, when there is nothing wrong, why fix it?
They brought the investment product based on the relationship manager’s (RM) recommendation and trusted their RM’s explanation on how the product should work. And when the product is providing returns, is it correct to fault the investors for assuming that the product is working as it should and that they did not question further how the product should work?
For example, would a child check what are the specific hardware in a computer he just brought (assuming the child does not have the ability to check the hardware himself, and that the child has the power to purchase a computer himself), other than to just use it as it is and trust what the sales people told him? In this case, he will only find out that he has been sold a different hardware configuration only after the computer broke down and the repairman tells him that.
3) The third is on the general investor profile. When I first heard of this, I wanted to find out about the investors themselves before I make a judgment. Hence I went down to Speaker’s Corner personally on the first Saturday gathering to see for myself. I was stunned. The majority of the people I see there are people in their 50-60s who speak little or no English. The moment anyone sees this, statistics nor any scientific measures matter.
It is common sense that the people in the crowd certainly do not fit the risk profile of the investors the structure products should be targeting. If professor Lan has not seen the investors personally, I suggest professor Lan to visit the Speakers Corner this Saturday and see for yourself. More information about the gathering can be found here, http://tankinlian.blogspot.com. I stopped visiting the gathering after the first one as it really hurts to see and hear them.
4) I would like to stress that, from what I heard, the investors “thought” they “know” what they are investing. The risks and downsides were not clearly explained to them. I am almost certain that if the downsides and the true natural of the product was clearly explained, no one would buy them.
5) On caveat emptor. I think this idea is wrong and should not be encouraged at all. Caveat emptor encourage businesses to be irresponsible. I do not think that this is a desirable outcome for our economy or society. Our economy would just cease functioning normally. Everyone would have to spend lots and lots of time double checking and double check again before they buy something. Common goods that are purchased everyday on the basis of trust would have double checked, as the consumers know they have no one to turn to if something goes wrong, and that they are on their own. Is this desirable?
Our society would become one engulfed in suspicion, of anything and anyone. No one would help one another and no one is interested in one another. Everyone for themselves. Is this sort of society a desirable one to live in?
The examples I used are extremes, as I am trying to illustrate a point here. Let’s not assume caveat emptor is “correct” and just use it as it is. The question to ask should be, is it right and desirable in the first place to “advocate” something like caveat emptor even if it is an accepted reality that buyers should check their purchases? Who coined it anyway and under what circumstances was it invented?
Just imagine if the Chinese told the affected “too bad, you brought the milk yourself, no one forced you to buy my milk. It’s your business that your babies are being poisoned”, what will happen? And isn’t the melamine milk incident a perfect platform of advocating caveat emptor too? Think about it, why didn’t the Chinese do that?
To me, the MAS is equivalent to AVA. Its role is not there to check if the food taste good or not. Its role is to check whether if there are harmful substances in the food. I believe the AVA scientists do not have a easy time trying to determine whether something is harmful or not too. But they do their best, and when things happen, the products get redrawn, an apology issued and people get treated. A person financially ruin is akin to getting poisoned. Especially if what taken away from them are lifetime savings they intend to live on when they are old.
6) I know that the banks got themselves covered legally. Even a disclaimer from a local broker’s analyst report is longer than the actual report itself. However, it is a moral issue here, and not a legal issue. I believe if the banks were to buy back the products at cost right now, which many has the ability to do so without hurting their bottom-line, the amount of goodwill this action generated will last for multiple generations. This beats years and any amount of advertising. It’s like the 1982 Chicago Tylenol murders, and the banks are in the shoes of J&J now.
I believe professor Lan’s viewpoint may be slightly legalistic, considering your legal background. However, I urge professor Lan to be empathic to investors who have lost their savings.
I would like to stress that these are my personal opinions, and is not an attempt to show any form of disrespect. I am not personally involved any of the affected structured products.
Yours sincerely,
Morgan Wu Min-han
Undergraduate, SMU
News about Jubilee Notes arranger
Jubilee note holders and distributors and the authorities may be interested to know these reports about the Jubilee Note arranger
http://www.nytimes.com/2008/08/22/business/22auction.html?scp=9&sq=Massachusetts%20+%20Merrill%
20Lynch&st=cse http://www.nytimes.com/2008/02/02/business/02legal.html?scp=1&sq=Massachusetts%20+%20Merrill%20Lynch&st=cse
http://www.nytimes.com/2008/08/22/business/22auction.html?scp=9&sq=Massachusetts%20+%20Merrill%
20Lynch&st=cse http://www.nytimes.com/2008/02/02/business/02legal.html?scp=1&sq=Massachusetts%20+%20Merrill%20Lynch&st=cse
Thursday, October 30, 2008
Conflict of interest between bank and customer
Mr. Tan
I started my career as an investment consultant which requires formulating advice from client's interest point of view. I had done some work with banks on asset allocation models and fund selection (thinking from customers' interests point of view).
Two and a half year ago, I decided to join a bank to carry on this work.
It is an uphill task to convince people within the bank to embrace the investment approach of diversifying investment risks for the interests of customers. This directly clashes with corporate interest of meeting sales target and paying high bonuses, via selling high margin high risk products.
To be more specific, areas of conflicts include:
1. Most products are high risks in nature. Recommending broadly diversified products will lead to cannibalising the business of those narrowly focused products (including structured products). Killing these high risk products mean threatening the jobs of those people making profits out of these.
2. People are generally excited by new products and not old products. So, there is an IPO mentality - new products are better than old. As broadly diversified products are considered old products, it is obvious that no bank will run a promotion on the newly launched global stock funds or global bond funds because they aren't any. As the room for innovating structured products is unlimited, excitement and hype can be easily created around these products to boost profits.
3. The compensation structure of people selling investment products is commission based, and it is difficult to drive sales on products with lower commission. Unfortunately, products that work for customers (e.g. Term Policy, ETFs, global diversified funds) are usually low in commissions.
I also sympathise with the sales people, who are not talented enough to be promoted out of their hot seats of having to sell highly risky products to vulnerable customers just to meet the forever increasing sales target. I suspect some of the sales people succumb to the lifestyle of closing deals that are not in the best interests of customers and enjoying high bonuses, while others with conscience are trying their very best to get promoted to become product managers or some other roles in the bank, or even consider moving out of the job of selling investment products to selling other safer thing like house, car etc.
I believe no sales person is happy with the consequences of causing losses on monies of customers with no intention to take any investment risks. I am sure sales people are also suffering significant degree of guilt.
The conflict of interests between banks and customers remain unresolved until today.
Unless this conflict is resolved totally, I remain uncomfortable working for a bank. And I believe most people who have worked in a bank will agree with me, while others who do not, may have numbed their conscience due to helplessness.
May be the banks now seriously need regulators to set specific governance framework, to help them counter the unsurmountable vested interests that are in direct conflict with customers.
(name deleted)
I started my career as an investment consultant which requires formulating advice from client's interest point of view. I had done some work with banks on asset allocation models and fund selection (thinking from customers' interests point of view).
Two and a half year ago, I decided to join a bank to carry on this work.
It is an uphill task to convince people within the bank to embrace the investment approach of diversifying investment risks for the interests of customers. This directly clashes with corporate interest of meeting sales target and paying high bonuses, via selling high margin high risk products.
To be more specific, areas of conflicts include:
1. Most products are high risks in nature. Recommending broadly diversified products will lead to cannibalising the business of those narrowly focused products (including structured products). Killing these high risk products mean threatening the jobs of those people making profits out of these.
2. People are generally excited by new products and not old products. So, there is an IPO mentality - new products are better than old. As broadly diversified products are considered old products, it is obvious that no bank will run a promotion on the newly launched global stock funds or global bond funds because they aren't any. As the room for innovating structured products is unlimited, excitement and hype can be easily created around these products to boost profits.
3. The compensation structure of people selling investment products is commission based, and it is difficult to drive sales on products with lower commission. Unfortunately, products that work for customers (e.g. Term Policy, ETFs, global diversified funds) are usually low in commissions.
I also sympathise with the sales people, who are not talented enough to be promoted out of their hot seats of having to sell highly risky products to vulnerable customers just to meet the forever increasing sales target. I suspect some of the sales people succumb to the lifestyle of closing deals that are not in the best interests of customers and enjoying high bonuses, while others with conscience are trying their very best to get promoted to become product managers or some other roles in the bank, or even consider moving out of the job of selling investment products to selling other safer thing like house, car etc.
I believe no sales person is happy with the consequences of causing losses on monies of customers with no intention to take any investment risks. I am sure sales people are also suffering significant degree of guilt.
The conflict of interests between banks and customers remain unresolved until today.
Unless this conflict is resolved totally, I remain uncomfortable working for a bank. And I believe most people who have worked in a bank will agree with me, while others who do not, may have numbed their conscience due to helplessness.
May be the banks now seriously need regulators to set specific governance framework, to help them counter the unsurmountable vested interests that are in direct conflict with customers.
(name deleted)
Old news that may be useful
1. Leading Case of Negligence by an Investment Adviser Sets Standard of Care
http://www.tannerdewitt.com/media/publications/field-v-barber-asia.php
2. Guided by Greed
http://www.tannerdewitt.com/media/publications/guided-by-greed.php
3. SFC Suspends Andrew Nicholas Barber for Unsuitable Investment Advice
http://www.sfc.hk/sfcPressRelease/EN/sfcOpenDocServlet?docno=05PR153
"The SFAT's Reasons for Determination confirm that express warnings on the face of the investment product documentation do not absolve an investment adviser from their duty to properly explain the risks involved to the client. Although the SFAT accepted that Barber had gone over the documentation with the client, the Code of Conduct for Persons Licensed by or Registered with the SFC requires an investment adviser, when providing services to a client in derivative products, including futures contracts or options, or any leveraged transaction, to assure themselves that the client understands the nature and risks of the products and has sufficient net worth to be able to assume the risks and bear the potential losses of trading in such products."
http://www.tannerdewitt.com/media/publications/field-v-barber-asia.php
2. Guided by Greed
http://www.tannerdewitt.com/media/publications/guided-by-greed.php
3. SFC Suspends Andrew Nicholas Barber for Unsuitable Investment Advice
http://www.sfc.hk/sfcPressRelease/EN/sfcOpenDocServlet?docno=05PR153
"The SFAT's Reasons for Determination confirm that express warnings on the face of the investment product documentation do not absolve an investment adviser from their duty to properly explain the risks involved to the client. Although the SFAT accepted that Barber had gone over the documentation with the client, the Code of Conduct for Persons Licensed by or Registered with the SFC requires an investment adviser, when providing services to a client in derivative products, including futures contracts or options, or any leveraged transaction, to assure themselves that the client understands the nature and risks of the products and has sufficient net worth to be able to assume the risks and bear the potential losses of trading in such products."
NTUC Bonus Cut was a bad idea
Hi Mr. Tan
When NTUC cut the bonus last year, the reason was to allow NTUC to invest the surplus into the stockmarket to get a higher return. Many policyholders opposed this move, as it would increase the risk. These policyholders are now proven correct, as the stockmarket dropped by 50%. It now appears that the cut in bonus is gone and cannot be recovered.
Earlier this year, you organised a collective protest against the bonus cut but did not lodge it at the AGM due to the assurance given by former NTUC boss Lim Boon Heng and the chairman Ng Kee Choe. The chairman also gave some assurance at the AGM. Are the assurances being kept and honoured?
As the bonus cut turns out to be a disaster, can the policyholders organise another protest to restore the old bonus rates? Can you take this matter to Speakers' Corner?
REPLY
Let me sort out the problem with the minibonds and other structured products over the next few months. We can review this matter in early 2009.
When NTUC cut the bonus last year, the reason was to allow NTUC to invest the surplus into the stockmarket to get a higher return. Many policyholders opposed this move, as it would increase the risk. These policyholders are now proven correct, as the stockmarket dropped by 50%. It now appears that the cut in bonus is gone and cannot be recovered.
Earlier this year, you organised a collective protest against the bonus cut but did not lodge it at the AGM due to the assurance given by former NTUC boss Lim Boon Heng and the chairman Ng Kee Choe. The chairman also gave some assurance at the AGM. Are the assurances being kept and honoured?
As the bonus cut turns out to be a disaster, can the policyholders organise another protest to restore the old bonus rates? Can you take this matter to Speakers' Corner?
REPLY
Let me sort out the problem with the minibonds and other structured products over the next few months. We can review this matter in early 2009.
Financial Services Authority fines Lloyds Bank in 2002
From Business Times
Lloyds TSB was fined GBP 1 million (S$2.35 million) in 2002 by the Financial Services Authority (FSA) of the UK and had to set aside GBP 165 million to compensate claims relating to mis-sold endowment policies, involving 45,000 policyholders.
In 2003, Lloyds TSB was further fined GBP 1.9 million and had to compensate GBP 98 million to 22,500 investors, many of them pensioners. This was related to the mis-selling of high-income 'precipice' bonds touted as an 'Extra Income and Growth Plan'. These bonds promised a return of 9.75-10.25 per cent over three years (twice the bank deposit rates then) and were linked to 30 stocks. They were called 'precipice' bonds because the investors' capital returns could 'fall off a cliff' if the markets fell below a pre-set trigger point.
The markets linked to the 30 stocks did indeed fall. These high-risk bonds, which were highly leveraged, were sold to inexperienced investors. Some 16,500 investors had never purchased equity-related investment products before.
22,500 sales out of 51,000 (that is, 44 per cent) of the total sold were deemed to have been mis-sold. Howard Davies, outgoing chairman of FSA, said that the products sold by Lloyds were 'inherently wicked' (because they were highly leveraged) and they were sold to unsuitable people.
Andrew Proctor, FSA director of enforcement, said: 'There was nothing wrong with the product itself. The problem was that too much of it was sold to the wrong people.'
Lloyds TSB was fined GBP 1 million (S$2.35 million) in 2002 by the Financial Services Authority (FSA) of the UK and had to set aside GBP 165 million to compensate claims relating to mis-sold endowment policies, involving 45,000 policyholders.
In 2003, Lloyds TSB was further fined GBP 1.9 million and had to compensate GBP 98 million to 22,500 investors, many of them pensioners. This was related to the mis-selling of high-income 'precipice' bonds touted as an 'Extra Income and Growth Plan'. These bonds promised a return of 9.75-10.25 per cent over three years (twice the bank deposit rates then) and were linked to 30 stocks. They were called 'precipice' bonds because the investors' capital returns could 'fall off a cliff' if the markets fell below a pre-set trigger point.
The markets linked to the 30 stocks did indeed fall. These high-risk bonds, which were highly leveraged, were sold to inexperienced investors. Some 16,500 investors had never purchased equity-related investment products before.
22,500 sales out of 51,000 (that is, 44 per cent) of the total sold were deemed to have been mis-sold. Howard Davies, outgoing chairman of FSA, said that the products sold by Lloyds were 'inherently wicked' (because they were highly leveraged) and they were sold to unsuitable people.
Andrew Proctor, FSA director of enforcement, said: 'There was nothing wrong with the product itself. The problem was that too much of it was sold to the wrong people.'
Reply to Today Paper - "Structured Products ....."
Editor
Today paper
Dear Sir,
I refer to the article by Christie Loh entitled "Structured Products: Let's not forget about personal responsibility" in today's TODAY.
The writer appeared to be supporting the banks in shifting the blame to the investor much as the rich and powerful people like Prof. Lan Luh Luh of the NUS in that regardless of situation, product or organisation, consumers must be at the receiving end of caveat emptor.
I can agree if the consumer is an experienced investor, but certainly not with the average man in the street who have been assured by these bank relationship managers that Lehman Brothers, et al, are infallible, and with Singapore's biggest and most trusted bank, DBS, selling the products nothing can go wrong.
It is the element of TRUST that even the fairly experienced investor would be persuaded to trade in for the caveat and when things go wrong, the bank, and sadly, the influential academics and the politicians are singing a different tune: it is still caveat emptor, serve you right!
The manner in which these structured deposits and minibonds are sold have mislead most consumers to believe, and were actually told by the relationship managers, to be another form of time deposits with a fixed interest rate and a maturity period. Unless one is a CPA or trained financial analyst, one would not have associated such instruments as a form of investment with the accompanying risks.
Given this scenario, even fixed deposits and current account balances are no longer safe although the government has temporarily given its warranty during the current financial crisis. Does this mean that once the warranty expires, depositors would have to revert to the caveat emptor principle and keep less than $20,000 with any one bank?
If that is the case, then we should all shop for a safe and keep the excess cash at home once the warranty period expires: better safe than sorry.
James Tan
Today paper
Dear Sir,
I refer to the article by Christie Loh entitled "Structured Products: Let's not forget about personal responsibility" in today's TODAY.
The writer appeared to be supporting the banks in shifting the blame to the investor much as the rich and powerful people like Prof. Lan Luh Luh of the NUS in that regardless of situation, product or organisation, consumers must be at the receiving end of caveat emptor.
I can agree if the consumer is an experienced investor, but certainly not with the average man in the street who have been assured by these bank relationship managers that Lehman Brothers, et al, are infallible, and with Singapore's biggest and most trusted bank, DBS, selling the products nothing can go wrong.
It is the element of TRUST that even the fairly experienced investor would be persuaded to trade in for the caveat and when things go wrong, the bank, and sadly, the influential academics and the politicians are singing a different tune: it is still caveat emptor, serve you right!
The manner in which these structured deposits and minibonds are sold have mislead most consumers to believe, and were actually told by the relationship managers, to be another form of time deposits with a fixed interest rate and a maturity period. Unless one is a CPA or trained financial analyst, one would not have associated such instruments as a form of investment with the accompanying risks.
Given this scenario, even fixed deposits and current account balances are no longer safe although the government has temporarily given its warranty during the current financial crisis. Does this mean that once the warranty expires, depositors would have to revert to the caveat emptor principle and keep less than $20,000 with any one bank?
If that is the case, then we should all shop for a safe and keep the excess cash at home once the warranty period expires: better safe than sorry.
James Tan
Be empathic to investors who lost their savings
Dear Mr. Tan,
I am a victim of the structured product. I get the impression that many people who are not directly involved said that "the investor should be blamed for buying the product. They should check carefully before they buy the product.
Even our Prime Minister has the same view. Can you help us to pass the message to the PM about why and how we were deceived?
REPLY
I will be happy to meet with the Prime Minister, if he is free to see me. I have spoken to some of the people who held this view - that the investors should not be compensated for their loss, as they wanted a higher return.
In the conversation, it was clear that they were not aware about the nature and risk of the product, and how the investors were deceived. After I told them about the product, they become sympathetic to the investors.
I like to ask other people who hold an unsympathetic view, to watch this video:
http://www.youtube.com/watch?v=fRFq6mJhOiw
I am a victim of the structured product. I get the impression that many people who are not directly involved said that "the investor should be blamed for buying the product. They should check carefully before they buy the product.
Even our Prime Minister has the same view. Can you help us to pass the message to the PM about why and how we were deceived?
REPLY
I will be happy to meet with the Prime Minister, if he is free to see me. I have spoken to some of the people who held this view - that the investors should not be compensated for their loss, as they wanted a higher return.
In the conversation, it was clear that they were not aware about the nature and risk of the product, and how the investors were deceived. After I told them about the product, they become sympathetic to the investors.
I like to ask other people who hold an unsympathetic view, to watch this video:
http://www.youtube.com/watch?v=fRFq6mJhOiw
LET'S NOT FORGET ABOUT PERSONAL RESPONSIBILITY'
Christie Loh, Today paper
WHILE much public focus has been on the calls for compensation from distributors of Lehman Brothers-linked structured products, observers of the financial scene say that — while sales staff must act responsibly — investors should not forget their personal responsibilities.
The point was recently made by Prime Minister Lee Hsien Loong. "Ultimately, each person has to take responsibility for his or her own financial decisions," said Mr Lee last week during a media interview, where he set the controversy within the larger context of Singapore as a financial centre, and examined the Government's role.
The implications may be hard for the 10,000 people in Singapore whose investments plunged in value overnight when United States investment bank Lehman filed for bankruptcy last month.
Many investors, some of whom are elderly and fearful of losing their retirement savings, have accused the distributors of failing to reveal the riskiness of products, including Lehman Mini-Bonds and DBS High Notes.
Analysts, however, say the individual is not fault-free, especially not in a market that runs on theprinciple of caveat emptor, meaning buyer beware.
"When people make money, nobody complains," Associate Professor Lan Luh Luh of the National University of Singapore's department of business policy told Today.
Having read a flyer promoting one of the affected products, Assoc Prof Lan said the potential double-digit investment return advertised certainly looked attractive. But the academic has thus far avoided buying structured products because "I invest only in the things I understand".
She said: "If you want your money to work for you, you have to work hard for it, too. There's no free lunch in this world."
There was a similar message from Securities Investors Association of Singapore (Sias) chief executive David Gerald, who feels people should ask some basic questions before ploughing hard-earned savings into complex products. The controversy over structured products has led Sias to work on producing an investment handbook, which is slated to be out within six months.
"Don't get excited only by the upside. You need to also ask about the downside," said Mr Gerald, citing a check-list including questions like whether the product is suitable for you and whether you have the "stamina" to withstand losses until you recoup them.
It is this financial system of free will and flexibility that PM Lee espouses, instead of a paternalistic one where the government decides for the consumer what's risky and what's not, Mr Gerald indicated.
"I think this is the better approach. Let people make their own choices and decisions, but within a proper system, and with appropriate safeguards. We have progressively shifted towards this over the last decade," Mr Lee had said. "It cannot be that if I invested and it turned out well, then I am happy, but if I invested and it turned out badly, then I am entitled to compensation."
The Prime Minister added it would be a "moral hazard" for the Government to intervene due to political pressure in a situation where the banks had acted within the rules. In a major financial centre like Singapore, Mr Lee said, regulations must be "fair, consistent and transparent", not arbitrary.
Prof Lan said: "The Government's role is to make sure there's as much disclosure as possible. No company or institution should block any information."
There's a second thing that pundits feel the authorities must do: Punish those who breached the rules on financial selling.
An independent check into the internal processes of product distributors would settle the question of whether there was indeed mis-selling, said one industry observer familiar with the ongoing mediation process.
Echoing the view, Mr Gerald said that while he agreed the Government would be setting a bad precedent if it bailed-out troubled investors, he added the authorities must ensure that the financial institutions have been "doing the right thing".
Said the small-investor champion: "I expect the financial institutions to be fair to investors because they're going to them with trust. The way we have been doing business for a long time now is based on trust."
WHILE much public focus has been on the calls for compensation from distributors of Lehman Brothers-linked structured products, observers of the financial scene say that — while sales staff must act responsibly — investors should not forget their personal responsibilities.
The point was recently made by Prime Minister Lee Hsien Loong. "Ultimately, each person has to take responsibility for his or her own financial decisions," said Mr Lee last week during a media interview, where he set the controversy within the larger context of Singapore as a financial centre, and examined the Government's role.
The implications may be hard for the 10,000 people in Singapore whose investments plunged in value overnight when United States investment bank Lehman filed for bankruptcy last month.
Many investors, some of whom are elderly and fearful of losing their retirement savings, have accused the distributors of failing to reveal the riskiness of products, including Lehman Mini-Bonds and DBS High Notes.
Analysts, however, say the individual is not fault-free, especially not in a market that runs on theprinciple of caveat emptor, meaning buyer beware.
"When people make money, nobody complains," Associate Professor Lan Luh Luh of the National University of Singapore's department of business policy told Today.
Having read a flyer promoting one of the affected products, Assoc Prof Lan said the potential double-digit investment return advertised certainly looked attractive. But the academic has thus far avoided buying structured products because "I invest only in the things I understand".
She said: "If you want your money to work for you, you have to work hard for it, too. There's no free lunch in this world."
There was a similar message from Securities Investors Association of Singapore (Sias) chief executive David Gerald, who feels people should ask some basic questions before ploughing hard-earned savings into complex products. The controversy over structured products has led Sias to work on producing an investment handbook, which is slated to be out within six months.
"Don't get excited only by the upside. You need to also ask about the downside," said Mr Gerald, citing a check-list including questions like whether the product is suitable for you and whether you have the "stamina" to withstand losses until you recoup them.
It is this financial system of free will and flexibility that PM Lee espouses, instead of a paternalistic one where the government decides for the consumer what's risky and what's not, Mr Gerald indicated.
"I think this is the better approach. Let people make their own choices and decisions, but within a proper system, and with appropriate safeguards. We have progressively shifted towards this over the last decade," Mr Lee had said. "It cannot be that if I invested and it turned out well, then I am happy, but if I invested and it turned out badly, then I am entitled to compensation."
The Prime Minister added it would be a "moral hazard" for the Government to intervene due to political pressure in a situation where the banks had acted within the rules. In a major financial centre like Singapore, Mr Lee said, regulations must be "fair, consistent and transparent", not arbitrary.
Prof Lan said: "The Government's role is to make sure there's as much disclosure as possible. No company or institution should block any information."
There's a second thing that pundits feel the authorities must do: Punish those who breached the rules on financial selling.
An independent check into the internal processes of product distributors would settle the question of whether there was indeed mis-selling, said one industry observer familiar with the ongoing mediation process.
Echoing the view, Mr Gerald said that while he agreed the Government would be setting a bad precedent if it bailed-out troubled investors, he added the authorities must ensure that the financial institutions have been "doing the right thing".
Said the small-investor champion: "I expect the financial institutions to be fair to investors because they're going to them with trust. The way we have been doing business for a long time now is based on trust."
Misleading Prospectus
The strategy committee will be getting legal advice to see if the prospectus breach the disclosure standard expected under the Securities & Futures Act.
If the case is strong, we will be able to take the following actions:
a) Lodge a Police report on the breach of the law, leading to investors being cheated
b) Take collective legal action against the distributor.
If the case is strong, we will be able to take the following actions:
a) Lodge a Police report on the breach of the law, leading to investors being cheated
b) Take collective legal action against the distributor.
Thomas Jefferson's views on the banking system
"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs." -- Thomas Jefferson (1743-1826), US Founding Father, drafted the Declaration of Independence, 3rd US President
"The system of banking [is] a blot left in all our Constitutions, which, if not covered, will end in their destruction... I sincerely believe that banking institutions are more dangerous than standing armies; and that the principle of spending money to be paid by posterity... is but swindling futurity on a large scale." -- Thomas Jefferson - Source: stated in 1811 when President Jefferson refused to renew the charter for the First Bank of the United States (the 2nd central bank chartered by Congress in 1791
Ho Cheow Seng
Talking point - minibonds and structured products
Watch this video:
http://www.youtube.com/watch?v=fRFq6mJhOiw
http://www.youtube.com/watch?v=fRFq6mJhOiw
Videos about speeches in Speaker's Corner
Dear Mr. Tan,
Do you have video recording of your speech in Speaker's Corner. Where can I find it?
REPLY
You can go to http://www.youtube.com/. Search for Tan Kin Lian. It gives you a list of all the speeches in Speaker's Corner. It also shows some TV programs about the minibond crisis.
It also contains my speech in Chinese delivered by Goh Meng Seng.
Do you have video recording of your speech in Speaker's Corner. Where can I find it?
REPLY
You can go to http://www.youtube.com/. Search for Tan Kin Lian. It gives you a list of all the speeches in Speaker's Corner. It also shows some TV programs about the minibond crisis.
It also contains my speech in Chinese delivered by Goh Meng Seng.
Wednesday, October 29, 2008
US Attorney General recovers for investors in auction rate secruties
Dear Mr. Tan
Can Singapore learn from New York?
http://www.oag.state.ny.us/media_center/2008/oct/oct8a_08.html
ATTORNEY GENERAL CUOMO ANNOUNCES SETTLEMENTS WITH BANK OF AMERICA AND ROYAL BANK OF CANADA TO RECOVER BILLIONS FOR INVESTORS IN AUCTION-RATE SECURITIES
NEW YORK, NY (October 8, 2008) - Attorney General Andrew M. Cuomo today announced two more agreements to provide liquidity to consumers who purchased auction-rate securities. Banc of America Securities LLC and Banc of America Investment Services, Inc. ("Bank of America") will return over $4.5 billion to investors across New York State and the nation. RBC Capital Markets Corporation ("RBC") will return over $850 million to investors across New York State and the nation. These agreements settle allegations that Bank of America and RBC made misrepresentations in its marketing and sales of auction-rate securities. Bank of America and RBC marketed and sold auction-rate securities as safe, cash-equivalent products, when in fact they faced increasing liquidity risk.
"In today's economic climate, it's more important than ever for investors to be able to access their money. Returning billions of dollars back to investors not only protects their interests but also increases confidence in the entire market," said Attorney General Andrew Cuomo. "Since the beginning of our investigation into the auction-rate securities market, our objective has been to provide relief to investors who have been unable to sell auction-rate securities as a result of widespread auction failures in February 2008. With these settlements, we've returned over $50 billion back into investors' hands, providing relief to the overwhelming majority of individual investors who were fraudulently sold auction-rate securities."
Similar to prior settlements in the industry-wide investigation, Bank of America and RBC have agreed to buyback auction-rate securities from certain customers. Bank of America has agreed to offer to buy back all illiquid auction-rate securities from all of Bank of America's retail customers, small businesses with less than $15 million on deposit and charities with less than $25 million on deposit. RBC has agreed to offer to buy back all illiquid auction-rate securities from all of RBC's individual customers; charities, non-profits and government entities with less than $25 million on deposit; and all other entities with less than $10 million on deposit.
Can Singapore learn from New York?
http://www.oag.state.ny.us/media_center/2008/oct/oct8a_08.html
ATTORNEY GENERAL CUOMO ANNOUNCES SETTLEMENTS WITH BANK OF AMERICA AND ROYAL BANK OF CANADA TO RECOVER BILLIONS FOR INVESTORS IN AUCTION-RATE SECURITIES
NEW YORK, NY (October 8, 2008) - Attorney General Andrew M. Cuomo today announced two more agreements to provide liquidity to consumers who purchased auction-rate securities. Banc of America Securities LLC and Banc of America Investment Services, Inc. ("Bank of America") will return over $4.5 billion to investors across New York State and the nation. RBC Capital Markets Corporation ("RBC") will return over $850 million to investors across New York State and the nation. These agreements settle allegations that Bank of America and RBC made misrepresentations in its marketing and sales of auction-rate securities. Bank of America and RBC marketed and sold auction-rate securities as safe, cash-equivalent products, when in fact they faced increasing liquidity risk.
"In today's economic climate, it's more important than ever for investors to be able to access their money. Returning billions of dollars back to investors not only protects their interests but also increases confidence in the entire market," said Attorney General Andrew Cuomo. "Since the beginning of our investigation into the auction-rate securities market, our objective has been to provide relief to investors who have been unable to sell auction-rate securities as a result of widespread auction failures in February 2008. With these settlements, we've returned over $50 billion back into investors' hands, providing relief to the overwhelming majority of individual investors who were fraudulently sold auction-rate securities."
Similar to prior settlements in the industry-wide investigation, Bank of America and RBC have agreed to buyback auction-rate securities from certain customers. Bank of America has agreed to offer to buy back all illiquid auction-rate securities from all of Bank of America's retail customers, small businesses with less than $15 million on deposit and charities with less than $25 million on deposit. RBC has agreed to offer to buy back all illiquid auction-rate securities from all of RBC's individual customers; charities, non-profits and government entities with less than $25 million on deposit; and all other entities with less than $10 million on deposit.
High risk from inception
Dear Mr. Tan
One of the crucial issues that MAS has to consider is whether all these structured products that have come to grief can be categorized as high risk products from the time they were rolled out to the public. If Lehman Brothers has not become insolvent, would it make the scenario any different, with regard to the question of the underlying risks of the products?
Surely, the answer must be No. If an evaluation of these products [with Lehman being Arranger and Counter-swap Party etc] were to show that they were highly risky to investors, then the risks would remain unaltered regardless of the financial status of Lehman for much of the term of the investment, or until the investors were repaid their principal.
If the consensus is that these structured products were highly risky investments, then it was grossly irresponsible for any distributor to sell them to retail investors without making clear the risks involved, or by making misrepresentations of the risks involved, or closing the deal with the investor despite knowing, from risk-analysis, that this was against the risk-profile of the investor - let alone adopting a marketing strategy promoting them as safe or sound investments through the use of such terms like “Invest on solid foundations” and “With our Minibond Series 3 credit-linked to six major financial institutions, you can enjoy the returns you deserve with peace of mind.”
Any misrepresentations made by the RMs would of course constitute a legit ground for seeking restitution from the institution[s] they were representing. MAS should come down hard on the distributors who had mis-sold or misrepresented, instead of blurting out "This group should have understood the risks of investing in these products and take responsibilities for their actions”, clearly a prejudicial or arbitrary comment.
Richard Woo
One of the crucial issues that MAS has to consider is whether all these structured products that have come to grief can be categorized as high risk products from the time they were rolled out to the public. If Lehman Brothers has not become insolvent, would it make the scenario any different, with regard to the question of the underlying risks of the products?
Surely, the answer must be No. If an evaluation of these products [with Lehman being Arranger and Counter-swap Party etc] were to show that they were highly risky to investors, then the risks would remain unaltered regardless of the financial status of Lehman for much of the term of the investment, or until the investors were repaid their principal.
If the consensus is that these structured products were highly risky investments, then it was grossly irresponsible for any distributor to sell them to retail investors without making clear the risks involved, or by making misrepresentations of the risks involved, or closing the deal with the investor despite knowing, from risk-analysis, that this was against the risk-profile of the investor - let alone adopting a marketing strategy promoting them as safe or sound investments through the use of such terms like “Invest on solid foundations” and “With our Minibond Series 3 credit-linked to six major financial institutions, you can enjoy the returns you deserve with peace of mind.”
Any misrepresentations made by the RMs would of course constitute a legit ground for seeking restitution from the institution[s] they were representing. MAS should come down hard on the distributors who had mis-sold or misrepresented, instead of blurting out "This group should have understood the risks of investing in these products and take responsibilities for their actions”, clearly a prejudicial or arbitrary comment.
Richard Woo
Do you hear the people sing - version #4
Les Miserables
http://www.youtube.com/watch?v=1VR1bOha40U
Chorus
Do you hear our voices sing?
Singing songs of agony?
It is the wailing of the people
Who’s been cheated of our money!
When the banks claim innocence,
and the authority's voiceless
There is a fight about to start,
for what is ours!
Will you join in our crusade?
Who will be strong and stand with me?
Beyond the disclaimers
Is there justice you long to see?
Then join in the fight
That will give you the right to be free!
Chorus:
Will you give all you can give
So that our banner may advance
Against the institutions,
Will you stand and take your chance?
The despair of our people
Can all be seen at a glance!
Chorus:
http://www.youtube.com/watch?v=1VR1bOha40U
Chorus
Do you hear our voices sing?
Singing songs of agony?
It is the wailing of the people
Who’s been cheated of our money!
When the banks claim innocence,
and the authority's voiceless
There is a fight about to start,
for what is ours!
Will you join in our crusade?
Who will be strong and stand with me?
Beyond the disclaimers
Is there justice you long to see?
Then join in the fight
That will give you the right to be free!
Chorus:
Will you give all you can give
So that our banner may advance
Against the institutions,
Will you stand and take your chance?
The despair of our people
Can all be seen at a glance!
Chorus:
Mini-bond investor gives his view
Dear Mr. Tan
I would like to response to some misconceptions and unfair criticisms to the minibond holders from the general public (and probably including some of our leaders). They are :
1) When Lehman brothers did not fail, these minibond holders collected their quarterly payout and kept quiet. Now they got burned, they want MAS to bail them out ?
We did not asked MAS to bail us out. What we are asking is: MAS please carry out your duty , i.e. to investigate into any mis-selling and mis-representations.
2) Since you have make a wrong decision in investment , you have to take responsibility and accept the consequences.
Many of us were misled into believing that the product we bought is a bond issued by the six leading banks (or the investment is to buy into bond issued by the six banks) namely, DBS, Citibank, Merrill lynch. Goldman Sachs, HSBC, and Standard Chartered bank. Now then we discovered that the bond is actually not issued by the six banks and worse it is not a bond, instead, it is a very complex product which even the sales people from the Financial institutions are unable to explain clearly.
3) The risks are explained in the prospectus in bold print that you can lose everything. Therefore minibond holders cannot claim that they do not know the risks
We understand that the principal amount is not guaranteed. But we are misled into believing that the bond is issued by the six leading banks(or the investment is to buy into bond issued by the six banks) and therefore if one of the six bank fail, the maximum loss is only 1/6 (16.7%) of the principal amount. We will lose everything only when all the six leading banks go bankrupt. Since Lehman brothers is not one of the six banks, we should not suffer any loss.
4) it is greed that drive them to invest in minibond.
Many of us bought the bond during last year when the market is good, if it is greed, then we should invested in stocks, because the return is easily 20% to 30% within weeks. But instead we chose to part our money in minibond for five full years just to earn a total return of 25.5% ( 5 x 5.1%).
5) high return high risk, since you get 5.1%, the risk should be high.
Comparing with the OCBC 4.2% and 4.5% preference shares available from the stock market, which we can sell the shares anytime if we need cash, the interest offered by the bond is not very attractive because we have to part the money for 5 years just for 5.1% interest. But the bond is issued by the six leading banks, the risk should be much lower than OCBC preference shares(six bank against one).
Thank you.
I would like to response to some misconceptions and unfair criticisms to the minibond holders from the general public (and probably including some of our leaders). They are :
1) When Lehman brothers did not fail, these minibond holders collected their quarterly payout and kept quiet. Now they got burned, they want MAS to bail them out ?
We did not asked MAS to bail us out. What we are asking is: MAS please carry out your duty , i.e. to investigate into any mis-selling and mis-representations.
2) Since you have make a wrong decision in investment , you have to take responsibility and accept the consequences.
Many of us were misled into believing that the product we bought is a bond issued by the six leading banks (or the investment is to buy into bond issued by the six banks) namely, DBS, Citibank, Merrill lynch. Goldman Sachs, HSBC, and Standard Chartered bank. Now then we discovered that the bond is actually not issued by the six banks and worse it is not a bond, instead, it is a very complex product which even the sales people from the Financial institutions are unable to explain clearly.
3) The risks are explained in the prospectus in bold print that you can lose everything. Therefore minibond holders cannot claim that they do not know the risks
We understand that the principal amount is not guaranteed. But we are misled into believing that the bond is issued by the six leading banks(or the investment is to buy into bond issued by the six banks) and therefore if one of the six bank fail, the maximum loss is only 1/6 (16.7%) of the principal amount. We will lose everything only when all the six leading banks go bankrupt. Since Lehman brothers is not one of the six banks, we should not suffer any loss.
4) it is greed that drive them to invest in minibond.
Many of us bought the bond during last year when the market is good, if it is greed, then we should invested in stocks, because the return is easily 20% to 30% within weeks. But instead we chose to part our money in minibond for five full years just to earn a total return of 25.5% ( 5 x 5.1%).
5) high return high risk, since you get 5.1%, the risk should be high.
Comparing with the OCBC 4.2% and 4.5% preference shares available from the stock market, which we can sell the shares anytime if we need cash, the interest offered by the bond is not very attractive because we have to part the money for 5 years just for 5.1% interest. But the bond is issued by the six leading banks, the risk should be much lower than OCBC preference shares(six bank against one).
Thank you.
Savings of retired workers
My friend who works in the NTUC group told me that she was misled into investing in the structured product. Being financially trained, she was quite careful and asked about the product, before she made the investment. She was mis-informed about the product by the relationship manager.
I suggested to her that she should bring it to the attention of the leaders in NTUC, specially the ministers and members of parliament. So many people have been misled. Many of them are the retired workers who invested all of their life time savings. She agreed.
I suggested to her that she should bring it to the attention of the leaders in NTUC, specially the ministers and members of parliament. So many people have been misled. Many of them are the retired workers who invested all of their life time savings. She agreed.
Collective legal action (1)
Approach recommended by Mr. Glenn Knight
1. I have met with several investors and found that a collective action is difficult.
2. I proposed that the investors should come forward and to say how they have been ‘misled’ and by which party meaning the banks or the other financial institution. I will then these people according to the financial institution who sold them the product.
3. For each group, I will choose one client who will sue alone but who will be backed financially by the others of the same group. My estimate is about S$80,000 for each client for the suit. The case will be heard in the District Court.
4. If the client wins the case, it will be a crucial victory. I will then use this case to settle with that financial institution on behalf of the other investors, provided of course that this is agreed by the financial institution. In that way, all similar cases can be settled.
5. If I am not able to act against any financial institution due to conflict, I can arrange for another lawyer to act (e.g. Mr. Raymond Loo).
6. If I should lose the case, the amount involved would be on a scale basis (provided in the books) of S$40,000 say for a trial that would last 4 days.
7. In the event that there would be an appeal to a High Court Judge in chambers, then I will have to charge another S$30,000. But if I should lose the appeal the party would have to bear costs of S$15,000
Glenn Knight
Bernard & Rada Law Corporation
50 Robinson Road
#08-00 VTB Building
Singapore 068882
DID: (65) 63947 852
Main: (65) 68999 888
Fax: (65) 6338 5377
Web: www.brllawcorp.com
1. I have met with several investors and found that a collective action is difficult.
2. I proposed that the investors should come forward and to say how they have been ‘misled’ and by which party meaning the banks or the other financial institution. I will then these people according to the financial institution who sold them the product.
3. For each group, I will choose one client who will sue alone but who will be backed financially by the others of the same group. My estimate is about S$80,000 for each client for the suit. The case will be heard in the District Court.
4. If the client wins the case, it will be a crucial victory. I will then use this case to settle with that financial institution on behalf of the other investors, provided of course that this is agreed by the financial institution. In that way, all similar cases can be settled.
5. If I am not able to act against any financial institution due to conflict, I can arrange for another lawyer to act (e.g. Mr. Raymond Loo).
6. If I should lose the case, the amount involved would be on a scale basis (provided in the books) of S$40,000 say for a trial that would last 4 days.
7. In the event that there would be an appeal to a High Court Judge in chambers, then I will have to charge another S$30,000. But if I should lose the appeal the party would have to bear costs of S$15,000
Glenn Knight
Bernard & Rada Law Corporation
50 Robinson Road
#08-00 VTB Building
Singapore 068882
DID: (65) 63947 852
Main: (65) 68999 888
Fax: (65) 6338 5377
Web: www.brllawcorp.com
Buying Government Securities
Many people have asked how they can buy Government Securities. I asked Adrian Tan to do some research. Here are his findings.
DO-IT-YOURSELF
http://www.sgs.gov.sg/pub_guide/faqs/publ_faqindinvestors.html
Go to “PURCHASING AND SELLING SGS” section.
To summarise, you have to open an account with a primary dealer (these include ABN AMBRO, DBS, OCBC and UOB) or a secondary dealer. “Banks, merchant banks and stockbroking firms are among the approved Secondary Dealers”.
“With this account, you can purchase SGS over the counter with these banks.”
If you follow this route, make sure you ask about the commissions and other charges that are applicable.
If you face difficulties, say finding the right people in the bank to talk to, I suggest you tell MAS about your experiences.
ELECTRONICALLY (fundsupermat)
If you have have an investment account with fundsupermart, you may invest in SGS bonds using this existing account. If you have never opened an investment account, you will be required to open one before you can invest in SGS bonds https://secure.fundsupermart.com/main/acl/registerAccount1.tpl
You are only allowed to purchase SGS Bonds via this platform using cash
'For SGS Bond, the charges that you will incur is 0.1% processing fee and 0.1% annual custody fee. The 0.1% processing fee will be deducted from your nominal value upon purchasing and the remaining 0.1% annual custody fee will be deducted yearly from your coupon payment i.e. 0.05% semi annually as the coupon payment will be paid out every 6 months. Please be noted that no charges will be incurred when you sell the SGS Bonds.
Please refer to FAQ over the website:
http://www.fundsupermart.com/main/faq/sgs_faq.tpl?id=6546
http://www.fundsupermart.com/main/faq/sgs_faq.tpl?id=910
http://www.fundsupermart.com/main/faq/sgs_faq.tpl?id=3826”
Author's note -- You have to be personally satisfied that you are comfortable dealing with fundsupermarket.com or its related entities. Mr Tan Kin Lian or Adrian Tan are not making any representations about fundsupermarket.com or its related entities.
DO-IT-YOURSELF
http://www.sgs.gov.sg/pub_guide/faqs/publ_faqindinvestors.html
Go to “PURCHASING AND SELLING SGS” section.
To summarise, you have to open an account with a primary dealer (these include ABN AMBRO, DBS, OCBC and UOB) or a secondary dealer. “Banks, merchant banks and stockbroking firms are among the approved Secondary Dealers”.
“With this account, you can purchase SGS over the counter with these banks.”
If you follow this route, make sure you ask about the commissions and other charges that are applicable.
If you face difficulties, say finding the right people in the bank to talk to, I suggest you tell MAS about your experiences.
ELECTRONICALLY (fundsupermat)
If you have have an investment account with fundsupermart, you may invest in SGS bonds using this existing account. If you have never opened an investment account, you will be required to open one before you can invest in SGS bonds https://secure.fundsupermart.com/main/acl/registerAccount1.tpl
You are only allowed to purchase SGS Bonds via this platform using cash
'For SGS Bond, the charges that you will incur is 0.1% processing fee and 0.1% annual custody fee. The 0.1% processing fee will be deducted from your nominal value upon purchasing and the remaining 0.1% annual custody fee will be deducted yearly from your coupon payment i.e. 0.05% semi annually as the coupon payment will be paid out every 6 months. Please be noted that no charges will be incurred when you sell the SGS Bonds.
Please refer to FAQ over the website:
http://www.fundsupermart.com/main/faq/sgs_faq.tpl?id=6546
http://www.fundsupermart.com/main/faq/sgs_faq.tpl?id=910
http://www.fundsupermart.com/main/faq/sgs_faq.tpl?id=3826”
Author's note -- You have to be personally satisfied that you are comfortable dealing with fundsupermarket.com or its related entities. Mr Tan Kin Lian or Adrian Tan are not making any representations about fundsupermarket.com or its related entities.
Regulator should disallow the sale of bad products
The CEO of a large government owned organisation told me,
"Kin Lian, you are opening a pandora's box. By speaking for the investors who were misled into buying the structured products, you allow other sophisticated investors to claim that they were also misled and to claim compensation. How can you differentiate between the two group?"
I showed this blog to him on my notebook computer: http://tankinlian.blogspot.com/2008/10/nature-and-risk-of-structured-product.html
After reading it, he changed his mind. He did not realise that the product could be so toxic and was surprised that it was allowed to be sold. Nobody would have bought the product, if it was properly described to them.
I showed to him another potential time bomb, concerning the leveraged dual currency investment:
http://tankinlian.blogspot.com/2008/10/leveraged-dual-currency-investments.html
He was again surprised. He wanted to check if his wife also invested in these dual currency investment. It is so easy for the unsavvy to be fooled.
He suggested to me on how the message of these bad products could be disseminated more widely to inform the investors. I replied that, by naming the products, I stand the risk of being sued by the creators of these products. In my view, it is the job of the regulator to ensure that bad products cannot be sold.
"Kin Lian, you are opening a pandora's box. By speaking for the investors who were misled into buying the structured products, you allow other sophisticated investors to claim that they were also misled and to claim compensation. How can you differentiate between the two group?"
I showed this blog to him on my notebook computer: http://tankinlian.blogspot.com/2008/10/nature-and-risk-of-structured-product.html
After reading it, he changed his mind. He did not realise that the product could be so toxic and was surprised that it was allowed to be sold. Nobody would have bought the product, if it was properly described to them.
I showed to him another potential time bomb, concerning the leveraged dual currency investment:
http://tankinlian.blogspot.com/2008/10/leveraged-dual-currency-investments.html
He was again surprised. He wanted to check if his wife also invested in these dual currency investment. It is so easy for the unsavvy to be fooled.
He suggested to me on how the message of these bad products could be disseminated more widely to inform the investors. I replied that, by naming the products, I stand the risk of being sued by the creators of these products. In my view, it is the job of the regulator to ensure that bad products cannot be sold.
Tuesday, October 28, 2008
Singapore Kopitiam Forum
Dear Mr. Tan:
I would like to commend you for your selfless effort in helping the investors to get back some of their investments in Minibonds, DBS High Notes 5, Jubilee Notes, and Pinnacle Notes, etc.
I realize that you have to block some of the comments left by visitors to your blog in order to keep your blog clean.
In an effort to assist you to achieve your goal, I have set aside a "Finance/Str_Products/Stock" discussion board at "Singapore Kopitiam" Forum for investors to air their views, exchange ideas, and coordinate a common approach to financial institutions:
http://forums.delphiforums.com/n/mb/list.asp?webtag=sunkopitiam&ctx=32768&cacheTag=x10-28
Any visitor can register a free account at "Singapore Kopitiam" Forum and start posting without time delay or moderation. "Singapore Kopitiam" Forum has already carried some of the reposted messages from your blog and other news concerning Minibonds, DBS High Notes 5, Jubilee Notes, and Pinnacle Notes, etc.
I would appreciate it very much if you would publicize it on your blog and encourage investors to make use of the facilities to achieve their goals.
God bless you!
Regards
Victor Sun
Singapore Kopitiam
http://forums.delphiforums.com/sunkopitiam
I would like to commend you for your selfless effort in helping the investors to get back some of their investments in Minibonds, DBS High Notes 5, Jubilee Notes, and Pinnacle Notes, etc.
I realize that you have to block some of the comments left by visitors to your blog in order to keep your blog clean.
In an effort to assist you to achieve your goal, I have set aside a "Finance/Str_Products/Stock" discussion board at "Singapore Kopitiam" Forum for investors to air their views, exchange ideas, and coordinate a common approach to financial institutions:
http://forums.delphiforums.com/n/mb/list.asp?webtag=sunkopitiam&ctx=32768&cacheTag=x10-28
Any visitor can register a free account at "Singapore Kopitiam" Forum and start posting without time delay or moderation. "Singapore Kopitiam" Forum has already carried some of the reposted messages from your blog and other news concerning Minibonds, DBS High Notes 5, Jubilee Notes, and Pinnacle Notes, etc.
I would appreciate it very much if you would publicize it on your blog and encourage investors to make use of the facilities to achieve their goals.
God bless you!
Regards
Victor Sun
Singapore Kopitiam
http://forums.delphiforums.com/sunkopitiam
Nature and risk of the structured product
Hi Mr. Tan,
You said, on many occasions, that the investors have been mis-informed about the "nature and risk" of the structured product. Can you explain what you mean and what actually happened?
REPLY
If you invest in a bond of a company, you stand the risk of losing your investment if this company goes bankrupt. To reduce this risk, you can spread your investment over 6 bonds. If any one company goes bankrupt, you only lose 1/6 of your investment. This is called diversification and is a sound investment strategy.
If you invest in a structured product with 6 "first to default" swaps, you stand to lose all of your capital if any one of these 6 swaps failed. You stand the chance of losing your capital 6 times. Instead of reducing your risk to 1/6, you are multiplying your risk 6 times. It is highly risky. It is madness.
Many people were misled into thinking that they are reducing their risk by diversifying their investment into 6 entities. The actual situation is that they are increasing their risk 6 fold by the "first to default" swaps on these 6 entities.
This actual "nature and risk" of the structured product has not been properly explained in the prospectus and in the explanation given by the sales representative.
You said, on many occasions, that the investors have been mis-informed about the "nature and risk" of the structured product. Can you explain what you mean and what actually happened?
REPLY
If you invest in a bond of a company, you stand the risk of losing your investment if this company goes bankrupt. To reduce this risk, you can spread your investment over 6 bonds. If any one company goes bankrupt, you only lose 1/6 of your investment. This is called diversification and is a sound investment strategy.
If you invest in a structured product with 6 "first to default" swaps, you stand to lose all of your capital if any one of these 6 swaps failed. You stand the chance of losing your capital 6 times. Instead of reducing your risk to 1/6, you are multiplying your risk 6 times. It is highly risky. It is madness.
Many people were misled into thinking that they are reducing their risk by diversifying their investment into 6 entities. The actual situation is that they are increasing their risk 6 fold by the "first to default" swaps on these 6 entities.
This actual "nature and risk" of the structured product has not been properly explained in the prospectus and in the explanation given by the sales representative.
Make Government Bonds easily available
26 October, 2008
Editor
Forum Page
Straits Times
Make Government Bonds easily available to the public
The Singapore Government has decided to guarantee all deposits with banks in Singapore. This move is intended to maintain the depositors' confidence in Singapore banks and to prevent the flight of deposits to financial jurisdiction covered by a state guarantee.
I wonder why Singapore taxpayers should be bearing the cost of this guarantee? The Singapore banks now offer a low interest rate of less than 1% per annum and earn a high spread on the loans that they make out. They are able to lend out the money on loans and overdrafts at the prime rate of 4% plus a margin. Are the taxpayers subsidising the shareholders of these banks?
I like to suggest an alternative approach. The Singapore Government should issue more government bonds for durations of 1 to 30 years. This should be made easily available to the public to buy through ATMs or other channels. The money collected from these bonds can be lent out to the financial institutions based on the cost of funds plus a credit spread, for the financial institutions to make loans and overdraft.
This approach will allow the working people and retirees in Singapore to earn a market rate of interest on the government bonds, which is higher than interest paid on bank deposits. This higher interest rate will help to cushion the temporary high inflation rate in Singapore.
The banks should not be allowed to earn a high margin on their lending operations and benefit from the guarantee provided by the Government. The high margin increases the profits of the banks and benefits their shareholders, but comes at the expense of the deposits who are given a low interest rate.
Tan Kin Lian
Editor
Forum Page
Straits Times
Make Government Bonds easily available to the public
The Singapore Government has decided to guarantee all deposits with banks in Singapore. This move is intended to maintain the depositors' confidence in Singapore banks and to prevent the flight of deposits to financial jurisdiction covered by a state guarantee.
I wonder why Singapore taxpayers should be bearing the cost of this guarantee? The Singapore banks now offer a low interest rate of less than 1% per annum and earn a high spread on the loans that they make out. They are able to lend out the money on loans and overdrafts at the prime rate of 4% plus a margin. Are the taxpayers subsidising the shareholders of these banks?
I like to suggest an alternative approach. The Singapore Government should issue more government bonds for durations of 1 to 30 years. This should be made easily available to the public to buy through ATMs or other channels. The money collected from these bonds can be lent out to the financial institutions based on the cost of funds plus a credit spread, for the financial institutions to make loans and overdraft.
This approach will allow the working people and retirees in Singapore to earn a market rate of interest on the government bonds, which is higher than interest paid on bank deposits. This higher interest rate will help to cushion the temporary high inflation rate in Singapore.
The banks should not be allowed to earn a high margin on their lending operations and benefit from the guarantee provided by the Government. The high margin increases the profits of the banks and benefits their shareholders, but comes at the expense of the deposits who are given a low interest rate.
Tan Kin Lian
Not a happy time for me
26 October, 2008
Editor
Today Paper
I refer to your article entitled “Finally, a Change on Friday” (Today, 25 October 2008).
I thank your editorial director P N Balji for an excellent article in tracing the developments in Singapore on the structured products affected by the collapse of Lehman Brothers.
I also welcome the decision by the Monetary Authority of Singapore to help resolve the complaints of the investors in these structured products. Like the saying goes, “better late than never”.
The MAS has asked the financial institutions to give priority to the “vulnerable” investors, who are defined to be elderly and lowly educated. Many investors who fall outside of this category are worried that their claims may be ignored. MAS has since clarified that their complaints will also be attended to.
You made the following statement which I need to correct, “… they should not have maintained silence …. thus creating a vacuum which people like Mr.Tan filled happily”. I wish to say that it was not a happy time for me.
For the past one over year, I have advised visitors to my blog www.tankinlian.blogspot.com to avoid these structured products. I was horrified to learn, following the collapse of Lehman Brothers, about the extent of the losses incurred by the investors and how they were misled into investing in the structured products.
I decided to organise a Petition to ask the Government to investigate if there were breaches of the law and if so, could the relevant authority take relevant action to help the investors to seek fair compensation. I decided to hold a meeting at Speaker’s Corner to give an update of the Petition.
The past three weeks have been very stressful for me. I have to deal with more than 50 e-mails and postings to my blog each day. Many of the investors were lost and needed guidance. I am grateful for the large number of volunteers who came forward to help, but the main burden fell on my shoulders.
I wished that there was no vacuum that needed to be filled. In an earlier statement to the media, I express the wish that MAS could provide the appropriate assistance to the investors so that I do not have to “work so hard”. I hope that it is possible for me to step back soon to attend to my normal routine.
Tan Kin Lian
Editor
Today Paper
I refer to your article entitled “Finally, a Change on Friday” (Today, 25 October 2008).
I thank your editorial director P N Balji for an excellent article in tracing the developments in Singapore on the structured products affected by the collapse of Lehman Brothers.
I also welcome the decision by the Monetary Authority of Singapore to help resolve the complaints of the investors in these structured products. Like the saying goes, “better late than never”.
The MAS has asked the financial institutions to give priority to the “vulnerable” investors, who are defined to be elderly and lowly educated. Many investors who fall outside of this category are worried that their claims may be ignored. MAS has since clarified that their complaints will also be attended to.
You made the following statement which I need to correct, “… they should not have maintained silence …. thus creating a vacuum which people like Mr.Tan filled happily”. I wish to say that it was not a happy time for me.
For the past one over year, I have advised visitors to my blog www.tankinlian.blogspot.com to avoid these structured products. I was horrified to learn, following the collapse of Lehman Brothers, about the extent of the losses incurred by the investors and how they were misled into investing in the structured products.
I decided to organise a Petition to ask the Government to investigate if there were breaches of the law and if so, could the relevant authority take relevant action to help the investors to seek fair compensation. I decided to hold a meeting at Speaker’s Corner to give an update of the Petition.
The past three weeks have been very stressful for me. I have to deal with more than 50 e-mails and postings to my blog each day. Many of the investors were lost and needed guidance. I am grateful for the large number of volunteers who came forward to help, but the main burden fell on my shoulders.
I wished that there was no vacuum that needed to be filled. In an earlier statement to the media, I express the wish that MAS could provide the appropriate assistance to the investors so that I do not have to “work so hard”. I hope that it is possible for me to step back soon to attend to my normal routine.
Tan Kin Lian
Misleading advertisements
Dear Kin Lian,
Mr. Heng Swee Kiat, the Managing Director for the Monetary Authority of Singapore, is reported to have said, inter alia, ... "This group should have understood the risks of investing in these products and take responsibilities for their actions" [Sunday Times, Oct 26] when he expressed assurance that all investors’ complaints of mis-selling would be reviewed, with regard to their investment in structured products linked to bankrupt Lehman Brothers. Was it fair of Mr. Heng to pass such a comment? If mis-selling is considered a legitimate ground for seeking restitution, then it would have been more constructive if Mr. Heng had said: "Any bank or institution that has mis-sold or misrepresented must bear the loss suffered by the investor."
Some examples of mis-selling are clear-cut, and have been discussed in the local newspapers. An advertising pamphlet [M-pamphlet] produced for public consumption, for Minibonds Series 3, is a case in point. This M-pamphlet was produced with these enticing statements:
"Invest on solid foundations and earn 5% pa paid every 3 months for 53/4 years" and
"With our Minibond Series 3 credit-linked to six major financial institutions, you can enjoy the returns you deserve with peace of mind"
As a marketing ploy, these adverts make the product look attractive, but M-pamphlet was designed with deception in mind nevertheless, notwithstanding a disclaimer clause, in almost illegible fine print, placed at the bottom of the pamphlet. When the institution responsible for this M-pamphlet instructed the investor to sign on a modified version of M-pamphlet, the investor was probably not aware of the slight but crucial disparity between this modified version and M-pamphlet. And one cannot be faulted for saying that many, if not all, investors could have seen M-pamphlet and relied on the enticing statements mentioned above. And what is this disparity?
The disparity is that this encouraging and enticing statement "With our Minibond Series 3 credit-linked to six major financial institutions, you can enjoy the returns you deserve with peace of mind" and the disclaimer clause do not appear on the modified version. Any investors must still be given credit if they had noticed this disparity but had thought nothing of it. But if no one had noticed it they could not be faulted. It is clear that the advertising pamphlet was designed with a preconceived intention of misleading the public.
If MAS is serious in holding distributors responsible for mis-selling, MAS should ask for specimens of advertising materials/other documentation used by distributors when they were flogging these products, and critically examine them. The verbal input given to investors by relationship managers is no doubt an area of equal importance, if not more so, as a source of evidence for mis-selling or misrepresentation.
If any risk analysis completed for an investor shows the investor was NOT a high-risk taker, then the distributor was prima facie irresponsible for selling the product to the investor concerned and must now reimburse the investor for the loss. Should any distributor be found to be clearly at fault for mis-selling or misrepresenting a particular product, then MAS would do well to tell the distributor to reimburse all investors to whom they sold the product.
Richard Woo
Mr. Heng Swee Kiat, the Managing Director for the Monetary Authority of Singapore, is reported to have said, inter alia, ... "This group should have understood the risks of investing in these products and take responsibilities for their actions" [Sunday Times, Oct 26] when he expressed assurance that all investors’ complaints of mis-selling would be reviewed, with regard to their investment in structured products linked to bankrupt Lehman Brothers. Was it fair of Mr. Heng to pass such a comment? If mis-selling is considered a legitimate ground for seeking restitution, then it would have been more constructive if Mr. Heng had said: "Any bank or institution that has mis-sold or misrepresented must bear the loss suffered by the investor."
Some examples of mis-selling are clear-cut, and have been discussed in the local newspapers. An advertising pamphlet [M-pamphlet] produced for public consumption, for Minibonds Series 3, is a case in point. This M-pamphlet was produced with these enticing statements:
"Invest on solid foundations and earn 5% pa paid every 3 months for 53/4 years" and
"With our Minibond Series 3 credit-linked to six major financial institutions, you can enjoy the returns you deserve with peace of mind"
As a marketing ploy, these adverts make the product look attractive, but M-pamphlet was designed with deception in mind nevertheless, notwithstanding a disclaimer clause, in almost illegible fine print, placed at the bottom of the pamphlet. When the institution responsible for this M-pamphlet instructed the investor to sign on a modified version of M-pamphlet, the investor was probably not aware of the slight but crucial disparity between this modified version and M-pamphlet. And one cannot be faulted for saying that many, if not all, investors could have seen M-pamphlet and relied on the enticing statements mentioned above. And what is this disparity?
The disparity is that this encouraging and enticing statement "With our Minibond Series 3 credit-linked to six major financial institutions, you can enjoy the returns you deserve with peace of mind" and the disclaimer clause do not appear on the modified version. Any investors must still be given credit if they had noticed this disparity but had thought nothing of it. But if no one had noticed it they could not be faulted. It is clear that the advertising pamphlet was designed with a preconceived intention of misleading the public.
If MAS is serious in holding distributors responsible for mis-selling, MAS should ask for specimens of advertising materials/other documentation used by distributors when they were flogging these products, and critically examine them. The verbal input given to investors by relationship managers is no doubt an area of equal importance, if not more so, as a source of evidence for mis-selling or misrepresentation.
If any risk analysis completed for an investor shows the investor was NOT a high-risk taker, then the distributor was prima facie irresponsible for selling the product to the investor concerned and must now reimburse the investor for the loss. Should any distributor be found to be clearly at fault for mis-selling or misrepresenting a particular product, then MAS would do well to tell the distributor to reimburse all investors to whom they sold the product.
Richard Woo
Why does the stock market fall?
I recall a story. British Prime Minister Winston Churchill was asked, "Sir, why is the stock market falling every day?"
His answer, "There are more sellers than buyers".
This is what is happening now to the global stock markets. Everybody (except Warren Buffett) is so negative. Nobody is buying. They expect the stock markets to fall.
The hedge funds have to liquidate their position due to withdrawals by the investors. They sell their holdings at any price. Some may be selling short. The wave after wave of selling will continue, until the value become $0. (Just joking. It will not reach this extreme point).
This is our wonderful global financial system, that has now totally collapsed.
His answer, "There are more sellers than buyers".
This is what is happening now to the global stock markets. Everybody (except Warren Buffett) is so negative. Nobody is buying. They expect the stock markets to fall.
The hedge funds have to liquidate their position due to withdrawals by the investors. They sell their holdings at any price. Some may be selling short. The wave after wave of selling will continue, until the value become $0. (Just joking. It will not reach this extreme point).
This is our wonderful global financial system, that has now totally collapsed.
Unconditional help from volunteers
Many people thanked me for spending time and effort to help the investors of the structured products.
I wish to acknowledge the unconditional help given by many volunteers who came forward to assist me. I shall not mention their names, but tell you what they have been doing:
> volunteers who provide guidance and deal with specific issues of investors
> volunteers who help at Speaker's Corner
> contact persons for the various groups (by distributor or product)
> strategy team who understakes various types of tasks
> volunteers who monitor the internet for news and contribute updates for me
> volunteers who translate my article into Chinese.
These volunteers came forward without being asked. Some are investors, others are not. They do what they consider to be useful. This is called UNCONDITIONAL HELP.
I wish to acknowledge the unconditional help given by many volunteers who came forward to assist me. I shall not mention their names, but tell you what they have been doing:
> volunteers who provide guidance and deal with specific issues of investors
> volunteers who help at Speaker's Corner
> contact persons for the various groups (by distributor or product)
> strategy team who understakes various types of tasks
> volunteers who monitor the internet for news and contribute updates for me
> volunteers who translate my article into Chinese.
These volunteers came forward without being asked. Some are investors, others are not. They do what they consider to be useful. This is called UNCONDITIONAL HELP.
NUS dean also exposed to loss
http://www.todayonline.com/articles/283518.asp
Today Weekend, October 25, 2008, By Lin Yanqin
HE HAD built his career on his expertise and knowledge in the field of finance, but like thousands of others, he too fell victim to the collapse of Lehman-backed structured products after the American investment bank folded.
Professor Bernard Yeung, the new dean of NUS Business School, recalled the moment when he received the bad news from his broker.
“She said ‘Bernard, you’re exposed to Lehman Brothers’. I won’t tell you how much I lost, I basically feel like I’m working for free right now,” said Prof Yeung.
The Lehman fiasco prompted Prof Yeung to pull together the business school’s academics to share their knowledge and expertise on the issue.
“We said, ‘This is our social responsibility’... So we asked the faculty to write about this crisis, to help society understand what has happened,” said the 55-year-old Hong Kong-born Canadian, who met the media on Friday.
This culminated in a 13-part series in The Straits Times, as well as various articles in Today (picture) and The Business Times.
Such, Prof Yeung says, is how he envisions Singapore’s oldest business school spreading its knowledge beyond the ivory tower — drawing from its “peaks of excellence” to make a social impact.
Not only does he want to create a culture of intellectual curiosity and integrity in the school, Prof Yeung wants the knowledge created to be shared through teaching, journals and books, as well as the mass media.
Apart from the articles in the newspapers, the school also organised a panel discussion with industry leaders, faculty and alumni to educate its students about the impact of the ongoing financial crisis.
A special module on the crisis will be taught next month for the whole university, with lectures on topics like moral hazards, governance and government policy.
Prof Yeung, who came to NUS after nine years at New York University’s Stern School of Business, said NUS would play to its strengths and “focus on the basics”.
“The whole industry needs to train people back to the basics. We need to understand risk management better, we need to understand finance even better, and we need to think about this concept of responsibility,” he said.
“There’s a lot of self-reflection going on in the industry.”
Prof Yeung also spoke about the importance of rankings. These measures matter because they reflect what a school is about. Hence it is important to create a culture of learning and impart this to students — a hallmark of well-ranked schools. “If they deliver, we’ll always be the best,” he said.
His appointment at NUS — a three-year renewable term — allows him to be immersed in what he sees as the “Asian Renaissance,” with Asia becoming central to the world’s economy.
“It’s very exciting to be here,” said Prof Yeung, who intends to retire here.
Today Weekend, October 25, 2008, By Lin Yanqin
HE HAD built his career on his expertise and knowledge in the field of finance, but like thousands of others, he too fell victim to the collapse of Lehman-backed structured products after the American investment bank folded.
Professor Bernard Yeung, the new dean of NUS Business School, recalled the moment when he received the bad news from his broker.
“She said ‘Bernard, you’re exposed to Lehman Brothers’. I won’t tell you how much I lost, I basically feel like I’m working for free right now,” said Prof Yeung.
The Lehman fiasco prompted Prof Yeung to pull together the business school’s academics to share their knowledge and expertise on the issue.
“We said, ‘This is our social responsibility’... So we asked the faculty to write about this crisis, to help society understand what has happened,” said the 55-year-old Hong Kong-born Canadian, who met the media on Friday.
This culminated in a 13-part series in The Straits Times, as well as various articles in Today (picture) and The Business Times.
Such, Prof Yeung says, is how he envisions Singapore’s oldest business school spreading its knowledge beyond the ivory tower — drawing from its “peaks of excellence” to make a social impact.
Not only does he want to create a culture of intellectual curiosity and integrity in the school, Prof Yeung wants the knowledge created to be shared through teaching, journals and books, as well as the mass media.
Apart from the articles in the newspapers, the school also organised a panel discussion with industry leaders, faculty and alumni to educate its students about the impact of the ongoing financial crisis.
A special module on the crisis will be taught next month for the whole university, with lectures on topics like moral hazards, governance and government policy.
Prof Yeung, who came to NUS after nine years at New York University’s Stern School of Business, said NUS would play to its strengths and “focus on the basics”.
“The whole industry needs to train people back to the basics. We need to understand risk management better, we need to understand finance even better, and we need to think about this concept of responsibility,” he said.
“There’s a lot of self-reflection going on in the industry.”
Prof Yeung also spoke about the importance of rankings. These measures matter because they reflect what a school is about. Hence it is important to create a culture of learning and impart this to students — a hallmark of well-ranked schools. “If they deliver, we’ll always be the best,” he said.
His appointment at NUS — a three-year renewable term — allows him to be immersed in what he sees as the “Asian Renaissance,” with Asia becoming central to the world’s economy.
“It’s very exciting to be here,” said Prof Yeung, who intends to retire here.
Enforce the law
Sent by e-mail to me:
Minister Lim Hng Kiang (Deputy Chairman of MAS) said that it is not up to MAS to judge the merit of the investment product, yet MAS endorses the standard of clarity in the prospectus of the investment products.
He said that two legal laws, i.e. Financial Advisors Act and The Securities and Futures Act, are already in place, yet MAS, being the regulator empowered to enforce these laws, chooses not to exercise its power.
Full posting:
http://theonlinecitizen.com/2008/10/a-sleeping-authority/#comments
Minister Lim Hng Kiang (Deputy Chairman of MAS) said that it is not up to MAS to judge the merit of the investment product, yet MAS endorses the standard of clarity in the prospectus of the investment products.
He said that two legal laws, i.e. Financial Advisors Act and The Securities and Futures Act, are already in place, yet MAS, being the regulator empowered to enforce these laws, chooses not to exercise its power.
Full posting:
http://theonlinecitizen.com/2008/10/a-sleeping-authority/#comments
Well regarded persons oversee the financial institutions
The well regarded persons appointed to oversee the complaint handling of the financial institutions are:
Gerard Ee – DBS Bank
Law Song Keng – ABN Amro, Hong Leong Finance, Maybank
Hwang Soo Jin – CIMB GK Securities, DMG & Partners Securities, Kim Eng Securities, OCBC Securities, Phillips Securities, UOB Kay Hian, AMEX Bank.
Standard Chartered - try Hwang Soo Jin or write to MAS.
If you wish to contact these three people, you can write to their name, c/o Monetary Authority of Singapore.
10 Shenton Way MAS Building
Singapore 079117
Tel : (65)-6225-5577
Fax : (65)-6229-9229
Website : http://www.mas.gov.sg
Gerard Ee – DBS Bank
Law Song Keng – ABN Amro, Hong Leong Finance, Maybank
Hwang Soo Jin – CIMB GK Securities, DMG & Partners Securities, Kim Eng Securities, OCBC Securities, Phillips Securities, UOB Kay Hian, AMEX Bank.
Standard Chartered - try Hwang Soo Jin or write to MAS.
If you wish to contact these three people, you can write to their name, c/o Monetary Authority of Singapore.
10 Shenton Way MAS Building
Singapore 079117
Tel : (65)-6225-5577
Fax : (65)-6229-9229
Website : http://www.mas.gov.sg
Town Council invest in Minibond
Mr Tan,
Even Town Council use the resident sink fund to invest in Minibond , sorry can't tell you the name of the TC.
Invest around 300k, ....... many more MCST too have invest in it, So just simply write off public fund, it is legal?
Hope more people can surface more related info, to add on the pressure.
Eric
Even Town Council use the resident sink fund to invest in Minibond , sorry can't tell you the name of the TC.
Invest around 300k, ....... many more MCST too have invest in it, So just simply write off public fund, it is legal?
Hope more people can surface more related info, to add on the pressure.
Eric
Jump on bandwagon
Someone sent an e-mail to me, arguing that some of the investors are knowledgeable and wanted to jump on the bandwagon to claim for compensation.
I asked him to call me by telephone. He did, and we had a chat. I realise that he was not aware about the details of the structured product. He was arguing from a "thereotical" angle.
I explained that there is no way for any knowledgeable person to invest in the structured product, if he has been properly informed about the risk. The return of 5% is not worth the risk.
He still did not accept my point.
I hope that other people who claimed that the investors were "greedy" should meet and talk to them, before forming this opinion.
I asked him to call me by telephone. He did, and we had a chat. I realise that he was not aware about the details of the structured product. He was arguing from a "thereotical" angle.
I explained that there is no way for any knowledgeable person to invest in the structured product, if he has been properly informed about the risk. The return of 5% is not worth the risk.
He still did not accept my point.
I hope that other people who claimed that the investors were "greedy" should meet and talk to them, before forming this opinion.
Malaysia act against land banking
Hi Tan,
On the subject about land banking, how come the relevant authorities here not taking action whereas our neighbouring country is taking action.
http://www.malaysianbar.org.my/legal/general_news/companies_commission_raids_three_companies_over_illegal_land_investments.html
I believe that Malaysia is not exposed to Lehman Brothers Minibonds but doing something as a watch dog!
JLN
On the subject about land banking, how come the relevant authorities here not taking action whereas our neighbouring country is taking action.
http://www.malaysianbar.org.my/legal/general_news/companies_commission_raids_three_companies_over_illegal_land_investments.html
I believe that Malaysia is not exposed to Lehman Brothers Minibonds but doing something as a watch dog!
JLN
Monday, October 27, 2008
Can investors understand CDO?
Dear Mr. Tan,
Financial Times interviewd Dr. Tony Tan in Feb 2008. Dr. Tan said,
"We believe that one of the reasons why we have, for example, weathered these CDO difficulties well is because we have always put risk management as a very high priority. We studied CDOs on many occasions in the past several years. We could not understand who was bearing the risk there. We looked at this many times and we decided several years ago, as a policy, that we will not invest in CDOs, so we have no direct exposure to CDOs at all. Of course, we also invest in funds and they invest in CDOs, so indirectly we do have some exposure, but as far as direct exposure is concerned I think our risk management framework works quite well."
If GIC admits it does not understand CDO risks, how can MAS MD said, "There will also be a group he described as 'knowledgeable and experienced. This group should have understood the risks of investing in these products and take responsibility for their actions."
Financial Times interviewd Dr. Tony Tan in Feb 2008. Dr. Tan said,
"We believe that one of the reasons why we have, for example, weathered these CDO difficulties well is because we have always put risk management as a very high priority. We studied CDOs on many occasions in the past several years. We could not understand who was bearing the risk there. We looked at this many times and we decided several years ago, as a policy, that we will not invest in CDOs, so we have no direct exposure to CDOs at all. Of course, we also invest in funds and they invest in CDOs, so indirectly we do have some exposure, but as far as direct exposure is concerned I think our risk management framework works quite well."
If GIC admits it does not understand CDO risks, how can MAS MD said, "There will also be a group he described as 'knowledgeable and experienced. This group should have understood the risks of investing in these products and take responsibility for their actions."
Biggest loss in the the structured products
I met a couple at Speakers' Corner on 25 October. They invested a total of $1,775,000 in Jubilee Notes 3, Minibonds 3, Pinnacles 3 and 6. The investments were made in their personal name and in their company's name during February to June 2007.
They asked me to look into their faces. Were they greedy people? Were they people willing to take risk?
I felt so sorry to learn about their devastating loss. I told them that I will try my best ot help them to recover some of their loss.
They asked me to look into their faces. Were they greedy people? Were they people willing to take risk?
I felt so sorry to learn about their devastating loss. I told them that I will try my best ot help them to recover some of their loss.
CLSA Asks 500 Staff to Take Pay Cuts of Up to 25%
Oct. 27 (Bloomberg) -- CLSA Asia-Pacific Markets, the regional brokerage unit of Credit Agricole SA, asked 500 senior bankers and executives to accept pay cuts of as much as 25 percent next year to avoid getting rid of jobs.
The voluntary salary reduction program that was proposed for one-third of the staff last week would reduce basic pay by 15 percent to 25 percent starting in January, according to Chief Executive Officer Jonathan Slone. The participating employees would be paid the salary they forgo and may also receive a bonus payment when profit meets certain targets, he said.
``We think it's the right way to keep our team intact, maintain client service and allow us to expand our offering during a difficult time,'' Slone said in an interview. ``We face challenges like this crisis as a team and when conditions turn, we all share in the benefits as well.''
COMMENT BY TAN KIN LIAN:
This is an excellent way to deal with the recession. It is different from the American approach of retrenching employees.
The voluntary salary reduction program that was proposed for one-third of the staff last week would reduce basic pay by 15 percent to 25 percent starting in January, according to Chief Executive Officer Jonathan Slone. The participating employees would be paid the salary they forgo and may also receive a bonus payment when profit meets certain targets, he said.
``We think it's the right way to keep our team intact, maintain client service and allow us to expand our offering during a difficult time,'' Slone said in an interview. ``We face challenges like this crisis as a team and when conditions turn, we all share in the benefits as well.''
COMMENT BY TAN KIN LIAN:
This is an excellent way to deal with the recession. It is different from the American approach of retrenching employees.
Collapse of the global financial system
The global financial system has collapsed. This has been acknowledged by the leaders of Asia and Europe at their meeting in Beijing. In their statement after the meeting, they pledged to rebuild the global financial system. President Sarkosky of France is providing the leadership.
The pillars of the collapsed system are:
> free market
> minimal regulation
> excessive leverage
> financial engineering
> non-regulated derivatives and swaps
> excessive reliance on private capital
> unsound banking system
> excessive rewards for corporate leaders
What will the new global financial system be based on? The leaders did not provide sufficient details. We must be ready to think of a new paradigm.
The pillars of the collapsed system are:
> free market
> minimal regulation
> excessive leverage
> financial engineering
> non-regulated derivatives and swaps
> excessive reliance on private capital
> unsound banking system
> excessive rewards for corporate leaders
What will the new global financial system be based on? The leaders did not provide sufficient details. We must be ready to think of a new paradigm.
Lehman Brother bond
My friend invested $100,000 in the mini-bond, introduced to him by his stockbroker. He thought that he was investing in the Lehman Brother bond (which was A-rated at that time).
He said, "If I have actually bought the Lehman Brother bond, I would have lost my entire investment anyway. It is not fair for me to lodge a complaint about the mini-bond. It is just my bad luck".
I salute him for his honorable decision.
He said, "If I have actually bought the Lehman Brother bond, I would have lost my entire investment anyway. It is not fair for me to lodge a complaint about the mini-bond. It is just my bad luck".
I salute him for his honorable decision.
A fair compensation
Dear Mr. Tan,
Why should the investors in the mini-bonds and other notes expect to get full compensation for the investments? Surely, they know that there must be some risk, when they expect to get interest rate of 5%, when FD is only 1% or less.
Do you know that the people who invested in stocks are suffering losses of 50% or more. Can we ask for compensation? Even A-rated bonds can fail. Can the investor than ask for compensation from the distributor?
Surly all kind of investments have risk. Why should the mini-bond holders expect full compensation? Why are you supporting this unreasonable claim?
REPLY
I believe that these structured products should not be sold in the first place. If the distributor had properly described the product, it is likely that nobody would have bought them.
In my personal view, the loss should be shared equally between the distributor and the investor (i.e. noteholder). It will not be fair for the investor to shoulder the loss entirely. It is also not fair for the distributor to make a full compensation. I hope that both parties will make a compromise and agree to share the loss equally. Many investors have told me that they will accept such an offer.
Why should the investors in the mini-bonds and other notes expect to get full compensation for the investments? Surely, they know that there must be some risk, when they expect to get interest rate of 5%, when FD is only 1% or less.
Do you know that the people who invested in stocks are suffering losses of 50% or more. Can we ask for compensation? Even A-rated bonds can fail. Can the investor than ask for compensation from the distributor?
Surly all kind of investments have risk. Why should the mini-bond holders expect full compensation? Why are you supporting this unreasonable claim?
REPLY
I believe that these structured products should not be sold in the first place. If the distributor had properly described the product, it is likely that nobody would have bought them.
In my personal view, the loss should be shared equally between the distributor and the investor (i.e. noteholder). It will not be fair for the investor to shoulder the loss entirely. It is also not fair for the distributor to make a full compensation. I hope that both parties will make a compromise and agree to share the loss equally. Many investors have told me that they will accept such an offer.
Prospectus needed
Will the co-ordinator of Pinnacle Notes, and the co-ordinators of investors that bought minibonds etc from UOB Kay Hian and Phillips, please contact Adrian Tan at atans1@hotmail.com?
Volunteers are willing to analyse the prospectuses, pricing supplements, promotional materials and advertisements of Pinnacle notes, and minibonds etc that Phillips Secs and UOB Kay Hian clients bought. Copies of these materials are needed.
Volunteers are willing to analyse the prospectuses, pricing supplements, promotional materials and advertisements of Pinnacle notes, and minibonds etc that Phillips Secs and UOB Kay Hian clients bought. Copies of these materials are needed.
A fair rate of return
Hi Mr. Tan,
Investors in Singapore have no real safe alternatives to park their money and get a fair return if they don't want any risk. So, what is a fair return for keeping money safe? My feel is that, the return should at the very least offset inflation.
However, for far too long, savings/fixed deposit rates at banks here are ridiculously low. The last time I checked, POSB/DBS, fixed deposit is at around 0.45 percent to 0.75 percent, for most people, of course, depending on amount & tenure. This can hardly offset inflation that is much higher, 5 to 6 percent.
The Singapore government has long pursued a strong SGD to fight inflation. The trinity of inflation, interest rates & foreign exchange is supposedly linked by the PPP, purchasing power parity. However, for the short term PPP may not hold and distortions can persist for years. So, with our recent SGD weakening, we would see higher SGD interest rates instead ?
Some of my friends even suggest that the the Singapore government providing long running subsidy for local banks. Just consider this, local banks take in funds from depositors at less than 1 percent rate, and then invest in Singapore Government Securites, which depending on tenure, can yield up to 3.6 percent. Banks have to hold a certain amount of SGS anyway, as stipulated under MLA requirement from the central bank, MAS.
So, assuming 3 percent spread on say, 300mil, that's 15mil, almost risk free for the banks!
Regards
Investors in Singapore have no real safe alternatives to park their money and get a fair return if they don't want any risk. So, what is a fair return for keeping money safe? My feel is that, the return should at the very least offset inflation.
However, for far too long, savings/fixed deposit rates at banks here are ridiculously low. The last time I checked, POSB/DBS, fixed deposit is at around 0.45 percent to 0.75 percent, for most people, of course, depending on amount & tenure. This can hardly offset inflation that is much higher, 5 to 6 percent.
The Singapore government has long pursued a strong SGD to fight inflation. The trinity of inflation, interest rates & foreign exchange is supposedly linked by the PPP, purchasing power parity. However, for the short term PPP may not hold and distortions can persist for years. So, with our recent SGD weakening, we would see higher SGD interest rates instead ?
Some of my friends even suggest that the the Singapore government providing long running subsidy for local banks. Just consider this, local banks take in funds from depositors at less than 1 percent rate, and then invest in Singapore Government Securites, which depending on tenure, can yield up to 3.6 percent. Banks have to hold a certain amount of SGS anyway, as stipulated under MLA requirement from the central bank, MAS.
So, assuming 3 percent spread on say, 300mil, that's 15mil, almost risk free for the banks!
Regards
Electricity prices: 82% higher her than in Hong Kong
Paul Chan wrote to the Straits Times Forum about our electricity charges. Hong Kong residence pasy 17 cents per nit. Singaporeans pay 31 cents - 82% higher. Electricity in Singapore is more expensive than in USA or France.
What is happening? I recall these events but cannot remember the details:
1. Our power plants sold by Temasek to foreign shareholders?
2. Singapore hedged the price of oil, and are now stuck with the higher contracted prices?
I like to invite the knowledgeable people to put some details into what is happening here. You can also help to search Google for the facts.
What is happening? I recall these events but cannot remember the details:
1. Our power plants sold by Temasek to foreign shareholders?
2. Singapore hedged the price of oil, and are now stuck with the higher contracted prices?
I like to invite the knowledgeable people to put some details into what is happening here. You can also help to search Google for the facts.
Profit margin in creating the structured product
Comment posted in my blog
I am greatly sadden by the losses sufered by the HN5 investors. As an insider, I understand that the sale of high notes products was a highly profitable business for the bank. The product is doubly leveraged - the first-to-default risk and the underlying collaterialsed debt obligation.
Even in early 2007 where credit risk is severely underpriced, the return for the risk undertaken that is passed to HN5 investors borders on ridiculous. The bank keeps a fat margin.
I would suggest HN5 investors ask the bank to oepn its book on the structuring profit for high notes products.
Even if the bank refuses to compensate the 'non-vulnerable' investors, the bank should not be allowed to make money from them.
It also seems that the bank is not so truthful when they said that they were caught unaware by the collapse of Lehman Brothers. i understand that bank had bought CDS protection to hedge the bank's own exposure to Lehman, and have avoided trading with Lehman to reduce counterparty exposure as early as 1Q2008
I know this would drag DBS profit and shares price down further, but my guilt does not allow me to keep quiet.
REPLY
The Petition #1 ask the Government to investigate the creation and marketing of the products. In my supporting document, I asked the Government to look into the accounts for the structured products to see how much money is taken away by the product issuer and the marketeer.
I hope that MAS will pursue this matter. If not, I will ask a Member of Parliament to raise this matter in Parliament.
I am greatly sadden by the losses sufered by the HN5 investors. As an insider, I understand that the sale of high notes products was a highly profitable business for the bank. The product is doubly leveraged - the first-to-default risk and the underlying collaterialsed debt obligation.
Even in early 2007 where credit risk is severely underpriced, the return for the risk undertaken that is passed to HN5 investors borders on ridiculous. The bank keeps a fat margin.
I would suggest HN5 investors ask the bank to oepn its book on the structuring profit for high notes products.
Even if the bank refuses to compensate the 'non-vulnerable' investors, the bank should not be allowed to make money from them.
It also seems that the bank is not so truthful when they said that they were caught unaware by the collapse of Lehman Brothers. i understand that bank had bought CDS protection to hedge the bank's own exposure to Lehman, and have avoided trading with Lehman to reduce counterparty exposure as early as 1Q2008
I know this would drag DBS profit and shares price down further, but my guilt does not allow me to keep quiet.
REPLY
The Petition #1 ask the Government to investigate the creation and marketing of the products. In my supporting document, I asked the Government to look into the accounts for the structured products to see how much money is taken away by the product issuer and the marketeer.
I hope that MAS will pursue this matter. If not, I will ask a Member of Parliament to raise this matter in Parliament.
BBC radio documentary on structured products
Commemt posted in my blog
It is terrifying to hear from this bbc documentary that you have published on your site about reputable banks resorting to dirty tricks. I urge that this radio documentary to be heard by the public as it reveal many disturbing discovery.
http://www.bbc.co.uk/worldservice/documentaries/2008/10/081022_failure_or_fraud.shtml
Call to MAS - pass general guideline for compenstion
Comment posted in my blog
The only solution of this SAGA is to ask MAS pass the message down to ALL distributors to set general guideline for compensation.those are not happy can continue to take legal action later.Some buy from broker firms, the firms can argue that we send the brochure to you and you can decide not to buy. firms are only the distributer.We , singaporean always have this in mind, the FI dares to send such brochure to customers,the product must have been approved by MAS and safe. The product advertisement on newspaper is so BIG. It should be safe , espectially ,series by series continously, it should be safe.
The only solution of this SAGA is to ask MAS pass the message down to ALL distributors to set general guideline for compensation.those are not happy can continue to take legal action later.Some buy from broker firms, the firms can argue that we send the brochure to you and you can decide not to buy. firms are only the distributer.We , singaporean always have this in mind, the FI dares to send such brochure to customers,the product must have been approved by MAS and safe. The product advertisement on newspaper is so BIG. It should be safe , espectially ,series by series continously, it should be safe.
Husband's objection
Dear Mr Tan,
It is really kind of you to spend so much time and energy to help the unfortunate people who bought Mini Bonds and High Notes. My relationship manager from ABM Ambro too approached me many times to buy the Lehman minibond.
Do not let nasty comments discourage you and just focus on the truth. Many of us are greedy and I escaped the noose only because of my husband's objection.
EO
REPLY
You are fortunate to have a husband who is knowledgeable. Many people were badly advised by the sales representative and did not have a family member to advised them on the risk.
It is really kind of you to spend so much time and energy to help the unfortunate people who bought Mini Bonds and High Notes. My relationship manager from ABM Ambro too approached me many times to buy the Lehman minibond.
Do not let nasty comments discourage you and just focus on the truth. Many of us are greedy and I escaped the noose only because of my husband's objection.
EO
REPLY
You are fortunate to have a husband who is knowledgeable. Many people were badly advised by the sales representative and did not have a family member to advised them on the risk.
Sunday, October 26, 2008
Blog for High Note investors
Hi Mr Tan,
We have created our blog to coordinate our HN group's activities. The blog is at:
http://dbshns.blogspot.com/
We will be grateful if you can help us publicise the blog in your respective websites.
We have created our blog to coordinate our HN group's activities. The blog is at:
http://dbshns.blogspot.com/
We will be grateful if you can help us publicise the blog in your respective websites.
Complaint Form
Several investors have asked me for the complaint form. I will make them available at Speaker's Corner on Saturdays 5 to 7 pm, over the next few weeks.
You can download the form here:
http://www.tankinlian.com/forms/complaint_form.pdf
Please come to collect the form there and also to meet other investors in your group (based on distributor). You can get assistance from the other investors.
I urge all investors to seek assistance from the other investors in your group. Please do not approach me on your individual cases, as I am not able to handle so many people. Be considerate for my health.
If you are not sure about how to present your statement, you can see a lawyer to write a statutory declaration and pay a fee of $120. It may be worth spending.
You can download the form here:
http://www.tankinlian.com/forms/complaint_form.pdf
Please come to collect the form there and also to meet other investors in your group (based on distributor). You can get assistance from the other investors.
I urge all investors to seek assistance from the other investors in your group. Please do not approach me on your individual cases, as I am not able to handle so many people. Be considerate for my health.
If you are not sure about how to present your statement, you can see a lawyer to write a statutory declaration and pay a fee of $120. It may be worth spending.
It will be handled 'fairly'
XI'AN (China) - SINGAPOREANS aggrieved by their investment in Lehman Minibonds and DBS High Notes 5 will have their complaints handled 'fairly and properly', Prime Minister Lee Hsien Loong assured on Sunday in his first remarks on the issue. He said it was understandable that some investors had reacted emotionally as they lost their money in a sudden and unexpected manner, while others felt that the risks had not been adequately explained to them.
But ultimately, the banks do realise that it is in their interest to resolve the matter quickly and not let it drag on, he told reporters in the western Chinese city of Xi'an where he wrapped up his five-day visit to China.
'The banks have what they call reputational risk,' said PM Lee. 'In other words, if you do the right thing, your customers will remember you for a long time.
'If you do the wrong thing, customers and potential customers will remember you for a long time. The banks and financial institutions know this and have every interest in sorting this out expeditiously and fairly.'
In Singapore, about 10,000 retail investors have invested over $500 million into structured products linked to now-bankrupt Lehman Brothers. DBS Bank, Hong Leong Finance and Maybank said last week that they would look into complaints and fast-track vulnerable cases, prompting some investors to worry that they would be left out.
The Prime Minister repeatedly stressed the notion of fairness during his lengthy remarks on the issue yesterday, and added that instances of mis-selling would be investigated.
Mis-selling, at its simplest, means giving the wrong advice to potential investors. Beyond that, it can also mean a failure to help clients diversify their assets, non-disclosure of risks or not completing a proper fact-find to ensure the product being sold suits the customer.
Said PM Lee: 'Where there has been mis-selling, it has to be put right.
'Where there has been less than professional behaviour by the relationship managers, or where things don't measure up to the standards that the Monetary Authority of Singapore (MAS) expects when you promote the financial products, then the banks have to do the right thing.'
The MAS said on Friday that it would look into complaints of mis-selling, and added that an imminent review of the structured products industry would address such issues as better descriptions and labelling of products, as well as more professionally trained relationship managers.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_295167.html
COMMENT
It is encouraging for the Prime Minister to emphasise on fairness. I hope that fairness has to be seen in the eyes of the aggrieved person. It will be difficult for the aggrieved person to feel that he (or she) has been fairly treated, unless the matter is settled through mutual agreement or by a fair, independent adjudication.
Some businesses hold the view that there are 4 million customers and if a few of them gets angry, there are other customers for them to tap. They also think that customers have short memories.
But ultimately, the banks do realise that it is in their interest to resolve the matter quickly and not let it drag on, he told reporters in the western Chinese city of Xi'an where he wrapped up his five-day visit to China.
'The banks have what they call reputational risk,' said PM Lee. 'In other words, if you do the right thing, your customers will remember you for a long time.
'If you do the wrong thing, customers and potential customers will remember you for a long time. The banks and financial institutions know this and have every interest in sorting this out expeditiously and fairly.'
In Singapore, about 10,000 retail investors have invested over $500 million into structured products linked to now-bankrupt Lehman Brothers. DBS Bank, Hong Leong Finance and Maybank said last week that they would look into complaints and fast-track vulnerable cases, prompting some investors to worry that they would be left out.
The Prime Minister repeatedly stressed the notion of fairness during his lengthy remarks on the issue yesterday, and added that instances of mis-selling would be investigated.
Mis-selling, at its simplest, means giving the wrong advice to potential investors. Beyond that, it can also mean a failure to help clients diversify their assets, non-disclosure of risks or not completing a proper fact-find to ensure the product being sold suits the customer.
Said PM Lee: 'Where there has been mis-selling, it has to be put right.
'Where there has been less than professional behaviour by the relationship managers, or where things don't measure up to the standards that the Monetary Authority of Singapore (MAS) expects when you promote the financial products, then the banks have to do the right thing.'
The MAS said on Friday that it would look into complaints of mis-selling, and added that an imminent review of the structured products industry would address such issues as better descriptions and labelling of products, as well as more professionally trained relationship managers.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_295167.html
COMMENT
It is encouraging for the Prime Minister to emphasise on fairness. I hope that fairness has to be seen in the eyes of the aggrieved person. It will be difficult for the aggrieved person to feel that he (or she) has been fairly treated, unless the matter is settled through mutual agreement or by a fair, independent adjudication.
Some businesses hold the view that there are 4 million customers and if a few of them gets angry, there are other customers for them to tap. They also think that customers have short memories.
Interviews with Financial Institutions
Many investors have reported unsatisfactory experiences when they attend the interviews called by the financial institutions. I suggest that they write to the independent "well regarded" persons appointed by the financial institution.
As you do not have the address of these persons, you can write to their specific name (i.e Mr. Gerard Ee, Mr. Law Song Keng or Mr. Hwang Soo Jin, c/o the Monetary Authority of Singapore).
If you attend an interview, as a fellow investor to attend with you. In turn, you can accompany the interview with the fellow investors.
This is unsatisfactory, but it is MAS way. Let us follow it as best as we can.
As you do not have the address of these persons, you can write to their specific name (i.e Mr. Gerard Ee, Mr. Law Song Keng or Mr. Hwang Soo Jin, c/o the Monetary Authority of Singapore).
If you attend an interview, as a fellow investor to attend with you. In turn, you can accompany the interview with the fellow investors.
This is unsatisfactory, but it is MAS way. Let us follow it as best as we can.
Unhappy with the interview
Dear Mr Tan,
I had attended the interview. It's feels like asking a criminal to conduct the trial and pass his own verdict. It may be a bit exaggerating but it's definitely not a fair trial. I will be surprise if anyone can get a fair hearing and compensaiton from this.
One of the most ridiculous question I was asked is, "If no one from X tell you it's a Fixed Deposit, what is your complaint then?". I never know a broking house is allowed to sell FD. I started to recall and found out that this person actually heads the department that was selling all these toxic products.....Head of Business Developement Department. So is it fair?
The other one is he claimed that X is only distributing and not selling. So there is no mis-selling. X not selling but did received a commission from the issuer, sound ridiculous again. I went alone; I will only challenge him when there is a fair trial.
I insisted on bringing the form home to fill in. He tried to pressured me to submit on the spot claiming that my hearing will be delay if I don't submit on the spot, etc. Clearly this is another one of those pressure tactic used. I told him off. I do not want to say much, because the other 2 persons just keep writing the moment I open my mouth. It was quite a hostile interview because of the stupid questions asked and the pressure tactic used.
It's a waste of time to attend. Think about it, it really a ridiculous approach from MAS. Like asking us to go commit sucide.
I'm sorry to bother you, but I think only you can help us and provide leadership to us since MAS is washing hand. I'm very disappointed with the government.
I wish to remain anonymous
REPLY
This is an interview. Is should not be described as a trial or interrogation. You can write a complaint to the "well regarded person" who is supposed to review the complaint handling process for the distributor, i.e. Mr. Ee, Mr. Low or Mr. Hwang.
I had attended the interview. It's feels like asking a criminal to conduct the trial and pass his own verdict. It may be a bit exaggerating but it's definitely not a fair trial. I will be surprise if anyone can get a fair hearing and compensaiton from this.
One of the most ridiculous question I was asked is, "If no one from X tell you it's a Fixed Deposit, what is your complaint then?". I never know a broking house is allowed to sell FD. I started to recall and found out that this person actually heads the department that was selling all these toxic products.....Head of Business Developement Department. So is it fair?
The other one is he claimed that X is only distributing and not selling. So there is no mis-selling. X not selling but did received a commission from the issuer, sound ridiculous again. I went alone; I will only challenge him when there is a fair trial.
I insisted on bringing the form home to fill in. He tried to pressured me to submit on the spot claiming that my hearing will be delay if I don't submit on the spot, etc. Clearly this is another one of those pressure tactic used. I told him off. I do not want to say much, because the other 2 persons just keep writing the moment I open my mouth. It was quite a hostile interview because of the stupid questions asked and the pressure tactic used.
It's a waste of time to attend. Think about it, it really a ridiculous approach from MAS. Like asking us to go commit sucide.
I'm sorry to bother you, but I think only you can help us and provide leadership to us since MAS is washing hand. I'm very disappointed with the government.
I wish to remain anonymous
REPLY
This is an interview. Is should not be described as a trial or interrogation. You can write a complaint to the "well regarded person" who is supposed to review the complaint handling process for the distributor, i.e. Mr. Ee, Mr. Low or Mr. Hwang.
Deposit Guarantee scheme in New Zealand
Hi Mr. Tan,
I thought you might be interested to know how the deposit guarantee scheme is being implemented in NZ.
A few points to note:
1) It is a facility where the Crown guarantees people who have deposits with institutions in the scheme. It covers all retail deposits of participating New Zealand-registered banks, and retail deposits by locals in non-bank deposit-taking entities. This would include building societies, credit unions and deposit-taking finance companies.
It only covers deposits and other debt securities.
2) Financial instutions are charged and the charges might be passed on to consumer at the banks' discretion.
For institutions with total retail deposits above $5 billion, a fee of 10 basis points per annum will be charged. This means that a bank with $20 billion in retail deposits would pay $15 million in fees per annum.
Following changes announced on 22 October 2008, there are also now fees for the new business component of registered banks and non-bank deposit-takers that are not already subject to a fee charge. These institutions whose covered liabilities are under $5 billion will be charged the following fees on the cumulative growth in their book since 12 October 2008 (with an allowance of plus 10 per cent per year on this amount):
- 10 basis points per annum to institutions rated AA minus and above
- 20 basis points per annum to institutions rated A+, A and A minus
- 50 basis points per annum to institutions rated BBB+, BBB and BBB minus
- 100 basis points per annum to institutions rated BB+ and BB
- 300 basis points per annum to institutions rated below BB or are unrated
Growth would be measured, and charged for, monthly.
3) There is a deposit coverage cap of $1 million per depositor per covered institution
4) For non-residents:
The guarantee will cover resident and non-resident holders of debt securities issued by approved New Zealand registered banks.
However, for approved local branches of overseas banks existing on 12 October 2008, the guarantee for non-resident depositors in these branches will be capped at the total amount owed to such depositors at 12 October 2008, allowing for growth of 10 percent per year.
For approved non-bank deposit takers, only debt securities held by New Zealand tax residents or New Zealand citizens will be covered by the guarantee.
In all of the above situations, the deposit coverage cap of $1 million per depositor per covered institution also applies
5) Full set of Q&A at: http://www.treasury.govt.nz/economy/guarantee/qanda
In fact, this scheme is till being fine tuned. So the details are changed from time to time.
HL
REPLY
Thank you. I hope that the Singapore Government has similar charges and safeguards.
I thought you might be interested to know how the deposit guarantee scheme is being implemented in NZ.
A few points to note:
1) It is a facility where the Crown guarantees people who have deposits with institutions in the scheme. It covers all retail deposits of participating New Zealand-registered banks, and retail deposits by locals in non-bank deposit-taking entities. This would include building societies, credit unions and deposit-taking finance companies.
It only covers deposits and other debt securities.
2) Financial instutions are charged and the charges might be passed on to consumer at the banks' discretion.
For institutions with total retail deposits above $5 billion, a fee of 10 basis points per annum will be charged. This means that a bank with $20 billion in retail deposits would pay $15 million in fees per annum.
Following changes announced on 22 October 2008, there are also now fees for the new business component of registered banks and non-bank deposit-takers that are not already subject to a fee charge. These institutions whose covered liabilities are under $5 billion will be charged the following fees on the cumulative growth in their book since 12 October 2008 (with an allowance of plus 10 per cent per year on this amount):
- 10 basis points per annum to institutions rated AA minus and above
- 20 basis points per annum to institutions rated A+, A and A minus
- 50 basis points per annum to institutions rated BBB+, BBB and BBB minus
- 100 basis points per annum to institutions rated BB+ and BB
- 300 basis points per annum to institutions rated below BB or are unrated
Growth would be measured, and charged for, monthly.
3) There is a deposit coverage cap of $1 million per depositor per covered institution
4) For non-residents:
The guarantee will cover resident and non-resident holders of debt securities issued by approved New Zealand registered banks.
However, for approved local branches of overseas banks existing on 12 October 2008, the guarantee for non-resident depositors in these branches will be capped at the total amount owed to such depositors at 12 October 2008, allowing for growth of 10 percent per year.
For approved non-bank deposit takers, only debt securities held by New Zealand tax residents or New Zealand citizens will be covered by the guarantee.
In all of the above situations, the deposit coverage cap of $1 million per depositor per covered institution also applies
5) Full set of Q&A at: http://www.treasury.govt.nz/economy/guarantee/qanda
In fact, this scheme is till being fine tuned. So the details are changed from time to time.
HL
REPLY
Thank you. I hope that the Singapore Government has similar charges and safeguards.
Singapore Government guarantees bank deposits
The Singapore Government has guaranteed all bank deposits in Singapore. I think that this is a bad idea. It is putting taxpayers at risk, without any appropriate return.
Here is a possible risk. A foreign bank receives $1 billion of deposits in Singapore. The bank engages in risky trading and lost $1 billion. After deducting its capital, the remaining loss has to be borne by the Singapore Government, actually the taxpayers of Singapore.
The Monetary Authority of Singapore may have ways of monitoring this risk and preventing it. But, can MAS look after the detailed operations of all the banks in Singapore? Do they have the resources and expertise?
Suppose the Singapore Government does not give this guarantee. Some of the money in Singapore will flow to Hong Kong or Malaysia. To keep the money in Singapore, the banks have to offer higher interest rate, maybe 3%, 4% or 5%. This will allow the deposit rate to increase to the market rate, and give the public a better interest rate on their savings. This is a good idea.
If there is a real need to guarantee the deposits, perhaps it should be up to 50% instead of the total sum. Maybe, the bank should pay some guarantee fee to the Singapore Government.
I hope to raise this point to the Singapore Government at an appropriate time, if my views are confirmed to be sensible. I look forward to receive the views of knowledgeable people on this matter.
Here is a possible risk. A foreign bank receives $1 billion of deposits in Singapore. The bank engages in risky trading and lost $1 billion. After deducting its capital, the remaining loss has to be borne by the Singapore Government, actually the taxpayers of Singapore.
The Monetary Authority of Singapore may have ways of monitoring this risk and preventing it. But, can MAS look after the detailed operations of all the banks in Singapore? Do they have the resources and expertise?
Suppose the Singapore Government does not give this guarantee. Some of the money in Singapore will flow to Hong Kong or Malaysia. To keep the money in Singapore, the banks have to offer higher interest rate, maybe 3%, 4% or 5%. This will allow the deposit rate to increase to the market rate, and give the public a better interest rate on their savings. This is a good idea.
If there is a real need to guarantee the deposits, perhaps it should be up to 50% instead of the total sum. Maybe, the bank should pay some guarantee fee to the Singapore Government.
I hope to raise this point to the Singapore Government at an appropriate time, if my views are confirmed to be sensible. I look forward to receive the views of knowledgeable people on this matter.
Leveraged Dual Currency Investments
I have been advising people to avoid Dual Currency Investment for the past year. My views are stated in this FAQ: http://www.tankinlian.com/faq/duali.html
This type of investment allows you to bet on currency movements. You stand the chance of a big loss when the currency moves against you. You only get a small return (in the form of a higher interest rate) when currency moves in your favour.
Recently, the AUD dropped by 30%. Those who were "long" in AUD lost 30%. But those who were "short" in AUD did not gain 30%. They only gain 1% or 2% in higher interest. The bank keeps the remainder of the profit.
I learned to my horror that unsophisticated investors were asked to invest in "leveraged" dual currency investments. The bank lends them 4 times of their investment, so that they can take 5 times of the risk. If the currency drops by 20%, their total investment is wiped out (i.e. 20% X 5 times).
The relationship manager of the bank who sold the leveraged DCI earned 5 times of the commission on this product. But, it wiped out the total savings of the investors.
Someone told me that her mother lost $500,000 on this type of investment. Another retiree told me that he lost $150,000 in 2 months, out of the invested sum of S200,000.
Do not invest in any of these products. Be careful about the advice of the relationship managers.
This type of investment allows you to bet on currency movements. You stand the chance of a big loss when the currency moves against you. You only get a small return (in the form of a higher interest rate) when currency moves in your favour.
Recently, the AUD dropped by 30%. Those who were "long" in AUD lost 30%. But those who were "short" in AUD did not gain 30%. They only gain 1% or 2% in higher interest. The bank keeps the remainder of the profit.
I learned to my horror that unsophisticated investors were asked to invest in "leveraged" dual currency investments. The bank lends them 4 times of their investment, so that they can take 5 times of the risk. If the currency drops by 20%, their total investment is wiped out (i.e. 20% X 5 times).
The relationship manager of the bank who sold the leveraged DCI earned 5 times of the commission on this product. But, it wiped out the total savings of the investors.
Someone told me that her mother lost $500,000 on this type of investment. Another retiree told me that he lost $150,000 in 2 months, out of the invested sum of S200,000.
Do not invest in any of these products. Be careful about the advice of the relationship managers.
Pinnacle Notes - lodge a complaint now
Dear Mr. Tan,
I met the RM of my bank and asked about the Pinnacle Notes. The RM said that there is no problem with the Pinnacle Notes now, and if the reference entity does not "credit event", I will be able to get back 100% of my invested sum.
I asked about the price of the Pinnacle Notes now, but the RM said that I should sell but wait until maturity to get back 100%. Is this correct?
REPLY
You should ask the relationship manager to put the assurance in writing that 100% of the invested sum will be paid back on the maturity date, if there is no credit event involving any of the reference entities.
It is better for you to lodge a complaint now about mis-selling, as the price of the Pinnacle Notes have dropped significantly and you these notes may default before the maturity date. Even if there is no default, you may get less than 100%.
I met the RM of my bank and asked about the Pinnacle Notes. The RM said that there is no problem with the Pinnacle Notes now, and if the reference entity does not "credit event", I will be able to get back 100% of my invested sum.
I asked about the price of the Pinnacle Notes now, but the RM said that I should sell but wait until maturity to get back 100%. Is this correct?
REPLY
You should ask the relationship manager to put the assurance in writing that 100% of the invested sum will be paid back on the maturity date, if there is no credit event involving any of the reference entities.
It is better for you to lodge a complaint now about mis-selling, as the price of the Pinnacle Notes have dropped significantly and you these notes may default before the maturity date. Even if there is no default, you may get less than 100%.
Saturday, October 25, 2008
HK Monetary Authority refers 40 more 'mini-bonds' cases to SFC
Saturday, 25 October 2008
The Hong Kong Monetary Authority said yesterday it had referred to the Securities and Futures Commission 40 more cases of alleged mis-selling of Lehman Brothers-backed financial products by banks.
"The 40 cases, which are the second batch of Lehman-Brothers-related cases referred in this way, involved alleged misconduct by two licensed banks in Hong Kong," the city's de-facto central bank said in a statement.
It said one of the banks in question was also involved in the first batch of 24 cases it referred on October 17.
Up to Thursday, the authority said it had received 16,301 complaints by investors who said their banks had sold them "mini-bonds" backed by the collapsed US giant without having fully explained to them the risks involved.
Apart from the 64 referrals to the SFC, the authority said it had opened investigations on 285 complaints and was seeking further information on 1,942 complaints.
In light of the large number of complaints, the authority said it would have to streamline the investigation process by identifying groups of cases with common features in making referrals to the SFC.
The Hong Kong Association of Banks said in a statement Friday that individual banks had since earlier this week started the process of settling with relevant investors, particularly elderly customers with no investment experience.
The association said its special task force will be in close liaison with the Monetary Authority to explore a mediation mechanism between the banks and their investors.
Thousands of investors have held protests across the territory in the past few weeks claiming the banks mis-sold the mini-bonds as risk-free investments, and lured vulnerable citizens into using up their life-savings.
Although the banks agreed last week to adopt a government proposal for them to buy back the products from customers at their current market value, the move failed to pacify investors who said they would get back a portion of their investment.
The mini-bonds are complex financial products linked to a bundle of derivatives backed by Lehman, and their value plummeted after the investment bank collapsed in September.
http://www.macaudailytimesnews.com/index.php?option=com_content&task=view&id=18068&Itemid=34
The Hong Kong Monetary Authority said yesterday it had referred to the Securities and Futures Commission 40 more cases of alleged mis-selling of Lehman Brothers-backed financial products by banks.
"The 40 cases, which are the second batch of Lehman-Brothers-related cases referred in this way, involved alleged misconduct by two licensed banks in Hong Kong," the city's de-facto central bank said in a statement.
It said one of the banks in question was also involved in the first batch of 24 cases it referred on October 17.
Up to Thursday, the authority said it had received 16,301 complaints by investors who said their banks had sold them "mini-bonds" backed by the collapsed US giant without having fully explained to them the risks involved.
Apart from the 64 referrals to the SFC, the authority said it had opened investigations on 285 complaints and was seeking further information on 1,942 complaints.
In light of the large number of complaints, the authority said it would have to streamline the investigation process by identifying groups of cases with common features in making referrals to the SFC.
The Hong Kong Association of Banks said in a statement Friday that individual banks had since earlier this week started the process of settling with relevant investors, particularly elderly customers with no investment experience.
The association said its special task force will be in close liaison with the Monetary Authority to explore a mediation mechanism between the banks and their investors.
Thousands of investors have held protests across the territory in the past few weeks claiming the banks mis-sold the mini-bonds as risk-free investments, and lured vulnerable citizens into using up their life-savings.
Although the banks agreed last week to adopt a government proposal for them to buy back the products from customers at their current market value, the move failed to pacify investors who said they would get back a portion of their investment.
The mini-bonds are complex financial products linked to a bundle of derivatives backed by Lehman, and their value plummeted after the investment bank collapsed in September.
http://www.macaudailytimesnews.com/index.php?option=com_content&task=view&id=18068&Itemid=34
Speech at Speaker’s Corner – 25 Oct 2008
http://theonlinecitizen.com/2008/10/investors-to-submit-fourth-petition-to-mas/#respond
1. Lodge your complaint
The first step is to lodge your complaint with the financial institution that sold the product to you.
Be honest. In your report, you should state honestly what you were told and what you were led to believe, when you decided to invest in the product. Many investors were assured that the structured product is “safe” and “low risk” and is a good alternative to “fixed deposit”. If this is the case, you can state it honestly.
Do not worry that you have signed forms given to you by the sales representative (or relationship manager). If you were not told about the content of the form and did not get a clear explanation on what the statements meant, you can state it in your report.
The most important point is to state how you were misled, and what you were told by the sales representative.
I have printed the forms for you to collect the relevant information to complete your complaint. You can get the assistance of the volunteers, if you are not clear about the type of information that is needed.
Read this advice:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
2. “Non-Vulnerable” Investor
Many investors were unsure about how they will be treated, as the fall outside of the “vulnerable” group. So far, MAS and the financial institutions have not stated how these investor will be treated.
Let us take it one step at a time. You should lodge your complaint and attend the interview arranged by the financial institution. You can state honestly what is contained in your statement that you lodged with the financial institution.
If you do not wish to attend alone, you can bring a family member, friend or fellow investor to accompany you.
3. Dispute Resolution Center
If you are not able to get a satisfactory compensation from the financial institution, you can bring you case to Financial Industry Dispute Resolution Center, FiDREC (http://www.fidrec.com.sg/). You pay a fee of $50.
FiDREC will form a panel to consider your complaint. FiDREC has the authority to pass a judgment that is binding on the financial institution. This decision is NOT binding on the consumer. The consumer still has the right to take the case to court.
At present, FiDREC has the authority to decide on claims up to $50,000. It can hear larger cases, subject to agreement of the financial institution.
4. Open Forum with Financial Institution
I suggest that investors should get together, according to the financial institution that sold the product to you, to request the financial institution to hold an open forum with the investors to discuss the following:
a) How the investors were misled by the information given by the sales representatives
b) How the financial institution can compensate the investors for their loss, caused by the bad advice and mis-information.
5. Petition #4
There are a potential of 10,000 cases to be handled. So far, just a handful of cases under the “vulnerable group” have been handled. It will take a long time for these 10,000 cases to be resolved, using the “case by case” approach. Many of those affected have still not lodged their complaint.
I will be organizing another Petition #4 addressed to the chairman of MAS. This is to ask MAS to help find a collective solution to the mis-selling by the financial institutions. A collective approach will reduce the stress on the individual investors in making the complaint and will ensure that fair compensation is given to all the affected investors, according to the category that they fall under.
6. Legal action
Some investors wish to take collective legal action. I like them to be aware that it can be costly and risky to take this action. It should be considered only as a last resort.
Before the investors decide to take this action, they should be aware about the cost and the chance of winning the case. They must also agree on the approach. They may be able to get different estimates of the cost from other lawyers.
Tan Kin Lian
http://www.tankinlian.blogspot.com/
SCMP: Angry investors protest
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=DNB3L2CAL132&linkid=b7a97cb4-e18d-4fe7-a5c8-f27afb0432d2&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
SCMP:Angry investors protest
25 Oct 2008
Peter So
About 100 desperate investors who bought retail structured notes and equity-linked notes from local banks linked to the bankrupt US investment bank Lehman Brothers protested to the Hong Kong Monetary Authority and the Securities and Futures Commission yesterday morning.
They said the authorities had only paid attention to the victims of Lehman-linked minibonds but ignored those who bought other structured products. Minibonds are not corporate bonds but consist of high-risk creditlinked derivatives.
The protesters included customers of Citic Ka Wah Bank, Chong Hing Bank, DBS Bank, Citibank, Standard Chartered Bank, ABN Amro, Royal Bank of Scotland and Dai Sang Bank.
They said the banks had deceived them into putting their life savings into the high-risk investment products and urged the banks to make full repayments. DBS said it would notify clients yesterday of the value of their structured products linked to Lehman, and would compensate the customers for losses if mis-selling was found.
But protester Wong Kam-chuen, who invested more than HK$2 million in the bank’s retail structured notes, said he had heard nothing from DBS.
“The bank staff couldn’t tell me when the investigation [into alleged mis-selling] will finish. I really have no idea of when I can have my money back,” said Mr Wong.
SCMP:Angry investors protest
25 Oct 2008
Peter So
About 100 desperate investors who bought retail structured notes and equity-linked notes from local banks linked to the bankrupt US investment bank Lehman Brothers protested to the Hong Kong Monetary Authority and the Securities and Futures Commission yesterday morning.
They said the authorities had only paid attention to the victims of Lehman-linked minibonds but ignored those who bought other structured products. Minibonds are not corporate bonds but consist of high-risk creditlinked derivatives.
The protesters included customers of Citic Ka Wah Bank, Chong Hing Bank, DBS Bank, Citibank, Standard Chartered Bank, ABN Amro, Royal Bank of Scotland and Dai Sang Bank.
They said the banks had deceived them into putting their life savings into the high-risk investment products and urged the banks to make full repayments. DBS said it would notify clients yesterday of the value of their structured products linked to Lehman, and would compensate the customers for losses if mis-selling was found.
But protester Wong Kam-chuen, who invested more than HK$2 million in the bank’s retail structured notes, said he had heard nothing from DBS.
“The bank staff couldn’t tell me when the investigation [into alleged mis-selling] will finish. I really have no idea of when I can have my money back,” said Mr Wong.
Friday, October 24, 2008
Speaker's Corner - 25 October 2008
I have registered to speak at Speaker Corner from 5 to 7 pm on Saturday 25 October.
Some investors are very angry at the action by the Government regarding investors outside of the "vulnerable" group. They sent strong messages to me in my blog and by e-mail.
I agree with your views. I receive more than 100 of these messages. I suggest that some of these investors should come forward and speak at Speaker's Corner. You can register quite easily at:
http://www.nparks.gov.sg/cms/index.php?option=com_chronocontact&chronoformname=honglim_park_speakers_corner
If you have registered, send your particulars to me. I will get the host to call the speakers to talk in an orderly manner.
Some investors are very angry at the action by the Government regarding investors outside of the "vulnerable" group. They sent strong messages to me in my blog and by e-mail.
I agree with your views. I receive more than 100 of these messages. I suggest that some of these investors should come forward and speak at Speaker's Corner. You can register quite easily at:
http://www.nparks.gov.sg/cms/index.php?option=com_chronocontact&chronoformname=honglim_park_speakers_corner
If you have registered, send your particulars to me. I will get the host to call the speakers to talk in an orderly manner.
A serious recession in the months ahead
We have to prepare for a serious recession in the months ahead. Here are the likely trend of events:
a) Banks reduce their credit
b) Businesses do not have the operating capital
c) Consumers reduce their spending
d) Businesses cannot meet their operating expenses
e) They reduce the size of their offices, shops and factories and retrench employees
f) They cannot pay their rentals - so the landlords have to evict them (but they cannot find new tenants)
This will be a downward spiral.
What can be done?
a) Banks reduce their credit
b) Businesses do not have the operating capital
c) Consumers reduce their spending
d) Businesses cannot meet their operating expenses
e) They reduce the size of their offices, shops and factories and retrench employees
f) They cannot pay their rentals - so the landlords have to evict them (but they cannot find new tenants)
This will be a downward spiral.
What can be done?
Call for Public Inquiry - some views
Anonymous said...
There should be a PUBLIC INQUIRY held which should be initiated by the Govt on this matter. Do not let them sweep this matter 'under the carpet'.
Issues include:
1. MAS role as a regulator in this matter. Why there was an oversight over this matter? Who was the head of the division who oversaw this?
2. Why MAS did not further investigate when complaints as far back as 2003/04 began regarding mis-selling of structured products? How many complaints of mis-selling had been brought to MAS attention?
3. Can the Finance Ministry also look into their role to provide a higher level overview over MAS responsibilities?
4. Can those who bought structured investment products sold by Lehman/Merrill Lynch via local banks go to their MP and raise the issue with them. Go every day or week - go pester them as much as possible! They should be working for you - Spore citizens & not the govt! Go in a collective group but behave yourselves first! Agitate for a PUBLIC INQUIRY via a petition! A govt cannot refuse the public's request!
5. Organize collective groups to go to the MAS & Banks to protest & demand a PUBLIC INQUIRY. Do not fear the riot police squad because it's your money that is at risk. There is a fine line between political protest & personal protest. If you keep quiet & don't agitate, then you won't see your money! Better to go to jail than not see your money! What can they do to you as a collective group? It is not a time to be passive. Assert your rights as citizens to be heard!
2:01 PM
Donald said...
I agree with 2.01 pm. A PUBLIC INQUIRY is definitely required. If MAS failed in their role, they people responsible should be removed. FIs being the 'main mastermind' if found guilty should be penalised. Very sad, hard to find independance in Singapore. I am not surprised the minibond issue will drag to 2009, as FIs need their books to look good for 2008 to justify their bonuses.
Anonymous said...
From the way MAS is handling this issue, it is obvious to me that it is trying to side-step responsibility.
I suspect that there could be wrong-doings or careless decisions being made by MAS when they "registered" (which is as good as giving consent) for such dubious toxic entrapping products to be sold by the Financial Institutions.
Therefore, I fully agree and support the call for a Commission of Inquiry to be conducted by an independent neutral body convened by the Govt. Either the PM or the Finance Minister should initiate the Commission of Inquiry to address likely injustice, fraudulent dealings, breaches of regulations, cunning manipulations of the laws as well as to draw lessons from such a fiasco so that MAS and FIs would be put into their proper shoes in order to bring confidence back to Singapore as a financial centre.
by Neutral Observer, 24 Oct 2008.
2:43 AM
There should be a PUBLIC INQUIRY held which should be initiated by the Govt on this matter. Do not let them sweep this matter 'under the carpet'.
Issues include:
1. MAS role as a regulator in this matter. Why there was an oversight over this matter? Who was the head of the division who oversaw this?
2. Why MAS did not further investigate when complaints as far back as 2003/04 began regarding mis-selling of structured products? How many complaints of mis-selling had been brought to MAS attention?
3. Can the Finance Ministry also look into their role to provide a higher level overview over MAS responsibilities?
4. Can those who bought structured investment products sold by Lehman/Merrill Lynch via local banks go to their MP and raise the issue with them. Go every day or week - go pester them as much as possible! They should be working for you - Spore citizens & not the govt! Go in a collective group but behave yourselves first! Agitate for a PUBLIC INQUIRY via a petition! A govt cannot refuse the public's request!
5. Organize collective groups to go to the MAS & Banks to protest & demand a PUBLIC INQUIRY. Do not fear the riot police squad because it's your money that is at risk. There is a fine line between political protest & personal protest. If you keep quiet & don't agitate, then you won't see your money! Better to go to jail than not see your money! What can they do to you as a collective group? It is not a time to be passive. Assert your rights as citizens to be heard!
2:01 PM
Donald said...
I agree with 2.01 pm. A PUBLIC INQUIRY is definitely required. If MAS failed in their role, they people responsible should be removed. FIs being the 'main mastermind' if found guilty should be penalised. Very sad, hard to find independance in Singapore. I am not surprised the minibond issue will drag to 2009, as FIs need their books to look good for 2008 to justify their bonuses.
Anonymous said...
From the way MAS is handling this issue, it is obvious to me that it is trying to side-step responsibility.
I suspect that there could be wrong-doings or careless decisions being made by MAS when they "registered" (which is as good as giving consent) for such dubious toxic entrapping products to be sold by the Financial Institutions.
Therefore, I fully agree and support the call for a Commission of Inquiry to be conducted by an independent neutral body convened by the Govt. Either the PM or the Finance Minister should initiate the Commission of Inquiry to address likely injustice, fraudulent dealings, breaches of regulations, cunning manipulations of the laws as well as to draw lessons from such a fiasco so that MAS and FIs would be put into their proper shoes in order to bring confidence back to Singapore as a financial centre.
by Neutral Observer, 24 Oct 2008.
2:43 AM
No compensation from ABN AMRO
Dear Mr Tan,
My mother and I are joint account holders for minibond series 2 from ABN AMRO. My mum is 68 years old, attended only a few years of schooling, does not read or write English, stayed in a 4 room HDB flat that is more than 25 years old, and has been a frugal housewife all her life. Two years old, my mother's fixed deposit of S$170,000 matured and she put the entire amount of her hard-earned savings into the minibond series 2, thinking that she was investing in a safe bond as explained by the RM.
My mother clearly falls into the vulnerable investor group as described by MAS, and such risky product should never have been recommended to her. In fact, the RM did not even carry out a Financial Needs Analysis on my mother. When I asked for her profile report, the bank replied that they only need to do one profile. I told them that it is ridiculous for a bank and a gross negligent on the bank's part to assume that my risk profile and my mother's risk profile are the same.
This morning I just received a call from ABN AMRO that there will be no compensation for our minibond investment. I was so shocked to hear that since local FIs are already making the right steps to compensate the vulnerable investors. My mother was clearly a vulnerable investor sold on a product totally not suitable for her. The bank officer on the phone could not give a reason why there was no compensation, but only to say that the decision was made by a committee. After demanding to meet the committee, the officer came back to say that the bank will review the case again and get back to me.
I would like to caution other investors that some banks will try to get away with the compensation if they can. Do not give up, fight for what is rightfully ours.
Isabel Tan
My mother and I are joint account holders for minibond series 2 from ABN AMRO. My mum is 68 years old, attended only a few years of schooling, does not read or write English, stayed in a 4 room HDB flat that is more than 25 years old, and has been a frugal housewife all her life. Two years old, my mother's fixed deposit of S$170,000 matured and she put the entire amount of her hard-earned savings into the minibond series 2, thinking that she was investing in a safe bond as explained by the RM.
My mother clearly falls into the vulnerable investor group as described by MAS, and such risky product should never have been recommended to her. In fact, the RM did not even carry out a Financial Needs Analysis on my mother. When I asked for her profile report, the bank replied that they only need to do one profile. I told them that it is ridiculous for a bank and a gross negligent on the bank's part to assume that my risk profile and my mother's risk profile are the same.
This morning I just received a call from ABN AMRO that there will be no compensation for our minibond investment. I was so shocked to hear that since local FIs are already making the right steps to compensate the vulnerable investors. My mother was clearly a vulnerable investor sold on a product totally not suitable for her. The bank officer on the phone could not give a reason why there was no compensation, but only to say that the decision was made by a committee. After demanding to meet the committee, the officer came back to say that the bank will review the case again and get back to me.
I would like to caution other investors that some banks will try to get away with the compensation if they can. Do not give up, fight for what is rightfully ours.
Isabel Tan
Just One Year
During the past 12 months, the stockmarkets dropped as follows:
S&P (USA) 45%
Nikkei (Japan) 60%
STI (Singapore) 60%
I cannot imagine the scale of this drop in just 1 year. It is unimaginable. Earlier this year, the Singapore Government was projecting good economic growth. Now, we are likely to see a serious recession.
Previously, I thought that the hedge funds should be blamed for short selling the market to make a speculative gain. Maybe, this is not the reason.
It is possible that the hedge funds are invested to the full, with borrowings of 10 times of their capital. During this crisis, the lenders pulled back their credit lines. This forced the hedge funds to sell their holdings. This could be the reason for the massive falls in the stockmarkts of 10% a day.
Lesson: All hedge funds should be regulated. They are not allowed to operate on leverage. They should only invest their capital.
S&P (USA) 45%
Nikkei (Japan) 60%
STI (Singapore) 60%
I cannot imagine the scale of this drop in just 1 year. It is unimaginable. Earlier this year, the Singapore Government was projecting good economic growth. Now, we are likely to see a serious recession.
Previously, I thought that the hedge funds should be blamed for short selling the market to make a speculative gain. Maybe, this is not the reason.
It is possible that the hedge funds are invested to the full, with borrowings of 10 times of their capital. During this crisis, the lenders pulled back their credit lines. This forced the hedge funds to sell their holdings. This could be the reason for the massive falls in the stockmarkts of 10% a day.
Lesson: All hedge funds should be regulated. They are not allowed to operate on leverage. They should only invest their capital.
Investors want open forum with DBS
By Francis Chan
INVESTORS of DBS High Notes 5 went to the bank's Shenton Way headquarters yesterday to ask that an open forum be held for customers caught up in the debacle.
DBS said last night it was considering the request.
An investor, who wanted to stay anonymous, said she and two others gave a letter to DBS' consumer banking group head, Mr Rajan Raju, during the afternoon visit.
She said the letter contained signatures of 166 High Notes 5 investors identifying themselves as 'DBS's valued customers who have placed explicit trust in you and your organisation'.
The letter asked the bank's top brass to 'provide investors with a detailed statement of account for each series of the High Notes, from the inception until the latest available date' and to produce 'a valuation of each series of the notes at the latest available date'.
The group also asked the bank to organise a meeting with investors to help clarify various issues.
The letter, which was copied to the Monetary Authority of Singapore, also stated that the investors wanted Mr Gerard Ee to attend the meeting.
Mr Ee is the independent person appointed by DBS to oversee the bank's handling of complaints related to the sale of High Notes 5.
Over the last month, DBS has been accused of mis-selling the structured product, which went bad after the collapse of bankrupt US investment bank, Lehman Brothers.
But despite bearing the brunt of its customers' anger over the past month, the bank has been open to meeting investors.
'I must say that the senior management were very positive when they met us,' said the investor who handed over the letter.
'They even asked us if it would be better to hold a few meetings so that they could cater to more investors. I think that is a good sign.'
DBS officials met a small group of investors at its headquarters last Wednesday.
http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20081023-95689.html
INVESTORS of DBS High Notes 5 went to the bank's Shenton Way headquarters yesterday to ask that an open forum be held for customers caught up in the debacle.
DBS said last night it was considering the request.
An investor, who wanted to stay anonymous, said she and two others gave a letter to DBS' consumer banking group head, Mr Rajan Raju, during the afternoon visit.
She said the letter contained signatures of 166 High Notes 5 investors identifying themselves as 'DBS's valued customers who have placed explicit trust in you and your organisation'.
The letter asked the bank's top brass to 'provide investors with a detailed statement of account for each series of the High Notes, from the inception until the latest available date' and to produce 'a valuation of each series of the notes at the latest available date'.
The group also asked the bank to organise a meeting with investors to help clarify various issues.
The letter, which was copied to the Monetary Authority of Singapore, also stated that the investors wanted Mr Gerard Ee to attend the meeting.
Mr Ee is the independent person appointed by DBS to oversee the bank's handling of complaints related to the sale of High Notes 5.
Over the last month, DBS has been accused of mis-selling the structured product, which went bad after the collapse of bankrupt US investment bank, Lehman Brothers.
But despite bearing the brunt of its customers' anger over the past month, the bank has been open to meeting investors.
'I must say that the senior management were very positive when they met us,' said the investor who handed over the letter.
'They even asked us if it would be better to hold a few meetings so that they could cater to more investors. I think that is a good sign.'
DBS officials met a small group of investors at its headquarters last Wednesday.
http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20081023-95689.html
Hong Kong: Legco raps shortcomings in minibonds monitoring
The Legislative Council has passed a motion and three amendments to criticize the government for failing to monitor the sale of Lehman Brothers minibonds and other products by financial institutions and banks.
Diana Lee
Thursday, October 23, 2008
The Legislative Council has passed a motion and three amendments to criticize the government for failing to monitor the sale of Lehman Brothers minibonds and other products by financial institutions and banks.
Lawmakers also called for strengthening the protection of investors' interests and preventing any recurrence.
But banking sector legislator David Li Kwok-po said he hoped the issue would not be "politicized."
A bank is just the agent of the minibonds and selling them has been approved by the authorities, Li said.
"The banks have no obligation to conduct buyback deals with customers. They responded to market demand and were also taking risks."
Li's remarks raised the hackles of unionist Lee Cheuk-yan. "The banks abused the trust of the public," Lee said.
Meanwhile, the Hong Kong Association of Banks said the first Lehman minibond buyback exercise can be conducted in early December.
The Consumer Council said at least one complainant had sought assistance from its legal action fund to file a lawsuit.
A source said the Securities and Futures Commission expects banks to do their own review of the cases.
The source said the SFC has no plans to launch a blanket solution on compensation as it prefers banks to decide for themselves.
Meanwhile, the Monetary Authority of Singapore said it received two proposals to restructure Lehman products, a move that could help investors recoup some losses.
HSBC Institutional Trust Services (Singapore), the trustee for the minibonds, said two international financial institutions have offered to restructure the notes to allow them to run to maturity.
DBS said total customer compensation in Singapore and Hong Kong will be around HK$362 million.
http://www.thestandard.com.hk/news_print.asp?art_id=73338&sid=21122158
Diana Lee
Thursday, October 23, 2008
The Legislative Council has passed a motion and three amendments to criticize the government for failing to monitor the sale of Lehman Brothers minibonds and other products by financial institutions and banks.
Lawmakers also called for strengthening the protection of investors' interests and preventing any recurrence.
But banking sector legislator David Li Kwok-po said he hoped the issue would not be "politicized."
A bank is just the agent of the minibonds and selling them has been approved by the authorities, Li said.
"The banks have no obligation to conduct buyback deals with customers. They responded to market demand and were also taking risks."
Li's remarks raised the hackles of unionist Lee Cheuk-yan. "The banks abused the trust of the public," Lee said.
Meanwhile, the Hong Kong Association of Banks said the first Lehman minibond buyback exercise can be conducted in early December.
The Consumer Council said at least one complainant had sought assistance from its legal action fund to file a lawsuit.
A source said the Securities and Futures Commission expects banks to do their own review of the cases.
The source said the SFC has no plans to launch a blanket solution on compensation as it prefers banks to decide for themselves.
Meanwhile, the Monetary Authority of Singapore said it received two proposals to restructure Lehman products, a move that could help investors recoup some losses.
HSBC Institutional Trust Services (Singapore), the trustee for the minibonds, said two international financial institutions have offered to restructure the notes to allow them to run to maturity.
DBS said total customer compensation in Singapore and Hong Kong will be around HK$362 million.
http://www.thestandard.com.hk/news_print.asp?art_id=73338&sid=21122158
Global financial crisis is getting out of control
I wish to ask investors to be aware that the global financial crisis is getting out of control. Since the lodging of the Petition 3 weeks ago, the stockmarkets have dropped by 30%.
The timing may be bad for the investors to press the claims at this time. The financial institutions will be quite busy managing their other issues, including the solvency of their main business.
The timing may be bad for the investors to press the claims at this time. The financial institutions will be quite busy managing their other issues, including the solvency of their main business.
Treat all investors fairly
Dear Mr. Tan,
I appreciate the good work you have done todate.
It is wrong to give priority to the so-called vulnerable group because this implies that the vulnerable group has a Right for full compensation whilst those outside it do not have such a Right. You can somehow discern that the FIs are driving in that directions.
If the aim of giving priority to the vulnerable group is to prevent immediate financial hardship because he or she needs immediate cash as otherwise he or she has to seek government help, then that is understandable. I believe those elderly investors' fund were not "daily expense savings".
In such a case, then education and knowing the English language is NOT a criteria to be used to define the vulnerable group. We therefore need MAS to state that education is not a criteria. Mis-selling (as defined in the ST today) is mis-selling. It has nothing to do with the educational level of the investor.
Albert Tan
tan4tell@yahoo.com
I appreciate the good work you have done todate.
It is wrong to give priority to the so-called vulnerable group because this implies that the vulnerable group has a Right for full compensation whilst those outside it do not have such a Right. You can somehow discern that the FIs are driving in that directions.
If the aim of giving priority to the vulnerable group is to prevent immediate financial hardship because he or she needs immediate cash as otherwise he or she has to seek government help, then that is understandable. I believe those elderly investors' fund were not "daily expense savings".
In such a case, then education and knowing the English language is NOT a criteria to be used to define the vulnerable group. We therefore need MAS to state that education is not a criteria. Mis-selling (as defined in the ST today) is mis-selling. It has nothing to do with the educational level of the investor.
Albert Tan
tan4tell@yahoo.com
Response to: DBS begins process to compensate customers
Letter sent to Straits Times
I read your report in The Straits Times dated 24 October 2008, entitled "DBS begins process to compensate customers". It had a statement which mentioned "Brokerages like OCBC Securities, which distribute, but do not advise investors on Minibonds, ..........".
I beg to differ with the words 'do not advise'. OCBC Securities has an alternative product department which gives advice on alternative products such as minibonds, pinnacle notes, equity linked notes, etc. By stating so boldly that they only distribute but do not adivse is clearly a misnormer. How else can you market your products if you do not advise? Do you think clients of OCBC Securties will just purchase these products off the shelf with no questiones asked and advice given by their alternative product sales personnel. Insofar, I find statements made by OCBC Securities as a way of trying to evade responsibility and I find it very disturbing.
For your information, my husband and I are both victims of the minibond and pinnacle notes debacle and you probably can guess who had sold us the products. I also find that brokerages (in general) that had marketed these products to their clients, have been keeping a low profile and not willing to admit to any misrepresentation in mis-selling. Perhaps it is time to put pressure on them to "do the right thing' as of the like of DBS, Maybank etc. "
Regards
C P Tay
I read your report in The Straits Times dated 24 October 2008, entitled "DBS begins process to compensate customers". It had a statement which mentioned "Brokerages like OCBC Securities, which distribute, but do not advise investors on Minibonds, ..........".
I beg to differ with the words 'do not advise'. OCBC Securities has an alternative product department which gives advice on alternative products such as minibonds, pinnacle notes, equity linked notes, etc. By stating so boldly that they only distribute but do not adivse is clearly a misnormer. How else can you market your products if you do not advise? Do you think clients of OCBC Securties will just purchase these products off the shelf with no questiones asked and advice given by their alternative product sales personnel. Insofar, I find statements made by OCBC Securities as a way of trying to evade responsibility and I find it very disturbing.
For your information, my husband and I are both victims of the minibond and pinnacle notes debacle and you probably can guess who had sold us the products. I also find that brokerages (in general) that had marketed these products to their clients, have been keeping a low profile and not willing to admit to any misrepresentation in mis-selling. Perhaps it is time to put pressure on them to "do the right thing' as of the like of DBS, Maybank etc. "
Regards
C P Tay
Reputation as financial services hub
Hi Mr. Tan,
I have been quietly watching you championing for those who have lost their money at minibonds and High Notes. And, I must congratulate you as it is a good first success step that ST reported that the 3 banks may compensate the "vulnerable".
I have to tell you that I also bought the minibonds, series 2, although a small sum only.
I did not seek out for such an investment. I think I went to May Bank 2 years ago to do an FD, and the RM sold it to me.
Also, with the explanation, I was given to understand that I bought the bonds of these 7 organisations. Bonds should be quite safe right esp if held to maturity?
I remembered very clearly that I asked him what was the risk?
He told me that the risk is - if any of the 7 organisations went under , then I would lose the portion depending what is the percentage of the bonds. So, I calculated the risk. At most 1 company go under, then I should still get back he rest of the money from the balance of the bonds in the basket I remembered asking him this scenario, and he did not disagree with me. Looking at the list of the 7 big companies, the chance of 1 going under is slim leave alone more than one company going under.
No time during our conversation was Lehman Bros a risk analysis factor.
My friend, who has low risk appetite and is an accountancy grad, is also affected when she bought High Notes (given the understanding that in the worse case scenario, she would get the full sum back if held until maturity). Again, she did not seek out the investment, she went to DBS to do an FD.
Hence, my main point here is that - it is not only the vulnerable is affected. Someone with degree is also affected.
The Govt need to deal with banks who gave misleading info to consumers , if it wants its banks and our financial services here to retain a reputation as a reliable financial service hub.
KKW
I have been quietly watching you championing for those who have lost their money at minibonds and High Notes. And, I must congratulate you as it is a good first success step that ST reported that the 3 banks may compensate the "vulnerable".
I have to tell you that I also bought the minibonds, series 2, although a small sum only.
I did not seek out for such an investment. I think I went to May Bank 2 years ago to do an FD, and the RM sold it to me.
Also, with the explanation, I was given to understand that I bought the bonds of these 7 organisations. Bonds should be quite safe right esp if held to maturity?
I remembered very clearly that I asked him what was the risk?
He told me that the risk is - if any of the 7 organisations went under , then I would lose the portion depending what is the percentage of the bonds. So, I calculated the risk. At most 1 company go under, then I should still get back he rest of the money from the balance of the bonds in the basket I remembered asking him this scenario, and he did not disagree with me. Looking at the list of the 7 big companies, the chance of 1 going under is slim leave alone more than one company going under.
No time during our conversation was Lehman Bros a risk analysis factor.
My friend, who has low risk appetite and is an accountancy grad, is also affected when she bought High Notes (given the understanding that in the worse case scenario, she would get the full sum back if held until maturity). Again, she did not seek out the investment, she went to DBS to do an FD.
Hence, my main point here is that - it is not only the vulnerable is affected. Someone with degree is also affected.
The Govt need to deal with banks who gave misleading info to consumers , if it wants its banks and our financial services here to retain a reputation as a reliable financial service hub.
KKW
High risk, absymal return
Dear Kin Lian
You are certainly doing a great job for the community by bravely taking side against the establishments. If not for your effort at galvanizing support and media coverage I am sure the response by the banks will have been different.
My heart goes out to all the investors who have bought these derivatives without understanding the associated risks. I do not expect the vast majority of them to even have an inkling that these products can be so risky. After all when one steps into a bank and is told by their staffs that they have a very "safe" product to sell which yields higher than deposit rates then of course many will be simply sold by the fact that they are dealing with a reputable bank that will not dupe them.
I myself have been approached many time by staffs of banks wishing to sell me "products that are high yielding and safe." When I queried them further on their products abysmal return versus the risk they were unable to answer me. I guess they are only repeating what they have been taught not what they should know. I do not blame the staffs as most of the products they are selling have so many clauses, technicalities and conditions that they themselves are overwhelmed. I think the banks who sold these products should bear responsibility for any and all losses incurred by investors.
Well done and keep up the excellent work.
Paul (a fund manager)
You are certainly doing a great job for the community by bravely taking side against the establishments. If not for your effort at galvanizing support and media coverage I am sure the response by the banks will have been different.
My heart goes out to all the investors who have bought these derivatives without understanding the associated risks. I do not expect the vast majority of them to even have an inkling that these products can be so risky. After all when one steps into a bank and is told by their staffs that they have a very "safe" product to sell which yields higher than deposit rates then of course many will be simply sold by the fact that they are dealing with a reputable bank that will not dupe them.
I myself have been approached many time by staffs of banks wishing to sell me "products that are high yielding and safe." When I queried them further on their products abysmal return versus the risk they were unable to answer me. I guess they are only repeating what they have been taught not what they should know. I do not blame the staffs as most of the products they are selling have so many clauses, technicalities and conditions that they themselves are overwhelmed. I think the banks who sold these products should bear responsibility for any and all losses incurred by investors.
Well done and keep up the excellent work.
Paul (a fund manager)
Impact of Lehman Brothers on different types of securities
Dear Mr. Tan,
I am not clear why the collapse of Lehman Brothers affect some securities (such as High Notes, Jubilee Notes) more than other securities (such as Minibond)?
REPLY
Lehman Brothers is listed as a "reference entity" in the High Notes series 5 and the Jubilee Notes series 3. When Lehman Brothers entered into a "credit event", the entire capital of the securities is used to pay the swap counter-party. There is nothing left for the noteholders (i.e. investors of these securities).
For the Minibonds, Lehman Brothers is the swap counter-party. With the collapse of Lehman Brothers, another counter party has to be found to take over its place. If this is not done, the underlying securities have to be liquidated now at the current depressed price. This will leave the investors with very little, maybe 20% or less (just a guess). If a new swap counter party is found, the underlying assets can be kept until the maturity date. Hopefully, the price will be higher, but the investors is not likely to get back 100%.
For the securities that have not defaulted yet, the investors will still face the following risks prior to the maturity date:
a) Risk that any of the reference entity may default (similar to the Lehman Brother situation)
b) Risk that the underlying assets may defaults
c) Risk that the swap counterparty may default
All these risks remain quite high, under the current global financial crisis.
I am not clear why the collapse of Lehman Brothers affect some securities (such as High Notes, Jubilee Notes) more than other securities (such as Minibond)?
REPLY
Lehman Brothers is listed as a "reference entity" in the High Notes series 5 and the Jubilee Notes series 3. When Lehman Brothers entered into a "credit event", the entire capital of the securities is used to pay the swap counter-party. There is nothing left for the noteholders (i.e. investors of these securities).
For the Minibonds, Lehman Brothers is the swap counter-party. With the collapse of Lehman Brothers, another counter party has to be found to take over its place. If this is not done, the underlying securities have to be liquidated now at the current depressed price. This will leave the investors with very little, maybe 20% or less (just a guess). If a new swap counter party is found, the underlying assets can be kept until the maturity date. Hopefully, the price will be higher, but the investors is not likely to get back 100%.
For the securities that have not defaulted yet, the investors will still face the following risks prior to the maturity date:
a) Risk that any of the reference entity may default (similar to the Lehman Brother situation)
b) Risk that the underlying assets may defaults
c) Risk that the swap counterparty may default
All these risks remain quite high, under the current global financial crisis.
Demand for Compensation
I have set up two sub-blogs for investors to post their views:
Demand for 100% compensation:
http://creditlinkedsecurities.blogspot.com/2008/10/demand-for-100-compensation.html
Willing to accept at least 50% compensation:
http://creditlinkedsecurities.blogspot.com/2008/10/demand-for-loss-to-be-shared-equally.html
These blogs are un-moderated. Please put your name and email address, so that other investors who share your views can contact you directly.
Demand for 100% compensation:
http://creditlinkedsecurities.blogspot.com/2008/10/demand-for-100-compensation.html
Willing to accept at least 50% compensation:
http://creditlinkedsecurities.blogspot.com/2008/10/demand-for-loss-to-be-shared-equally.html
These blogs are un-moderated. Please put your name and email address, so that other investors who share your views can contact you directly.
A fair compensation
The majority of the investors who visit my block agree with my views, including my suggestion to seek compensation at between 50% to 80% of the amount that they have lost. My view is that both parties (i.e the financial institution and the investor) should share the loss. The distributor earns 3% to 5% commission for selling the product. If they have to compensate 50%, it will be 10 times (or more) of what they earned.
A few people, such as Zorro, disagree with this view. They like to seek 100%. They have posted their views in a rude way. I have asked them to give their name and e-mail addresss, and be the focal point for other investors who hold similar views. They can also set up another blog.
They can also send an e-mail to me, arguing their point of view. They should disclose their name and contact. I will post it up in the blog.
I am aware that some visitors to my blog represents the financial institutions. They are posting certain views to distract the investors. It will be more honorable for them to disclose their real identity and argue these points.
I continue to get postings from SiewKhim with the sole purpose of insulting me. If SiewKhim has a real grievance against me, he (or she) can send an e-mail to me, rather than continue to behave in this manner. I hope that he realise that he is causing a lot of harm to the thousand of investors who need genuine help.
The investors can take collective legal action. Many people have warned that this will be expensive and a long drawn out affair. I agree with this point of view. It should only be considered at the last resort. The investors should be properly briefed and be aware about the cost and consequence, before they take this action.
A few people, such as Zorro, disagree with this view. They like to seek 100%. They have posted their views in a rude way. I have asked them to give their name and e-mail addresss, and be the focal point for other investors who hold similar views. They can also set up another blog.
They can also send an e-mail to me, arguing their point of view. They should disclose their name and contact. I will post it up in the blog.
I am aware that some visitors to my blog represents the financial institutions. They are posting certain views to distract the investors. It will be more honorable for them to disclose their real identity and argue these points.
I continue to get postings from SiewKhim with the sole purpose of insulting me. If SiewKhim has a real grievance against me, he (or she) can send an e-mail to me, rather than continue to behave in this manner. I hope that he realise that he is causing a lot of harm to the thousand of investors who need genuine help.
The investors can take collective legal action. Many people have warned that this will be expensive and a long drawn out affair. I agree with this point of view. It should only be considered at the last resort. The investors should be properly briefed and be aware about the cost and consequence, before they take this action.
Distributor should be responsible
Mr. Tan,
I would just like to add my perspective on the view of some people who's opinion is that anyone who buy (put their money) should know and be responsible for their own action, including in this case old retirees.
I disagree to this general and superficial view. My reason for illustration: If the investor has bought the product say after persuasion (and convincingly maybe with brochures) from (a) at sungei road or (b) at a casino, then I will agree with their view that the investor has himself/ herself to take the blame.
In other words, there is a right time and right place for doing different things. So in what had happened with minibonds, investor walked into a BIG Registered approved bank, bought an approved financial product ( not an unrelated product like say computer for example) from a professional bank staff with assurance. It is done in a right time, right place with right (?) person.
In some way, it is like what you mentioned something like when u buy medical product, u naturally trust it is what is claimed as safe.
thank you.
REPLY
I agree with you. But we need to get the financial institution and MAS to agree with us. That is the challenge.
I would just like to add my perspective on the view of some people who's opinion is that anyone who buy (put their money) should know and be responsible for their own action, including in this case old retirees.
I disagree to this general and superficial view. My reason for illustration: If the investor has bought the product say after persuasion (and convincingly maybe with brochures) from (a) at sungei road or (b) at a casino, then I will agree with their view that the investor has himself/ herself to take the blame.
In other words, there is a right time and right place for doing different things. So in what had happened with minibonds, investor walked into a BIG Registered approved bank, bought an approved financial product ( not an unrelated product like say computer for example) from a professional bank staff with assurance. It is done in a right time, right place with right (?) person.
In some way, it is like what you mentioned something like when u buy medical product, u naturally trust it is what is claimed as safe.
thank you.
REPLY
I agree with you. But we need to get the financial institution and MAS to agree with us. That is the challenge.
Thursday, October 23, 2008
Hong Kong: Minibond investors demand full refund
Hong Kong: Minibond investors demand full refund
Wednesday, October 08, 2008
Lehman Brothers minibond holders are demanding a full refund of their money following the government's proposal that banks buy back the failed US investment bank's minibonds from investors.
The Hong Kong government on Monday proposed that 19 distributor banks and brokerage firms buy back minibonds from clients at market value to shorten the painful process of individuals recovering their money and limit reputational damage to banks.
About 50 investors attended a Democratic Party meeting yesterday to discuss the proposal.
Some minibond holders said they would not be happy if they can only get back 60 to 70 percent of their investment and insisted on a 100 percent refund. They also blamed the government for lacking supervision of investment products.
The investors said they will continue to pursue legal action on the marketing practices of the banks promoting Lehman minibonds.
Undersecretary of Financial Services and the Treasury Bureau Julia Leung Fung-yee reiterated yesterday that banks "are not exempted from the investigation on marketing practices even if they are willing to buy back."
The government expects distributors to look at the proposal and assess its potential risks before deciding within a week on whether to accept.
Investors will separately meet Bank of China (Hong Kong) (2388) representatives and lawmakers at the Legislative Council today.
Wednesday, October 08, 2008
Lehman Brothers minibond holders are demanding a full refund of their money following the government's proposal that banks buy back the failed US investment bank's minibonds from investors.
The Hong Kong government on Monday proposed that 19 distributor banks and brokerage firms buy back minibonds from clients at market value to shorten the painful process of individuals recovering their money and limit reputational damage to banks.
About 50 investors attended a Democratic Party meeting yesterday to discuss the proposal.
Some minibond holders said they would not be happy if they can only get back 60 to 70 percent of their investment and insisted on a 100 percent refund. They also blamed the government for lacking supervision of investment products.
The investors said they will continue to pursue legal action on the marketing practices of the banks promoting Lehman minibonds.
Undersecretary of Financial Services and the Treasury Bureau Julia Leung Fung-yee reiterated yesterday that banks "are not exempted from the investigation on marketing practices even if they are willing to buy back."
The government expects distributors to look at the proposal and assess its potential risks before deciding within a week on whether to accept.
Investors will separately meet Bank of China (Hong Kong) (2388) representatives and lawmakers at the Legislative Council today.
New swap counterparty
Dear Mr. Tan,
The Minibond series is regarded as toxic product, so if we have somebody willing to take over as swap guarantor, will be toxic be removed ? I do not think so!
I bought the Minibond because I do not know so many things, eg. if one entites fail, all the capital gone !! If I had known it I will not buy. So even there is white knight is willing to take over Lehman Brother's role as swap partner, I would vote against it because the product is still toxic.
Please be reminded that the fact of the toxic had been known, and if we still vote for the white knight to take over, if there is any of the listed entities fail, there is no more recourse/protest for ignorance as is the situation now because all the risk had been made known.
HS
REPLY
If you vote for the new swap counterparty, there is a chance that the structured product can continue until the maturity date, and a higher value can be obtained from the underlying assets. During this time, there is still the risk that a reference entity may fail, or the underlying assets may fail. But, this is a risk worth taking.
If the underlying assets are redeemed now, the value will be extremely low.
The Minibond series is regarded as toxic product, so if we have somebody willing to take over as swap guarantor, will be toxic be removed ? I do not think so!
I bought the Minibond because I do not know so many things, eg. if one entites fail, all the capital gone !! If I had known it I will not buy. So even there is white knight is willing to take over Lehman Brother's role as swap partner, I would vote against it because the product is still toxic.
Please be reminded that the fact of the toxic had been known, and if we still vote for the white knight to take over, if there is any of the listed entities fail, there is no more recourse/protest for ignorance as is the situation now because all the risk had been made known.
HS
REPLY
If you vote for the new swap counterparty, there is a chance that the structured product can continue until the maturity date, and a higher value can be obtained from the underlying assets. During this time, there is still the risk that a reference entity may fail, or the underlying assets may fail. But, this is a risk worth taking.
If the underlying assets are redeemed now, the value will be extremely low.
Avoid land banking
Dear Mr. Tan,
I was in Hong Lim speaker corner last 2 weeks, to listen to your talk and advice which was informative and helpful. You had done an excellent contribution to the society.
Can I seek your advice on the Land Banking which I was being approach to invest.It is a good investment to do.Please give your advice and comments. Thank you.
SL
REPLY
You should avoid investing in Land Banking. Learn from the lesson of Minibond and avoid these types of products.
AFTER NOTE.
If you wish to know the reason to avoid land banking, you can do your research using Google. There are many articles and experiences of people who invested in this product and have not got their money back after waiting for many years. I hope that someone can do the research and make a summary for me to post in my blog.
Some of the people who challenged my views on land banking are the financial advisers who now sell this product. Previously, they sell the minibonds and structured products, which has caused great loss to the ordinary investors.
I was in Hong Lim speaker corner last 2 weeks, to listen to your talk and advice which was informative and helpful. You had done an excellent contribution to the society.
Can I seek your advice on the Land Banking which I was being approach to invest.It is a good investment to do.Please give your advice and comments. Thank you.
SL
REPLY
You should avoid investing in Land Banking. Learn from the lesson of Minibond and avoid these types of products.
AFTER NOTE.
If you wish to know the reason to avoid land banking, you can do your research using Google. There are many articles and experiences of people who invested in this product and have not got their money back after waiting for many years. I hope that someone can do the research and make a summary for me to post in my blog.
Some of the people who challenged my views on land banking are the financial advisers who now sell this product. Previously, they sell the minibonds and structured products, which has caused great loss to the ordinary investors.
Requests for media interviews
The New Paper
..... looking to interview an investor who is about 61 years old and has secondary school education.
Contact Lediati Tan <ledtan@sph.com.sg>, 63195835
Channel NewsAsia
.... looking for an elderly investor from the "vulnerable group" who has received an offer from the financial institution
Contact Ryan Huang, RyanHuang@mediacorp.com.sg 6350 3690
NHK Broadcasting
.... looking for a particular Lehman-linked product investor who has lost $100,000 or more. s, Contact Cindy Wong, nhkwstleo3@gmail.com +603 2163 3078
..... looking to interview an investor who is about 61 years old and has secondary school education.
Contact Lediati Tan <ledtan@sph.com.sg>, 63195835
Channel NewsAsia
.... looking for an elderly investor from the "vulnerable group" who has received an offer from the financial institution
Contact Ryan Huang, RyanHuang@mediacorp.com.sg 6350 3690
NHK Broadcasting
.... looking for a particular Lehman-linked product investor who has lost $100,000 or more. s, Contact Cindy Wong, nhkwstleo3@gmail.com +603 2163 3078
Draft: Letter to request for Open Forum
Date
Name of CEO
Financial institution
Collective Letter to request for an Open forum
Dear Sir,
We are the valued customers who have placed our explicit trust in your organisation. On the recommendation of your Relationship Managers, we have put in our hard earned money in the credit linked securities and have made substantial losses.
We wish to request you Senior Management as follows:
1) Obtain from the trustees a detailed statement of account for each series of the credit linked securities sold to us, from the inception until the latest available date, together with a valuation of each series of the securities at the latest available date.
2) To hold a meeting of the investors to give an explanation on the performance of each series of the securities and to allow us ask questions and seek clarification. We wish to have the well-regarded person (Mr. XXXXXXXXXXX) to be present at the meeting.
We would like you to accede to this request within 2 weeks of this letter. Kindly provide a reply to this letter.
Yours Sincerely,
(signatories)
Name of CEO
Financial institution
Collective Letter to request for an Open forum
Dear Sir,
We are the valued customers who have placed our explicit trust in your organisation. On the recommendation of your Relationship Managers, we have put in our hard earned money in the credit linked securities and have made substantial losses.
We wish to request you Senior Management as follows:
1) Obtain from the trustees a detailed statement of account for each series of the credit linked securities sold to us, from the inception until the latest available date, together with a valuation of each series of the securities at the latest available date.
2) To hold a meeting of the investors to give an explanation on the performance of each series of the securities and to allow us ask questions and seek clarification. We wish to have the well-regarded person (Mr. XXXXXXXXXXX) to be present at the meeting.
We would like you to accede to this request within 2 weeks of this letter. Kindly provide a reply to this letter.
Yours Sincerely,
(signatories)
Inteview with journalist (4)
Dear Mr. Tan,
1. Three financial insitutions are taking step to compensate some vulnerable investors. What are your views on this latest development?
Reply: It appears that the vulnerable investors will be compensated for the full amount of their investments, less any coupons that they have received. The only lose the interest on the money that they have invested for the past one or two years. This is a generous settlement. I believe that those who receive the offer will be relieved and happy to receive their money back.
I believe that compensation should also be given to the other investors who do not fall within the "vulnerable group", as they have also been misled into making the investments and were not properly advised about the risks. The prospectus was written in a complicated manner and were not easy to read and understand, even for the educated and knowledgeable investors. In some cases, the prospectus were distributed only after the sale was concluded. The sales representative did not highlight and explain the key information in the prospectus concerining the risks.
I suggest that these investors should be compensated for 50% to 80% of their loss.
2. Did you received any calls from investors, expressing their thoughts upon hearing this news? What's their general impression about chances of getting money back?
Reply: I have received many e-mails from investors who expressed their happiness in getting back their money.
Even those who are outside of the "vulnerable group" are hopeful of getting some compensation, although they are still anxious to know how they will be treated. We will have to wait and see. Many of the investors thanked me for organising the Petition and for speaking at Speaker's Corner to voice out their difficulties.
3. What's your advise to investors now?
Reply: I advice the investors who have not lodge their complaint of mis-selling to do so immediately. They should lodge their complaint with the financial institution that sold the structured product to them.The complaint should highlight the areas where they were misled. They have to lodge their complaint truthfully. Some of the points to be covered are set out in this FAQ:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
4. Will you continue to speak at hong lim park this Sat?
I will continue to hold the meeting at Speaker's Corner on Saturdays from 5 to 7 pm. for the next few weeks, as long as there is a need for the investors to receive an update and to meet with other investors to exchange views and information.
1. Three financial insitutions are taking step to compensate some vulnerable investors. What are your views on this latest development?
Reply: It appears that the vulnerable investors will be compensated for the full amount of their investments, less any coupons that they have received. The only lose the interest on the money that they have invested for the past one or two years. This is a generous settlement. I believe that those who receive the offer will be relieved and happy to receive their money back.
I believe that compensation should also be given to the other investors who do not fall within the "vulnerable group", as they have also been misled into making the investments and were not properly advised about the risks. The prospectus was written in a complicated manner and were not easy to read and understand, even for the educated and knowledgeable investors. In some cases, the prospectus were distributed only after the sale was concluded. The sales representative did not highlight and explain the key information in the prospectus concerining the risks.
I suggest that these investors should be compensated for 50% to 80% of their loss.
2. Did you received any calls from investors, expressing their thoughts upon hearing this news? What's their general impression about chances of getting money back?
Reply: I have received many e-mails from investors who expressed their happiness in getting back their money.
Even those who are outside of the "vulnerable group" are hopeful of getting some compensation, although they are still anxious to know how they will be treated. We will have to wait and see. Many of the investors thanked me for organising the Petition and for speaking at Speaker's Corner to voice out their difficulties.
3. What's your advise to investors now?
Reply: I advice the investors who have not lodge their complaint of mis-selling to do so immediately. They should lodge their complaint with the financial institution that sold the structured product to them.The complaint should highlight the areas where they were misled. They have to lodge their complaint truthfully. Some of the points to be covered are set out in this FAQ:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
4. Will you continue to speak at hong lim park this Sat?
I will continue to hold the meeting at Speaker's Corner on Saturdays from 5 to 7 pm. for the next few weeks, as long as there is a need for the investors to receive an update and to meet with other investors to exchange views and information.
DBS Bank, Hong Leong Finance and Maybank to give compensation
http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_293690.html
DBS said 4,700 customers in Singapore and Hong Kong invested S$360 million in these products. In Singapore specifically, 1,400 customers invested S$103 million in High Notes 5.
'We have found that a number of cases did not meet the standards DBS upholds and the bank will be compensating these customers with effect from tomorrow,' DBS said in a statement to the Singapore exchange.
It added that 'our initial expectation of the worst-case scenario whereby investors will lose their entire principal investment amount is likely to materialize.'.........
DBS said 4,700 customers in Singapore and Hong Kong invested S$360 million in these products. In Singapore specifically, 1,400 customers invested S$103 million in High Notes 5.
'We have found that a number of cases did not meet the standards DBS upholds and the bank will be compensating these customers with effect from tomorrow,' DBS said in a statement to the Singapore exchange.
It added that 'our initial expectation of the worst-case scenario whereby investors will lose their entire principal investment amount is likely to materialize.'.........
Wednesday, October 22, 2008
Marketed to Asians
Mr. Tan,
It suddenly struck me that I should share a nugget of the telephone conversation between my Financial Adviser and I which happened about 2 weeks ago.
My FA had unwittingly revealed to me that, after Lehman Bros went bust, the financial institute she is attached to found out that the structured products were protected from the US investors. She added that they were only marketed to investors in Taiwan, Hongkong and Singapore, apparently because these predominantly Chinese cities have cash rich citizens with a money-saving habit. I could tell that she was insinuating that Lehman knew very well then that those were unworthy and dangerous products for their own people. But of course, the "reason" cited for not allowing US investor participation was "owing to tax reasons". Even the term "Minibond" was coined to deceive the unsuspecting investors they had intended to court in this part of the world.
From the above information, I arrive at the conclusion that we Asians have been bullied, and taken advantage of by the faltering American financial giants. A large number of Asians have been suckered, MAS and the FIs here too have been suckered, having not done thorough research before letting onto our shores such dubiously-named, out-to-deceive investment products. In my opinion, we were all fooled BIG TIME!
Why should this Singaporean group of ill-fated investors be pushed to moan, groan, cry foul and battle their way through to convince everyone that they were indeed innocent victims bearing the brunt of a spectacular con job. Why should they be made to bear a substantial loss of their investment capital, made up of their hard-earned life savings?
SF
It suddenly struck me that I should share a nugget of the telephone conversation between my Financial Adviser and I which happened about 2 weeks ago.
My FA had unwittingly revealed to me that, after Lehman Bros went bust, the financial institute she is attached to found out that the structured products were protected from the US investors. She added that they were only marketed to investors in Taiwan, Hongkong and Singapore, apparently because these predominantly Chinese cities have cash rich citizens with a money-saving habit. I could tell that she was insinuating that Lehman knew very well then that those were unworthy and dangerous products for their own people. But of course, the "reason" cited for not allowing US investor participation was "owing to tax reasons". Even the term "Minibond" was coined to deceive the unsuspecting investors they had intended to court in this part of the world.
From the above information, I arrive at the conclusion that we Asians have been bullied, and taken advantage of by the faltering American financial giants. A large number of Asians have been suckered, MAS and the FIs here too have been suckered, having not done thorough research before letting onto our shores such dubiously-named, out-to-deceive investment products. In my opinion, we were all fooled BIG TIME!
Why should this Singaporean group of ill-fated investors be pushed to moan, groan, cry foul and battle their way through to convince everyone that they were indeed innocent victims bearing the brunt of a spectacular con job. Why should they be made to bear a substantial loss of their investment capital, made up of their hard-earned life savings?
SF
A good settlement?
Dear Mr Tan
I thought that it may be useful to let you know that I have just obtained a verbal offer from X Bank to buy back the Minibond investment (Series 2) that was sold me in 2006. The buyback price is (details deleted .....................).
The bank has requested that I not make this details public for now (.... as they have to sort out some other matters). I am writing to inform you of this to let you know that your actions have resulted in a positive outcome in my situtation. I hope this encourages you to continue your good work for the rest of those affected.
At the same time, I hope that you can (without revealing details of the offer made to me) stress to all affected parties to work closely with the banks concerned in reaching a settlement. I am concerned because I noticed from the comments in your blog that many are disillussioned and are now focusing their energy on the legal action option, rather than working with the banks for a resolution.
Back to my situation, I know that you are very busy with many emails, but if you could find the time, could I ask if there are any concerns that I should have or if there are implications to such a settlement proposed by X? Is it necessary to consult with a lawyer before deciding on whether to accept the settlement?
Once again, my heartfelt thanks for everything that you have done.
Regards
I thought that it may be useful to let you know that I have just obtained a verbal offer from X Bank to buy back the Minibond investment (Series 2) that was sold me in 2006. The buyback price is (details deleted .....................).
The bank has requested that I not make this details public for now (.... as they have to sort out some other matters). I am writing to inform you of this to let you know that your actions have resulted in a positive outcome in my situtation. I hope this encourages you to continue your good work for the rest of those affected.
At the same time, I hope that you can (without revealing details of the offer made to me) stress to all affected parties to work closely with the banks concerned in reaching a settlement. I am concerned because I noticed from the comments in your blog that many are disillussioned and are now focusing their energy on the legal action option, rather than working with the banks for a resolution.
Back to my situation, I know that you are very busy with many emails, but if you could find the time, could I ask if there are any concerns that I should have or if there are implications to such a settlement proposed by X? Is it necessary to consult with a lawyer before deciding on whether to accept the settlement?
Once again, my heartfelt thanks for everything that you have done.
Regards
Did the financial institution carry out any risk assessment?
Dear Mr Tan,
I have come across in your blog various comments as to whether minibonds and other similar products such as High Note, Jubilee Note, were approved by the regulator.
However, MAS stand is that they only registered these products and did not approve them. This brings me to the next question:
Have the FIs involved in the distribution done any product risk assessment before approving the product for selling to the investors? If the answer is no, it is considered serious as such an FI is selling the product without knowing its risk level.
If the answer is yes, then what is the conclusion (whether low risk or high risk) by the respective FI and is the conclusion properly disclose to the investors at the point of selling?
Do you think the investors should raise the above issue with their respective FI?
NSW
REPLY
I think that the investors should ask the distributor to arrange an open forum to discuss these matters to be discussed.
http://tankinlian.blogspot.com/2008/10/collective-letter-to-distributor.html
I have come across in your blog various comments as to whether minibonds and other similar products such as High Note, Jubilee Note, were approved by the regulator.
However, MAS stand is that they only registered these products and did not approve them. This brings me to the next question:
Have the FIs involved in the distribution done any product risk assessment before approving the product for selling to the investors? If the answer is no, it is considered serious as such an FI is selling the product without knowing its risk level.
If the answer is yes, then what is the conclusion (whether low risk or high risk) by the respective FI and is the conclusion properly disclose to the investors at the point of selling?
Do you think the investors should raise the above issue with their respective FI?
NSW
REPLY
I think that the investors should ask the distributor to arrange an open forum to discuss these matters to be discussed.
http://tankinlian.blogspot.com/2008/10/collective-letter-to-distributor.html
Understanding the technical terms
Dear Mr. Tan.
Thanks once again for helping the us, the victims.
- Can a chartered accountant understand the medical terms used by medical doctor ?
- Can a medical doctor understand the terms used by scientist ?
- Can a management guuru understand terms used by biologist ?
The answer to all these is yes or no - yes, because it is written in ABC (they could even be able to pronounce it), no for the meaning, they just cannot understand the meaning of the terms used.
So the comments "You are educated so you must be able to read the prospectus and understand it" is pure nonsense and cannot be eatablished as the proof of understanding the product because the prospectus is designed to protect the product provider and written in such a way that it is very difficult to understand, full of jargon like CDO, CDS etc. During the sales process, bonds are mentioned, but in the prospectus, the CDO and CDS appears. To lay people, it is assume,thus, that CDO and CDS are just bonds and hence the arguments start after the problem occured. A degree holder in language could be able to write an article in such a way that the articles could be explained in different meanings in different situation!
It is also very difficults when facing the personnel from the financial institution for lodging complain because they are all well prepared to use fine print in the procpectus for arguments.
One officer from a FI even change the wording of the prospectus for the argument. In the prospectus "....the product is designed for defensive investors ......" but in the newspaper the word defensive is taken out and hence declared the product is NOT LOW RISK because High Risk product are not suitable for defensive investors. How can a defensive investor knowingly agrees that the whole capital could be wiped out !!!!!
Just wonder why the authority did not discover this and take serious steps to reprimand the offender.
HS
Thanks once again for helping the us, the victims.
- Can a chartered accountant understand the medical terms used by medical doctor ?
- Can a medical doctor understand the terms used by scientist ?
- Can a management guuru understand terms used by biologist ?
The answer to all these is yes or no - yes, because it is written in ABC (they could even be able to pronounce it), no for the meaning, they just cannot understand the meaning of the terms used.
So the comments "You are educated so you must be able to read the prospectus and understand it" is pure nonsense and cannot be eatablished as the proof of understanding the product because the prospectus is designed to protect the product provider and written in such a way that it is very difficult to understand, full of jargon like CDO, CDS etc. During the sales process, bonds are mentioned, but in the prospectus, the CDO and CDS appears. To lay people, it is assume,thus, that CDO and CDS are just bonds and hence the arguments start after the problem occured. A degree holder in language could be able to write an article in such a way that the articles could be explained in different meanings in different situation!
It is also very difficults when facing the personnel from the financial institution for lodging complain because they are all well prepared to use fine print in the procpectus for arguments.
One officer from a FI even change the wording of the prospectus for the argument. In the prospectus "....the product is designed for defensive investors ......" but in the newspaper the word defensive is taken out and hence declared the product is NOT LOW RISK because High Risk product are not suitable for defensive investors. How can a defensive investor knowingly agrees that the whole capital could be wiped out !!!!!
Just wonder why the authority did not discover this and take serious steps to reprimand the offender.
HS
Collective letter to distributor
The investors of the High Notes have submitted a collective letter to DBS to seek an open forum with the senior management.
I suggest a similar approach be taken by the investors who bought from the other distributors, such as Hong Leong, Maybank, ABN and others. The leaders of the group can take the lead to collect the signatures.
The collective letter should ask for a meeting to address the following:
1. the alleged mis-selling of the product
2. get the product arranger and/or the trustee to give a full statement of account
3. how the distributor can help the investors to reduce their loss or to give appropriate compensation.
Note: This letter to the other distributors should be worded differently from the letter to DBS - as DBS is both the product arranger and the distributor. For the other distributors, they are NOT the product arranger, so the statement of account has to be given by the product arranger.
I suggest a similar approach be taken by the investors who bought from the other distributors, such as Hong Leong, Maybank, ABN and others. The leaders of the group can take the lead to collect the signatures.
The collective letter should ask for a meeting to address the following:
1. the alleged mis-selling of the product
2. get the product arranger and/or the trustee to give a full statement of account
3. how the distributor can help the investors to reduce their loss or to give appropriate compensation.
Note: This letter to the other distributors should be worded differently from the letter to DBS - as DBS is both the product arranger and the distributor. For the other distributors, they are NOT the product arranger, so the statement of account has to be given by the product arranger.
Collective legal action - request for proposals
1. My preference is to consider collective legal action only as the last resort, after the other avenues have failed. Several investors are keen to consider this step now, as they have been disappointed with the steps now taken by MAS.
2. I have written to three lawyers to ask them to submit the following:
Can you give me a proposal for collective legal action. I wish to post this in my blog and ask the investors to indicate their desire to participate in this collective action.
In your proposal, please indicate the grounds for the action, the approach to be taken, the expected legal cost to the investor and the chance of winning. Please indicate the additional cost, if the investor loses the case and has to pay the other party's cost.
3. I suggest that the investors wait for the reply of the lawyers.
2. I have written to three lawyers to ask them to submit the following:
Can you give me a proposal for collective legal action. I wish to post this in my blog and ask the investors to indicate their desire to participate in this collective action.
In your proposal, please indicate the grounds for the action, the approach to be taken, the expected legal cost to the investor and the chance of winning. Please indicate the additional cost, if the investor loses the case and has to pay the other party's cost.
3. I suggest that the investors wait for the reply of the lawyers.
MAS push responsibility to Financial Institution
Dear Mr. Tan,
Being a investor of Minibonds, I got this feeling MAS is just trying to push all responsibility to the Financial Institution.
First, they suggest investors who feel that they have been mislead into buying those Lehman link product to file complaint at respective Financial Institution.
So now those investors will just file the complaint for the sake of filing, just with a hope of getting back their investment if the Minibonds were to be liquid off when come to the stage where there isn't any new swap counter party.
With a mixed of real complaint and fake complaint, the FI are certainly pressured on resolving it, maybe by ways of paying off the losses. Guess this is what all investor like me want in the end.
In the first place, this product is lodged and registered with MAS, so now they are saying they did not approve it. So I wonder why they call them governing body of the regulation?
MAS have said that they are looking at various possibilities of new swap counter party. So the deadline is on this Friday. How true are they doing it? When they know that even if there's no new swap counter party, end of the day the FI will have to be pressurized to pay up the loses in order to let all the saga end.
Is there any proof for investor to know that they are really various potential proposer? Or is it just covering up them that they are doing something about it.
P.S keep me as anonymous thanks.
Being a investor of Minibonds, I got this feeling MAS is just trying to push all responsibility to the Financial Institution.
First, they suggest investors who feel that they have been mislead into buying those Lehman link product to file complaint at respective Financial Institution.
So now those investors will just file the complaint for the sake of filing, just with a hope of getting back their investment if the Minibonds were to be liquid off when come to the stage where there isn't any new swap counter party.
With a mixed of real complaint and fake complaint, the FI are certainly pressured on resolving it, maybe by ways of paying off the losses. Guess this is what all investor like me want in the end.
In the first place, this product is lodged and registered with MAS, so now they are saying they did not approve it. So I wonder why they call them governing body of the regulation?
MAS have said that they are looking at various possibilities of new swap counter party. So the deadline is on this Friday. How true are they doing it? When they know that even if there's no new swap counter party, end of the day the FI will have to be pressurized to pay up the loses in order to let all the saga end.
Is there any proof for investor to know that they are really various potential proposer? Or is it just covering up them that they are doing something about it.
P.S keep me as anonymous thanks.
Where does the BUCK STOP?
Posted in an online forum
It is now established that X is a high risk complex derivative which exposed the investor to risk of losing the capital invested for 5.5 year. This X is not a suitable investment product for retail investor, especially those who are looking just to grow the life savings for retirement.
Knowing that X is NOT suitable for retail investors and yet inappropriately recommend such a product to retail investors, the relation managers (RMs) were mis-selling.
X was marketed by RMs as a safe and low risk investment to retail investors and assurance were given that so long as investors can hold till maturity, the capital will be fully repaid. This was misrepresentation.
The bank’s claim that that there is no misrepresentation on the part of their RMs. Their argument is that since the details of the product and the risks are spelt out in the prospectus they have no responsibility. This is irresponsible as it is the responsibility of the RM to explain in detail not only the advantages but also the risks of the investment.
Someting is wrong here:
“Caveat emptor” is fair if the playing field is level but in a Bank and customer relationship it is NOT. The bank knows the complexity of the X and the high risk involved but the buyer don’t and they are not forewarned. Customers trusted the RMs because of the bank's name and the authority that regulates it. They were misled into investing in a high risk product the resulted in a loss of their life savings. The bank now pleads “caveat emptor”. It now hides behind legalistic protections in documents and shirks from their responsibility.
For now, the authorities are taking, what appears to be, a wait and see approach, as far as blame goes. However, all victims of misrepresentation suffered the same pain and loss. Why should they advocate categorizing the investor for consideration of compensation if they are completely unbiased? Are they saying that the educated young deserve to be cheated?
Investors who intended to go to the bank as a group to ask for early resolution were allegedly, according to press reports, “warned and threatened with arrest”. Are investors being bullied here? Investor groups are now feeling stifled and frustrated.
Group petitions and complaints for redress to the authorities have not yet yielded any resolution and investors were simply advised to file individual claim with the bank that sold them the investment. The insistence of a case-by case investigation by the bank appears to prevent collective action and disadvantage the individual investors.
Is this what one expects from a fair and equal society? I sincerely hope that the authorities are doing the right thing to ensure that justice is done.
It is now established that X is a high risk complex derivative which exposed the investor to risk of losing the capital invested for 5.5 year. This X is not a suitable investment product for retail investor, especially those who are looking just to grow the life savings for retirement.
Knowing that X is NOT suitable for retail investors and yet inappropriately recommend such a product to retail investors, the relation managers (RMs) were mis-selling.
X was marketed by RMs as a safe and low risk investment to retail investors and assurance were given that so long as investors can hold till maturity, the capital will be fully repaid. This was misrepresentation.
The bank’s claim that that there is no misrepresentation on the part of their RMs. Their argument is that since the details of the product and the risks are spelt out in the prospectus they have no responsibility. This is irresponsible as it is the responsibility of the RM to explain in detail not only the advantages but also the risks of the investment.
Someting is wrong here:
“Caveat emptor” is fair if the playing field is level but in a Bank and customer relationship it is NOT. The bank knows the complexity of the X and the high risk involved but the buyer don’t and they are not forewarned. Customers trusted the RMs because of the bank's name and the authority that regulates it. They were misled into investing in a high risk product the resulted in a loss of their life savings. The bank now pleads “caveat emptor”. It now hides behind legalistic protections in documents and shirks from their responsibility.
For now, the authorities are taking, what appears to be, a wait and see approach, as far as blame goes. However, all victims of misrepresentation suffered the same pain and loss. Why should they advocate categorizing the investor for consideration of compensation if they are completely unbiased? Are they saying that the educated young deserve to be cheated?
Investors who intended to go to the bank as a group to ask for early resolution were allegedly, according to press reports, “warned and threatened with arrest”. Are investors being bullied here? Investor groups are now feeling stifled and frustrated.
Group petitions and complaints for redress to the authorities have not yet yielded any resolution and investors were simply advised to file individual claim with the bank that sold them the investment. The insistence of a case-by case investigation by the bank appears to prevent collective action and disadvantage the individual investors.
Is this what one expects from a fair and equal society? I sincerely hope that the authorities are doing the right thing to ensure that justice is done.
Tuesday, October 21, 2008
Lawyer: No obligation, no fee consultation
Hi Kin Lian,
I am organising meetings to see the investors at my law firm for no obligation no fee consultation. I will also pass you a list of the investors once I meet them.
The weekdays’ timeslots are from
4pm to 4.30pm
7pm to 7.30 pm
7.30pm to 8pm
8pm to 8.30pm
The Sunday special timeslots (at half hourly intervals) are from
2pm to 6pm
7pm to 9pm
Our law firm’s Lehman hotline to call is
(Office) 6557 2422
(Mobile)98456225.
Regards
Leonard Loo
LEONARD LOO & CO
Advocates & Solicitors
25 Tagore Lane #04-06
Singapore 787602 (opposite Thomson Used Car Centre)
Tel: (65) 6557 2422 Fax: (65) 6557 2022
Mobile : (65) 969 55694
Email: leonardloo_co@pacific.net.sg
I am organising meetings to see the investors at my law firm for no obligation no fee consultation. I will also pass you a list of the investors once I meet them.
The weekdays’ timeslots are from
4pm to 4.30pm
7pm to 7.30 pm
7.30pm to 8pm
8pm to 8.30pm
The Sunday special timeslots (at half hourly intervals) are from
2pm to 6pm
7pm to 9pm
Our law firm’s Lehman hotline to call is
(Office) 6557 2422
(Mobile)98456225.
Regards
Leonard Loo
LEONARD LOO & CO
Advocates & Solicitors
25 Tagore Lane #04-06
Singapore 787602 (opposite Thomson Used Car Centre)
Tel: (65) 6557 2422 Fax: (65) 6557 2022
Mobile : (65) 969 55694
Email: leonardloo_co@pacific.net.sg
SCMP: Investors hit by Lehman collapse get papers they can't understand
South China Morning Post (Hong Kong) - Tuesday, October 21, 2008
Author: Joyce Man
Investors who purchased complex derivatives linked to the financial health of now-bankrupt US investment bank Lehman Brothers finally got their hands on documents on the investments' underlying assets yesterday - but could not make head or tail of them.
DBS Bank handed a dozen investors stacks of files and papers centimetres thick, filled with legal and financial jargon. The investors had asked for documents showing what assets backed their investments, hoping to determine how much value they retained.
They pored over the documents for hours. Connie Kwan, who bought HK$1.3 million in derivatives known as retail structured notes in the past two years, said she felt no one could explain the papers.
"They say they will calculate the value based on the underlying assets, but we can't tell what the underlying assets are from these documents," she said.
DBS Bank (Hong Kong) managing director William Kwok Yu-lut explained how they could calculate the assets' value using lists in the documents, but he could not say what the asset breakdown was.
The retail structured notes that DBS distributed were linked to credit events - such as bankruptcies, loan defaults or being forced to repay loans early - of "baskets" of companies. If any company defaulted, investors would redeem their principal minus the reduction in value of that company. Some baskets included Lehman, which filed for the biggest bankruptcy in US history last month.
Investors estimate that DBS distributed more than 30 series of notes to hundreds of customers.
Meanwhile, Secretary for Justice Wong Yan-lung told a Legislative Council panel meeting yesterday that the government would like to see banks accused of mis-selling another type of derivative - minibonds - resolve disputes with investors through mediation.
He said the disputes might be long and expensive if the cases were handled by courts. The government had made contact with mediation agencies, and it would take only "weeks" for them to provide mediation services.
Author: Joyce Man
Investors who purchased complex derivatives linked to the financial health of now-bankrupt US investment bank Lehman Brothers finally got their hands on documents on the investments' underlying assets yesterday - but could not make head or tail of them.
DBS Bank handed a dozen investors stacks of files and papers centimetres thick, filled with legal and financial jargon. The investors had asked for documents showing what assets backed their investments, hoping to determine how much value they retained.
They pored over the documents for hours. Connie Kwan, who bought HK$1.3 million in derivatives known as retail structured notes in the past two years, said she felt no one could explain the papers.
"They say they will calculate the value based on the underlying assets, but we can't tell what the underlying assets are from these documents," she said.
DBS Bank (Hong Kong) managing director William Kwok Yu-lut explained how they could calculate the assets' value using lists in the documents, but he could not say what the asset breakdown was.
The retail structured notes that DBS distributed were linked to credit events - such as bankruptcies, loan defaults or being forced to repay loans early - of "baskets" of companies. If any company defaulted, investors would redeem their principal minus the reduction in value of that company. Some baskets included Lehman, which filed for the biggest bankruptcy in US history last month.
Investors estimate that DBS distributed more than 30 series of notes to hundreds of customers.
Meanwhile, Secretary for Justice Wong Yan-lung told a Legislative Council panel meeting yesterday that the government would like to see banks accused of mis-selling another type of derivative - minibonds - resolve disputes with investors through mediation.
He said the disputes might be long and expensive if the cases were handled by courts. The government had made contact with mediation agencies, and it would take only "weeks" for them to provide mediation services.
Volunteers to write statements of complaints
I wish to ask for volunteers to help the investors to write statements of complaints. Please meet at Speaker's Corner at 4.30 p.m. on Saturday 25 October. You will get a briefing on how to do this work. A form will be given to you to enter the particulars of the investors. We need volunteers to handle complaints in English and Chinese.
Please send your particulars (name, email, telephone) to Adrian Tan atans1@hotmail.com for record. Thank you.
Please send your particulars (name, email, telephone) to Adrian Tan atans1@hotmail.com for record. Thank you.
Post in my blog without Google account
If you wish to post in my blog without a Google account, you can send an e-mail to me at kinlian@gmail.com. I will post it for you as a new topic.
Block comments
I have to block anonymous comments that are considered to be defamatory or insulting. These comments are directed at specific persons.
If you wish to state an honest opinion, you should give your real name. I will be willing to allow these comments through.
I like to ask readers to avoid referring to me as "a hero". I have blocked some of these comments. Some people use it in a cynical way. Others may have good intentions, but it is best to avoid this doubt.
Please help to keep this blog clean.
If you wish to state an honest opinion, you should give your real name. I will be willing to allow these comments through.
I like to ask readers to avoid referring to me as "a hero". I have blocked some of these comments. Some people use it in a cynical way. Others may have good intentions, but it is best to avoid this doubt.
Please help to keep this blog clean.
Response to Mr. Lim Hng Kiang and MAS
I have written a response to Mr. Lim Hng Kiang's statement in Parliament about the failure of the structured products linked to Lehman Brothers.
It is now published in http://www.theonlinecitizen.com/. I want the investors to have a strong heart that there is still a good chance to win this battle.
http://theonlinecitizen.com/2008/10/loss-of-hard-earned-savings/#comments
It is now published in http://www.theonlinecitizen.com/. I want the investors to have a strong heart that there is still a good chance to win this battle.
http://theonlinecitizen.com/2008/10/loss-of-hard-earned-savings/#comments
Independent financial advisers are not able to compensate investors
Dear Mr Tan,
I am an independent financial adviser rep who was spared the ordeal of this Minibond saga as my firm was unable to market structured products.
As a bystander, I commend for your effort in standing out for the individual retail investors who would otherwise be taken advantage by big financial organisations.
I am indeed impressed by your dedication in this whole entire episode, esp on how the statement to financial institution should be written. It was simple and comprehensive to most
adults.
While I have no doubts that any act of mis-selling should be punished and appropriate compensation should be made to retail investors. I think some of my industry players in the IFA industry may have to file for bankruptcy if they have to compensate their clients.
As you may not be aware, most of them are not very profitable and in this current environment when revenues are decreasing and rental costs are hiking, this minibond saga has put them into bigger trouble. Unlike the banks with deep pockets, most IFA firms have little capital to withstand this crisis.
On the individual adviser representative level, what's worse is that as each financial adviser representative is individually licensed, that individual is also liable for any compensation and unable to hide under any corporate veil. I am not sure if professional indemnity insurance could be used in this case. If not, the impact would be equally catastrophic.
These individual advisers became insurance companies to their clients just like the investors who invested in the minibonds.
I am not against your actions and in fact very impressed with it. But I just feel that some of the casualties in this crisis were actually ppl who actually wanted to do a better job than the banks by providing independent and objective advice. But they were caught in this mess. I sincerely hope that they can survive this ordeal and become stronger.
You can quote my reply in your blog but please do not quote my name as I do not want to be seen as gloating over my competitors. I want to remain sensitive in this current environment. There is no need for me to make enemies. Everyone is only trying to make a living.
Regards.
REPLY
I believe that the professional indemnity insurance covers negligence. If the representative was negligent (and not fraudalent), it should be covered by the insurance. The firm should also be protected by insurance.
However, if they were fraudalent (i.e. they knew the risk but deliberately misrepresented them), then the cannot expect to be compensated by the professional indemnity insurance.
I am an independent financial adviser rep who was spared the ordeal of this Minibond saga as my firm was unable to market structured products.
As a bystander, I commend for your effort in standing out for the individual retail investors who would otherwise be taken advantage by big financial organisations.
I am indeed impressed by your dedication in this whole entire episode, esp on how the statement to financial institution should be written. It was simple and comprehensive to most
adults.
While I have no doubts that any act of mis-selling should be punished and appropriate compensation should be made to retail investors. I think some of my industry players in the IFA industry may have to file for bankruptcy if they have to compensate their clients.
As you may not be aware, most of them are not very profitable and in this current environment when revenues are decreasing and rental costs are hiking, this minibond saga has put them into bigger trouble. Unlike the banks with deep pockets, most IFA firms have little capital to withstand this crisis.
On the individual adviser representative level, what's worse is that as each financial adviser representative is individually licensed, that individual is also liable for any compensation and unable to hide under any corporate veil. I am not sure if professional indemnity insurance could be used in this case. If not, the impact would be equally catastrophic.
These individual advisers became insurance companies to their clients just like the investors who invested in the minibonds.
I am not against your actions and in fact very impressed with it. But I just feel that some of the casualties in this crisis were actually ppl who actually wanted to do a better job than the banks by providing independent and objective advice. But they were caught in this mess. I sincerely hope that they can survive this ordeal and become stronger.
You can quote my reply in your blog but please do not quote my name as I do not want to be seen as gloating over my competitors. I want to remain sensitive in this current environment. There is no need for me to make enemies. Everyone is only trying to make a living.
Regards.
REPLY
I believe that the professional indemnity insurance covers negligence. If the representative was negligent (and not fraudalent), it should be covered by the insurance. The firm should also be protected by insurance.
However, if they were fraudalent (i.e. they knew the risk but deliberately misrepresented them), then the cannot expect to be compensated by the professional indemnity insurance.
Investors should not be compensated
Dear Mr. Tan Kin Lian
I would have never drive in a F1 vehicle unless I make sure that I am thoroughly trained in the mechanics and the operation of the specialized automobile.
I wouldn't dare to tread into a dense forestry unless I am well equipped with navigational tools and go though training in advanced topographical skills.
I wouldn't also dare to swim in the deep sea, choppy waters unless I am well sheltered within a shark cage.
Why would any one in the first place, invest in a financial instrument when they have no idea of the underlying principles and functionality of the product?
I can probably think of one word, however harsh it may be - greed. The greed of potential high returns, and indeed this greed has returned to haunt those who have no idea what they were buying in the first place.
Never mind what the bankers says, never mind if there were any misrepresentations, I wouldn't even place a cent of my hard earned money (and I shudder to think of those retirees who placed in their entire life savings) into something that I do not understand.
Please do not get me wrong. My eyes wept for those whom I read in the newspapers who have lost a huge chunk of their life savings into the Minibonds, DBS high notes series etc. They have worked hard to save their money and its almost gone following the collapse of financial institutions in the United States. Some of them, though hard they may slog for the rest of their lives, will not see this kind of money, again.
While I feel nothing but pity for these poor souls, is it fair to ask the rest of us who did not invest, to support this petition and ask DBS, whom all Singaporeans have a stake in, to compensate the investors? I ask in reverse that if the US financial institutions did not fail, the sun shining brightly as ever - when these minibonds investors collect their quarterly payouts and high returns, how will it benefit the rest of us?
While our views may differ, I applaud your efforts in raising the awareness of mis-selling that are so rampantly found in our banks, and providing a voice for Singaporeans when it matters.
My views as a man on the street
Simon Chan
REPLY
Dear Simon Chan
I suggest that you read the views of the investors expressecd in:
www.tankinlian.blogspot.com
www.theonlinecitizen.com
I also suggest that you attend my meetings in Speakers' Corner, Hong Lim Green, on Saturdays 5 to 7 pm.
Can you tell me your age? and occupation?
I would have never drive in a F1 vehicle unless I make sure that I am thoroughly trained in the mechanics and the operation of the specialized automobile.
I wouldn't dare to tread into a dense forestry unless I am well equipped with navigational tools and go though training in advanced topographical skills.
I wouldn't also dare to swim in the deep sea, choppy waters unless I am well sheltered within a shark cage.
Why would any one in the first place, invest in a financial instrument when they have no idea of the underlying principles and functionality of the product?
I can probably think of one word, however harsh it may be - greed. The greed of potential high returns, and indeed this greed has returned to haunt those who have no idea what they were buying in the first place.
Never mind what the bankers says, never mind if there were any misrepresentations, I wouldn't even place a cent of my hard earned money (and I shudder to think of those retirees who placed in their entire life savings) into something that I do not understand.
Please do not get me wrong. My eyes wept for those whom I read in the newspapers who have lost a huge chunk of their life savings into the Minibonds, DBS high notes series etc. They have worked hard to save their money and its almost gone following the collapse of financial institutions in the United States. Some of them, though hard they may slog for the rest of their lives, will not see this kind of money, again.
While I feel nothing but pity for these poor souls, is it fair to ask the rest of us who did not invest, to support this petition and ask DBS, whom all Singaporeans have a stake in, to compensate the investors? I ask in reverse that if the US financial institutions did not fail, the sun shining brightly as ever - when these minibonds investors collect their quarterly payouts and high returns, how will it benefit the rest of us?
While our views may differ, I applaud your efforts in raising the awareness of mis-selling that are so rampantly found in our banks, and providing a voice for Singaporeans when it matters.
My views as a man on the street
Simon Chan
REPLY
Dear Simon Chan
I suggest that you read the views of the investors expressecd in:
www.tankinlian.blogspot.com
www.theonlinecitizen.com
I also suggest that you attend my meetings in Speakers' Corner, Hong Lim Green, on Saturdays 5 to 7 pm.
Can you tell me your age? and occupation?
Do you hear the people sing
Here is my favourite song from Les Miserables. The title is "Do you hear the people sing".
Ths song is sung to reflect the frustration of the poor people of France, who are angry at the authority for not taking care of their poor condition. It is a stirring song.
http://www.youtube.com/watch?v=1VR1bOha40U
Here is the lyrics:
Chorus:
Do you hear the people sing?
Singing a song of angry men?
It is the music of a people
Who will not be slaves again!
When the beating of your heart
Echoes the beating of the drums
There is a life about to start
When tomorrow comes!
Will you join in our crusade?
Who will be strong and stand with me?
Beyond the barricade
Is there a world you long to see?
Then join in the fight
That will give you the right to be free!
Chorus:
Will you give all you can give
So that our banner may advance
Some will fall and some will live
Will you stand up and take your chance?
The blood of the martyrs
Will water the meadows of France!
Chorus:
Can someone change these words to reflect the frustration and anger of the investors of the structured products. Please send to me at kinlian@gmail.com. See Comments for the reworded versions.
Ths song is sung to reflect the frustration of the poor people of France, who are angry at the authority for not taking care of their poor condition. It is a stirring song.
http://www.youtube.com/watch?v=1VR1bOha40U
Here is the lyrics:
Chorus:
Do you hear the people sing?
Singing a song of angry men?
It is the music of a people
Who will not be slaves again!
When the beating of your heart
Echoes the beating of the drums
There is a life about to start
When tomorrow comes!
Will you join in our crusade?
Who will be strong and stand with me?
Beyond the barricade
Is there a world you long to see?
Then join in the fight
That will give you the right to be free!
Chorus:
Will you give all you can give
So that our banner may advance
Some will fall and some will live
Will you stand up and take your chance?
The blood of the martyrs
Will water the meadows of France!
Chorus:
Can someone change these words to reflect the frustration and anger of the investors of the structured products. Please send to me at kinlian@gmail.com. See Comments for the reworded versions.
Monday, October 20, 2008
Exploitation of the consumer
Mr. Tan,
I was a financial adviser. I was simply stating that your motive as interpreted by me that it is more for a positive publicity for your own political ambitions if any. It is hard for me to comprehend that a person on the sideline (as you had declared that you are not invested) would stake your time, reputation and efforts on an issue which is nothing more than a manifestation of the risk in investment.
REPLY
Being a financial adviser used to earning a high commission by selling poor value products to consumers, it is naturally difficult for you to understand that there are people who are willing to spend time to fight against this type of exploitation of the consumers who trusted you.
I was a financial adviser. I was simply stating that your motive as interpreted by me that it is more for a positive publicity for your own political ambitions if any. It is hard for me to comprehend that a person on the sideline (as you had declared that you are not invested) would stake your time, reputation and efforts on an issue which is nothing more than a manifestation of the risk in investment.
REPLY
Being a financial adviser used to earning a high commission by selling poor value products to consumers, it is naturally difficult for you to understand that there are people who are willing to spend time to fight against this type of exploitation of the consumers who trusted you.
Views from an ex-private banker
Dear Mr. Tan
I read with interest your good work to investors on the recent debacle. I have more than 15 years experience in investment and private banking, I have quit this line as I was disillusioned with the wealth management industry.
Not only at retail level, even private banks are mis-selling products, putting bank's interest above clients interest. At the start of the credit crisis, I had foreseen the seriousness of the US credit issue, and gave a recommendation that clients sells all their money market funds. My rationale is that its no point earning additional 10-20 basis point but exposing themselves to underlying commercial papers that may default.
I was badly rapped for this recommendation, for the fact that this is not to the interest of the bank. All I could argue was that I was doing for clients' interest, but of course you can expect management's answer to me. A few months later, the US money market fund "break the buck".
Many products are mis-sold. Right from the start, these minibonds/dbs high note products are positioned wrongly - how can a credit link note be deemed as an alternative to deposit.
Is a bond the same as deposit, be it corporate or govt? Everyone knows the answer is no. Bond investor take the risk of the bond issuer, risk on default of that single name.
In this case, these products are linked to 5 credit name, which is even higher risk than straight bonds. If its higher risk than a straight bond, then why is it sold as an alternative to deposit?
Banks position these products wrongly, taught their RMs to speak the marketing story wrongly and ended up, of course, selling it to the wrong group of clients and the wrong risk profile.
Credit link notes, bonds, structured deposits, equity link notes, capital guarantee/capital protected notes, they are all not the same as deposit.
Even if Lehman's default is almost impossible at the point in time, this kind of products could never been sold as a deposit alternative. Just like a bond can never be sold as deposit.
And not just at retail level, even at the so-called more sophisticated Private Banks, the same mistakes are being made. Its time for a overhaul in banking practice and compensation scheme, may this be the last and most bitter lesson to banks
I wish to remain anonymous as I still have many friends in private banking. But being an insider, I feel for clients and investors.
regards
I read with interest your good work to investors on the recent debacle. I have more than 15 years experience in investment and private banking, I have quit this line as I was disillusioned with the wealth management industry.
Not only at retail level, even private banks are mis-selling products, putting bank's interest above clients interest. At the start of the credit crisis, I had foreseen the seriousness of the US credit issue, and gave a recommendation that clients sells all their money market funds. My rationale is that its no point earning additional 10-20 basis point but exposing themselves to underlying commercial papers that may default.
I was badly rapped for this recommendation, for the fact that this is not to the interest of the bank. All I could argue was that I was doing for clients' interest, but of course you can expect management's answer to me. A few months later, the US money market fund "break the buck".
Many products are mis-sold. Right from the start, these minibonds/dbs high note products are positioned wrongly - how can a credit link note be deemed as an alternative to deposit.
Is a bond the same as deposit, be it corporate or govt? Everyone knows the answer is no. Bond investor take the risk of the bond issuer, risk on default of that single name.
In this case, these products are linked to 5 credit name, which is even higher risk than straight bonds. If its higher risk than a straight bond, then why is it sold as an alternative to deposit?
Banks position these products wrongly, taught their RMs to speak the marketing story wrongly and ended up, of course, selling it to the wrong group of clients and the wrong risk profile.
Credit link notes, bonds, structured deposits, equity link notes, capital guarantee/capital protected notes, they are all not the same as deposit.
Even if Lehman's default is almost impossible at the point in time, this kind of products could never been sold as a deposit alternative. Just like a bond can never be sold as deposit.
And not just at retail level, even at the so-called more sophisticated Private Banks, the same mistakes are being made. Its time for a overhaul in banking practice and compensation scheme, may this be the last and most bitter lesson to banks
I wish to remain anonymous as I still have many friends in private banking. But being an insider, I feel for clients and investors.
regards
Interview at Bloomberg TV
I will be interviewed live at Bloomberg TV at 9.30 am on Tuesday 21 October. I shall be careful, polite and frank.
Continue your good work for ordinary citizens
Hi Mr Tan,
Just dropping you a note to tell you that I have been touched by your efforts so far, although I have not been a victim of the minibond mess. I felt it is really important that you see this through.
1) Your words and action carry more weight than mere civic citizens/anon bloggers like us - I think you have lived by your conscience quite unlike most of the establishment.
2) None of our MPs had actually spoken out in support of the people who lost their retirement savings - when most people believe that there are predatory selling and mis-representation on part of the banks RMs.
3) MAS, like most govt agencies, have actually distanced themselves and tried to outsource the work to a "independent 3rd party".
I hope my little note can provide you some encouragement to continue your good work for ordinary citizens like us.
YTP
Just dropping you a note to tell you that I have been touched by your efforts so far, although I have not been a victim of the minibond mess. I felt it is really important that you see this through.
1) Your words and action carry more weight than mere civic citizens/anon bloggers like us - I think you have lived by your conscience quite unlike most of the establishment.
2) None of our MPs had actually spoken out in support of the people who lost their retirement savings - when most people believe that there are predatory selling and mis-representation on part of the banks RMs.
3) MAS, like most govt agencies, have actually distanced themselves and tried to outsource the work to a "independent 3rd party".
I hope my little note can provide you some encouragement to continue your good work for ordinary citizens like us.
YTP
HKMA refers Lehman-Brothers-related cases to the SFC
This is the press release by Hong Kong Monetary Authority, October 20, 2008
The Hong Kong Monetary Authority (HKMA) has today (Friday) referred to the Securities and Futures Commission (SFC) 24 cases involving complaints of alleged misconduct in respect of investment products related to Lehman Brothers for further action. The 24 cases, which are the first batch of Lehman-Brothers-related cases referred in this way, involve alleged mis-selling by two licensed banks in Hong Kong.
A HKMA spokesperson said that the cases had been reviewed by the HKMA, which had determined that there were sufficient grounds for referring them to the SFC in accordance with the mechanism established under the Securities and Futures Ordinance and the Memorandum of Understanding between the HKMA and the SFC. "The HKMA is satisfied that there are adequate justifications for referring them immediately to the SFC, which is the authority ultimately responsible for deciding whether a bank has been guilty of misconduct," the spokesperson said. "The SFC will review the evidence and will consult with the HKMA in determining what sanction, if any, is to be imposed," the spokesperson added. Sanctions that the SFC may impose on a bank include suspension or revocation of registration, reprimands, fines or prohibition orders.
The spokesperson said that the HKMA had, up to 16 October 2008, received 12,091 complaints concerning Lehman-Brothers-related products. Apart from the 24 cases referred to the SFC today, the HKMA had formally opened investigations on a further 95 complaints and was currently seeking further information on 783 complaints. A further 21 complaints had been found to lack sufficient prima facie evidence to support further action (A table summarising the complaints received so far is attached).
"The HKMA will continue to work on the large number of complaints that still remain to be assessed as quickly as possible in a systematic and objective way, using the considerable staff resources it has mobilised and in accordance with its powers under relevant legislation," the spokesperson said.
The Hong Kong Monetary Authority (HKMA) has today (Friday) referred to the Securities and Futures Commission (SFC) 24 cases involving complaints of alleged misconduct in respect of investment products related to Lehman Brothers for further action. The 24 cases, which are the first batch of Lehman-Brothers-related cases referred in this way, involve alleged mis-selling by two licensed banks in Hong Kong.
A HKMA spokesperson said that the cases had been reviewed by the HKMA, which had determined that there were sufficient grounds for referring them to the SFC in accordance with the mechanism established under the Securities and Futures Ordinance and the Memorandum of Understanding between the HKMA and the SFC. "The HKMA is satisfied that there are adequate justifications for referring them immediately to the SFC, which is the authority ultimately responsible for deciding whether a bank has been guilty of misconduct," the spokesperson said. "The SFC will review the evidence and will consult with the HKMA in determining what sanction, if any, is to be imposed," the spokesperson added. Sanctions that the SFC may impose on a bank include suspension or revocation of registration, reprimands, fines or prohibition orders.
The spokesperson said that the HKMA had, up to 16 October 2008, received 12,091 complaints concerning Lehman-Brothers-related products. Apart from the 24 cases referred to the SFC today, the HKMA had formally opened investigations on a further 95 complaints and was currently seeking further information on 783 complaints. A further 21 complaints had been found to lack sufficient prima facie evidence to support further action (A table summarising the complaints received so far is attached).
"The HKMA will continue to work on the large number of complaints that still remain to be assessed as quickly as possible in a systematic and objective way, using the considerable staff resources it has mobilised and in accordance with its powers under relevant legislation," the spokesperson said.
Positive or negative?
Which group do you belong to?
Group 1- Positive
I wish to thank you for your tireless efforts in helping the investors to voice their anguish. Although, I am not optimistic about recovering my savings, given the lack of support from the authority, I nevertheless appreciate what you and your team is doing. Regardles of the outcome, you have my deepest appreciation.
Group 2 - Negative
You advised us to recover the investment from the financial institution. In my opinion, its a not a useful way to do it. It will only sapped our energy and hope and once we make a mistake, we can end up in jail for defamation or for lying. You said be truthful, so be truthful. Please do not give false hope! There is nothing we can do.
Which group do you belong to?
Group 1- Positive
I wish to thank you for your tireless efforts in helping the investors to voice their anguish. Although, I am not optimistic about recovering my savings, given the lack of support from the authority, I nevertheless appreciate what you and your team is doing. Regardles of the outcome, you have my deepest appreciation.
Group 2 - Negative
You advised us to recover the investment from the financial institution. In my opinion, its a not a useful way to do it. It will only sapped our energy and hope and once we make a mistake, we can end up in jail for defamation or for lying. You said be truthful, so be truthful. Please do not give false hope! There is nothing we can do.
Which group do you belong to?
Petition #3 (To Mrs Lim Hwee Hua)
This Petition has been sent to Mr. Albert Tan to forward to Mrs. Lim Hwee Hua. It contains 127 signatures (collected within 12 hours).
20 October 2008
PETITION
Mrs. Lim Hwee Hua
Senior Minister of State
Ministry of Finance
Dear Mrs. Lim,
Give Fair and Equal Treatment to All Buyers
As you are aware, a large number of us investors have been wrongly led to part with our life long savings for structured products eg Minibond, High Note and others which are not suitable for our class of investors. By the standard of professional investment managers, not more than 10% of a person's saving should be invested in high risk products.
In this saga, banks have persuaded most investors to part with a large part, if not all, of their life savings. The true nature of their products covered up by diverting attention to reference entities of large reputable banks when infact such products viability is hinged on swapped CDOs (collatoral debt obligations) details for which are not allowed to be released even after a default has happened.
How can banks be allowed to sell financial products without revealing the specifications of the underlying securities? How can they be allowed to refuse investors from knowing the true underlying securities even after the product has failed? It is more than a "mis-representation". It is a deliberate attempt to fool even the most savy investor including possibly MAS as otherwise MAS would not have registered the products. How can a structured product be called a bond? The word "Minibond" itself is inappropriate.
Now MAS has openly stated that those above 55 years and non-English speaking gets priority in compensation. The FIs will jump onto this and interprete it to mean something akin to modern day Robin Hood: take from A and pay to B. Those outside the "favored category" will suffer a double injustice.
Mrs. Lim, on our behalf, please advise MAS to re-state their position to ensure that the FIs grant fair and equal compensation to all the buyers of these toxic products irrespective of age or education level. Education only becomes a factor if language is the problem. In this case, even a university graduate will not be able to discover the true nature of the products.
Sincerely,
(Particulars of 127 signatories)
UPDATE
The Petition is drafted by Albert Tan. He will organise a group of signatories to meet with Mrs Kim Hwee Hua. If you are willing to join him, please send an email to him at tan4tell@yahoo.com.
20 October 2008
PETITION
Mrs. Lim Hwee Hua
Senior Minister of State
Ministry of Finance
Dear Mrs. Lim,
Give Fair and Equal Treatment to All Buyers
As you are aware, a large number of us investors have been wrongly led to part with our life long savings for structured products eg Minibond, High Note and others which are not suitable for our class of investors. By the standard of professional investment managers, not more than 10% of a person's saving should be invested in high risk products.
In this saga, banks have persuaded most investors to part with a large part, if not all, of their life savings. The true nature of their products covered up by diverting attention to reference entities of large reputable banks when infact such products viability is hinged on swapped CDOs (collatoral debt obligations) details for which are not allowed to be released even after a default has happened.
How can banks be allowed to sell financial products without revealing the specifications of the underlying securities? How can they be allowed to refuse investors from knowing the true underlying securities even after the product has failed? It is more than a "mis-representation". It is a deliberate attempt to fool even the most savy investor including possibly MAS as otherwise MAS would not have registered the products. How can a structured product be called a bond? The word "Minibond" itself is inappropriate.
Now MAS has openly stated that those above 55 years and non-English speaking gets priority in compensation. The FIs will jump onto this and interprete it to mean something akin to modern day Robin Hood: take from A and pay to B. Those outside the "favored category" will suffer a double injustice.
Mrs. Lim, on our behalf, please advise MAS to re-state their position to ensure that the FIs grant fair and equal compensation to all the buyers of these toxic products irrespective of age or education level. Education only becomes a factor if language is the problem. In this case, even a university graduate will not be able to discover the true nature of the products.
Sincerely,
(Particulars of 127 signatories)
UPDATE
The Petition is drafted by Albert Tan. He will organise a group of signatories to meet with Mrs Kim Hwee Hua. If you are willing to join him, please send an email to him at tan4tell@yahoo.com.
Fraudalent misrepresentation and clear mis-selling
Extrcted from:
http://comment.straitstimes.com/showthread.php?t=14234&page=3
I am a medical doctor and have been a specialist cardiologist for 18 years. As an educated, mature and risk adverse investor, I purchased $130,000 of Lehman Brother’s Minibond Series 5 from Maybank Singapore last year.
Events over the last few weeks have shown that there has been fraudulent misrepresentation and clear mis-selling of the Minibond for the following reasons:
1) The product is not at all a bond, but calling it a Minibond, marketing it as a low risk product and offering a modest return of 5% yearly was clearly intended to mislead the purchaser into thinking that it ranks as a bond in default risk.
2) By associating the product with 5 well known banks, by highlighting the good credit ratings of these banks and by linking the default of the product with a default of any of these banks, the purchaser is made to believe that the bonds are instruments supported by these banks. In fact, the banks have nothing to do with the Minibond which is created solely for the profit of Lehman Brothers and its agent Maybank Singapore.
3) By constantly referring to the ratings of the reference banks, the impression is given that the Minibond is of similar low risk and high grade, with holders protected as would any holder of bonds issued by these banks. It is only now apparent that the Minibond is an unrated structured product; purchasers are NOT holders of bonds issued by these reference banks, and are not even considered to be holders of bonds issued by Lehman Brothers.
4) The impression is given that funds invested in the Minibond will be used to purchase high quality securities that could easily be sold to safely redeem its value if the need arises. In actual fact, even the officers of Maybank do not know what the underlying securities are and an article in the Sunday Times of 19th October reported that the value of the securities in Minibond 5 have been determined to be zero.
I write in the hope that the Monetary Authority of Singapore will take the necessary action to ensure that those dishonestly misrepresenting financial products face the consequences of their action. It is in the long term interest of Singapore as a trusted financial centre that those who behave like unscrupulous traders, mis-selling and cheating purchasers be made to fully face the music. Thank You.
Yours Sincerely,
Dr Ong Hean Teik
20th October 2008
http://comment.straitstimes.com/showthread.php?t=14234&page=3
I am a medical doctor and have been a specialist cardiologist for 18 years. As an educated, mature and risk adverse investor, I purchased $130,000 of Lehman Brother’s Minibond Series 5 from Maybank Singapore last year.
Events over the last few weeks have shown that there has been fraudulent misrepresentation and clear mis-selling of the Minibond for the following reasons:
1) The product is not at all a bond, but calling it a Minibond, marketing it as a low risk product and offering a modest return of 5% yearly was clearly intended to mislead the purchaser into thinking that it ranks as a bond in default risk.
2) By associating the product with 5 well known banks, by highlighting the good credit ratings of these banks and by linking the default of the product with a default of any of these banks, the purchaser is made to believe that the bonds are instruments supported by these banks. In fact, the banks have nothing to do with the Minibond which is created solely for the profit of Lehman Brothers and its agent Maybank Singapore.
3) By constantly referring to the ratings of the reference banks, the impression is given that the Minibond is of similar low risk and high grade, with holders protected as would any holder of bonds issued by these banks. It is only now apparent that the Minibond is an unrated structured product; purchasers are NOT holders of bonds issued by these reference banks, and are not even considered to be holders of bonds issued by Lehman Brothers.
4) The impression is given that funds invested in the Minibond will be used to purchase high quality securities that could easily be sold to safely redeem its value if the need arises. In actual fact, even the officers of Maybank do not know what the underlying securities are and an article in the Sunday Times of 19th October reported that the value of the securities in Minibond 5 have been determined to be zero.
I write in the hope that the Monetary Authority of Singapore will take the necessary action to ensure that those dishonestly misrepresenting financial products face the consequences of their action. It is in the long term interest of Singapore as a trusted financial centre that those who behave like unscrupulous traders, mis-selling and cheating purchasers be made to fully face the music. Thank You.
Yours Sincerely,
Dr Ong Hean Teik
20th October 2008
Be careful of your relationship manager
Here are a few frightening stories ....
1. A customer deposited $800,000 into a fixed deposit. He was not aware that the relationship manager placed it in a leverage account which caused a loss of $400,000. The customer was asked to top up the account. The customer is making a Police report. Details are also given to a journalist.
2. Two weeks ago, someone sent an e-mail to me. Her mother lost the entire sum of $500,000 in a dual currency investment. She does not know how it happened. I asked her to get the bank to send a statement to her. I have not heard from her yet. My guess is that the money went into a leveraged account. It is probably leveraged 3 times or more. A 30% drop in the currency, with this type of leverage, could wipe out the entire deposit.
3. A neighbour's relative saw me last night. He was advised by the relationship manager to invest SGD $250,000 in Lehman Brother bonds in April 2008 to earn 4.2%. The bonds are now worthless. Previously, the same RM advised him to invest in a bond, which turned out to be a hedge fund. He has liquidated the investment at a big loss.
I wish to send this message to warn bank customers about the relationship managers. It seems that they have to meet high sales quota and are recommeding risky financial products to their customers, without giving proper advice. As there are so many cases of dishonest acts, we now have to worry about the integrity of the financial institutions and the relationship managers.
If you are a victim, you must lodge a Police report for dishonesty and also a complaint against the relationship manager. We have to act to clean up these dishonesty.
1. A customer deposited $800,000 into a fixed deposit. He was not aware that the relationship manager placed it in a leverage account which caused a loss of $400,000. The customer was asked to top up the account. The customer is making a Police report. Details are also given to a journalist.
2. Two weeks ago, someone sent an e-mail to me. Her mother lost the entire sum of $500,000 in a dual currency investment. She does not know how it happened. I asked her to get the bank to send a statement to her. I have not heard from her yet. My guess is that the money went into a leveraged account. It is probably leveraged 3 times or more. A 30% drop in the currency, with this type of leverage, could wipe out the entire deposit.
3. A neighbour's relative saw me last night. He was advised by the relationship manager to invest SGD $250,000 in Lehman Brother bonds in April 2008 to earn 4.2%. The bonds are now worthless. Previously, the same RM advised him to invest in a bond, which turned out to be a hedge fund. He has liquidated the investment at a big loss.
I wish to send this message to warn bank customers about the relationship managers. It seems that they have to meet high sales quota and are recommeding risky financial products to their customers, without giving proper advice. As there are so many cases of dishonest acts, we now have to worry about the integrity of the financial institutions and the relationship managers.
If you are a victim, you must lodge a Police report for dishonesty and also a complaint against the relationship manager. We have to act to clean up these dishonesty.
Tips from an ex-financial adviser
Dear Mr. Tan,
I used to work as an independent Financial Advisor. I wish to share my views on Insurance and Investment. I have now left the industry.
Protection Coverage
1) I believe that a person should buy some limited life insurance coverage for $100 k.
2) The rest should be based on group term insurance.
3) I was being taught the cover for critical illness, disability and death should be 10 times of your annual income, or at least $ 400k.
Investment
1) I believe that the best kind of investment is still unit trust, which allows good diversification. It is best to buy through an online portal and to avoid any financial advisor, thus saving on the commission.
3) It is better to have a regular saving plan and cost averaging.
M
I used to work as an independent Financial Advisor. I wish to share my views on Insurance and Investment. I have now left the industry.
Protection Coverage
1) I believe that a person should buy some limited life insurance coverage for $100 k.
2) The rest should be based on group term insurance.
3) I was being taught the cover for critical illness, disability and death should be 10 times of your annual income, or at least $ 400k.
Investment
1) I believe that the best kind of investment is still unit trust, which allows good diversification. It is best to buy through an online portal and to avoid any financial advisor, thus saving on the commission.
3) It is better to have a regular saving plan and cost averaging.
M
Be truthful, not fearful
Comment posted in my blog
I don't see anything untoward with Dr Balakrishnan's comment/opinion to The Online Citizen. (Mr Tan) argues for a calm, accountable and high-trust environment in Singapore. Nothing wrong with that. In fact, if you think about it, these are the exact attributes that should help us seek redress in our case with the banks. If the FIs are made to be accountable for their ill-advised sales technique/process, isn't that we want?
Mr Tan is providing valuable leadership in this matter when all of us seem to be headless chickens running from pillar to post over our predicament. So, I am thankful for what he is doing and especially so when I understand he has no personal funds at stake since he has not invested in these toxic products.
Mr Tan's friend who advised him comes from the political arena, and so I can understand why he said to be careful. However, IMO the situation is not exactly translatable here - our investments are commercial transactions, between banks and customers. Singapore's very economic lifeblood depends on similar transactions each and every day.
There has now been allegations of mis-selling and mis-representations on the part of the banks. As long as we keep our demands for remedial actions, whether individually or collectively at an apolitical level, why should there be anything to fear?
If you were robbed on the street one dark night, do you fear to report to the police. The robber should be the one who should be fearful, not you!
We are the aggrieved parties in the current situation. Like Mr Tan said on Saturday, just state our own case honestly and in a straightforward manner. There is no need to politicise the situation. Neither is there a necessity to fling untruths and half-truths about - it may help you to rant and beat your chest, but why run the risk of legal action.
The important thing is, when the need arises, we must speak up. The simple inescapable fact is that if we do not, then we cannot complain that the remedies we sought are not given us.
Betsybug
I don't see anything untoward with Dr Balakrishnan's comment/opinion to The Online Citizen. (Mr Tan) argues for a calm, accountable and high-trust environment in Singapore. Nothing wrong with that. In fact, if you think about it, these are the exact attributes that should help us seek redress in our case with the banks. If the FIs are made to be accountable for their ill-advised sales technique/process, isn't that we want?
Mr Tan is providing valuable leadership in this matter when all of us seem to be headless chickens running from pillar to post over our predicament. So, I am thankful for what he is doing and especially so when I understand he has no personal funds at stake since he has not invested in these toxic products.
Mr Tan's friend who advised him comes from the political arena, and so I can understand why he said to be careful. However, IMO the situation is not exactly translatable here - our investments are commercial transactions, between banks and customers. Singapore's very economic lifeblood depends on similar transactions each and every day.
There has now been allegations of mis-selling and mis-representations on the part of the banks. As long as we keep our demands for remedial actions, whether individually or collectively at an apolitical level, why should there be anything to fear?
If you were robbed on the street one dark night, do you fear to report to the police. The robber should be the one who should be fearful, not you!
We are the aggrieved parties in the current situation. Like Mr Tan said on Saturday, just state our own case honestly and in a straightforward manner. There is no need to politicise the situation. Neither is there a necessity to fling untruths and half-truths about - it may help you to rant and beat your chest, but why run the risk of legal action.
The important thing is, when the need arises, we must speak up. The simple inescapable fact is that if we do not, then we cannot complain that the remedies we sought are not given us.
Betsybug
Sunday, October 19, 2008
Petition #3 - Fair and equal compensation to all buyers
This Petiton is authored by Albert Tan (tan4tell@yahoo.com). It is addressed to Mrs. Lim Hwee Hua and ask her to get MAS to give fair and equal compensation to be given to all investors, regardless of age and language.
If you agree, please sign the Petition urgently, to be presented to Mrs. Lim for the Parliamentary debate this week.
http://www.petitiononline.com/FECTAB1/petition.html
If you agree, please sign the Petition urgently, to be presented to Mrs. Lim for the Parliamentary debate this week.
http://www.petitiononline.com/FECTAB1/petition.html
Onus of proof
An investor spoke to me at Speaker's Corner last night. He said that under the "Insider Trading Act", the onus of proof is now required for the accused to prove his innocence. (Note: I am not clear if this is actually the legal situation. I hope that a legal expert can confirm the situation).
He suggested that the same approach should be adopted for the mis-representation. It is clear that the credit linked notes are not suitable for the risk averse investors. He suggested that the financial insitution should be required to produce the evidence, from their records, that they have carried out the proper assessment. The financial insitution and/or its representatives cannot rely on the signed forms and disclaimers to justify their action.
I wonder if this approach can be adopted by MAS? It will help many of the vulnerable investors from the difficult task of lodging their complaint.
He suggested that the same approach should be adopted for the mis-representation. It is clear that the credit linked notes are not suitable for the risk averse investors. He suggested that the financial insitution should be required to produce the evidence, from their records, that they have carried out the proper assessment. The financial insitution and/or its representatives cannot rely on the signed forms and disclaimers to justify their action.
I wonder if this approach can be adopted by MAS? It will help many of the vulnerable investors from the difficult task of lodging their complaint.
Volunteers to write statement of claim
I wish to look for volunteers to help the investors write their statement of claim. There are a few thousand statements to be written. Some may see a lawyer, but the lawyers may not be able to cope with the volume of requests.
The statement will be based on the questions contained in section 1 of this paper:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
If you volunteer, please send your particulars (i.e. name, e-mail address, telephone number, and postal code, language) to kinlian@gmail.com. I will put your particulars for the investors to contact you. I will also arrange a briefing to the volunteers on how to write the statement.
Please come forward to help.
UPDATE
Here are the volunteers
Soh Poh Huat, davidsph@singnet.com.sg, 96826130, PD 520341, English, Hokkien
Rachel Chung, rae.chung@gmail.com, 9846 6598
Yong Shan Chie, yongcons@singnet.com.sg, 96931951, PD 128712
APPROACH YOUR MEMBER OF PARLIAMENT
A few people have suggested that y ou can approach your MP and ask for his or her help to prepare your statement. You can follow the guidelines to make sure that the relevant points are covered.
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
The statement will be based on the questions contained in section 1 of this paper:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
If you volunteer, please send your particulars (i.e. name, e-mail address, telephone number, and postal code, language) to kinlian@gmail.com. I will put your particulars for the investors to contact you. I will also arrange a briefing to the volunteers on how to write the statement.
Please come forward to help.
UPDATE
Here are the volunteers
Soh Poh Huat, davidsph@singnet.com.sg, 96826130, PD 520341, English, Hokkien
Rachel Chung, rae.chung@gmail.com, 9846 6598
Yong Shan Chie, yongcons@singnet.com.sg, 96931951, PD 128712
APPROACH YOUR MEMBER OF PARLIAMENT
A few people have suggested that y ou can approach your MP and ask for his or her help to prepare your statement. You can follow the guidelines to make sure that the relevant points are covered.
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
Jubilee Notes
Dear Mr. Tan Kin Lian
I am concerned about the lack of action or discussion about the Jubilee Notes that Merrill Lynch put together, allowed to default on the excuse that a single of the six highly regarded reference entities went broke, and left all investors with zero compensation.
Here we have a large Financial Institution that is still alive and sound, yet they seem to be getting away with doing everything wrong. They apparently sold off the instruments in question for next to nothing as there is no market at this time.
Yet, MAS seems to not even mention them, much less going after them. I would not be surprised, if the buyers of these instruments were able to sell them for good value to the US Government and pocket a handsome profit while we, the investors, get nothing.
Again, where is Singapore's regulation and supervision to ensure the good name of Singapore as a safe and well regulated Financial Hub is not placed in disrepute?
BM
REPLY
Please write to the trustee. Use this template:
http://tankinlian.blogspot.com/2008/10/jubilee-series-3-linkearner-notes.html
I am concerned about the lack of action or discussion about the Jubilee Notes that Merrill Lynch put together, allowed to default on the excuse that a single of the six highly regarded reference entities went broke, and left all investors with zero compensation.
Here we have a large Financial Institution that is still alive and sound, yet they seem to be getting away with doing everything wrong. They apparently sold off the instruments in question for next to nothing as there is no market at this time.
Yet, MAS seems to not even mention them, much less going after them. I would not be surprised, if the buyers of these instruments were able to sell them for good value to the US Government and pocket a handsome profit while we, the investors, get nothing.
Again, where is Singapore's regulation and supervision to ensure the good name of Singapore as a safe and well regulated Financial Hub is not placed in disrepute?
BM
REPLY
Please write to the trustee. Use this template:
http://tankinlian.blogspot.com/2008/10/jubilee-series-3-linkearner-notes.html
Suing for defamatory remarks
From www.theonlinecitizen.com
Even though Singapore is set to become a more open society in the future, the government is making no apologies when it comes to suing politicians for defamatory remarks, said Dr Vivian Balakrishnan, Minister for Community Development, Youth and Sports.
Speaking to the The Online Citizen (TOC) after the Kent Ridge Ministerial Forum held yesterday at the National University of Singapore (NUS), Dr Balakrishnan added that the government takes attacks on accuracy and integrity very seriously, because “establishing a high trust environment” is an advantage that gives Singapore an edge in a competitive global economy.
He said: “We don’t mind political openness, but we don’t want too much of the excitement. To the outsider, when they look at Singapore, they know that politics here is serious, it’s accurate, it’s real and accountable. It’s not a situation you get in other countries. We’re an outlier, but we are outlying because we want to keep our politics honest.”
MY COMMENT
When I announced that I would be speaking on the minibond issue at Speaker’s Corner (Hong Lim Green), a friend (who previously contested in the election under the Workers’ Party) sent an e-mail to me from Hong Kong. He advised me to be careful and not be say anything that is defamatory that could get me sued to bankrupcy.
He quoted incidences of candidates that were sued for statements that appear to be questioning something that is wrong. A few other people, including a lawyer, also warned me to “be careful”.
If I listened to their advice, I would not be saying anything. It is so dangerous to speak in Singapore. People are so fearful of saying something that can lead to being sued, even if they do not have any bad intent.
I had to look for someone to interprete my speech into Chinese. I asked many people to come forward. Some agreed first, and later declined. They cited “pressure from family members”. It was so diffiicult to get someone, even to interprete for me.
Is this the kind of society that our minister is so proud about? A society where people are fearful to speak up, in case they make a slip and get be sued till bankrupt? We should be ashamed of this sad state of affairs in Singapore.
Even though Singapore is set to become a more open society in the future, the government is making no apologies when it comes to suing politicians for defamatory remarks, said Dr Vivian Balakrishnan, Minister for Community Development, Youth and Sports.
Speaking to the The Online Citizen (TOC) after the Kent Ridge Ministerial Forum held yesterday at the National University of Singapore (NUS), Dr Balakrishnan added that the government takes attacks on accuracy and integrity very seriously, because “establishing a high trust environment” is an advantage that gives Singapore an edge in a competitive global economy.
He said: “We don’t mind political openness, but we don’t want too much of the excitement. To the outsider, when they look at Singapore, they know that politics here is serious, it’s accurate, it’s real and accountable. It’s not a situation you get in other countries. We’re an outlier, but we are outlying because we want to keep our politics honest.”
MY COMMENT
When I announced that I would be speaking on the minibond issue at Speaker’s Corner (Hong Lim Green), a friend (who previously contested in the election under the Workers’ Party) sent an e-mail to me from Hong Kong. He advised me to be careful and not be say anything that is defamatory that could get me sued to bankrupcy.
He quoted incidences of candidates that were sued for statements that appear to be questioning something that is wrong. A few other people, including a lawyer, also warned me to “be careful”.
If I listened to their advice, I would not be saying anything. It is so dangerous to speak in Singapore. People are so fearful of saying something that can lead to being sued, even if they do not have any bad intent.
I had to look for someone to interprete my speech into Chinese. I asked many people to come forward. Some agreed first, and later declined. They cited “pressure from family members”. It was so diffiicult to get someone, even to interprete for me.
Is this the kind of society that our minister is so proud about? A society where people are fearful to speak up, in case they make a slip and get be sued till bankrupt? We should be ashamed of this sad state of affairs in Singapore.
Call to MAS - investigate mass cheating
Comment posted in my blog
Now, our MAS hold a press conference when HKMA has already achieved so much and are closed to a resolution! But our MAS STILL DON"T GET IT! Our MAS still thinks that Minibonds is just mis-sold, mis-represented to the old & un-educated.
Check first before you make this assumption. If only they bothered to even take a cursory look at the Minibond fact sheets they will know that it was designed to deceive & mislead on a mass scale. I don't know if the people & bosses in MAS have even bothered to look at the Minibond fact sheets or are they still at 10,000 feet.
MAS, please ask yourselves a few questions. Why should 1,000 Singaporeans sign a petition to ask you and Commercial Affairs Department to investigate the FIs if it is only the old, uneducated who have been cheated? If we are bluffing about being cheated, why be so silly to petition the Commercial Affairs Dept to investigate? This is mass cheating not isolated cheating. I hope you get it.
Ask yourselves why are so many people in Hong Kong & Singapore protesting not just the old and uneducated? Ask yourselves, why should the banks in Hong Kong agree to buy back ALL their customers' minibonds & not just from the old and uneducated? The banks are not silly or charitable. If it is a few isolated cases, they will only compensate these few cases. Why compensate so much more? Please open your eyes & investigate properly before you say anything.
I fully sympthize with the old & uneducated being taken advantaged of by the banks. It is totally unbecoming of the banks to do such things. But the old & uneducated are not the only ones being cheated. Do not assume that the educated cannot be cheated. MAS, you are already tardy, do not further damage your reputation by jumping to the wrong conclusions so fast without proper fact finding. We have all been taught that ASSUME makes an ASS of U&ME. Please check if what you think/say is an assumption or a fact. Please don't mess up again and cause us further anguish & frustrations.
Now, our MAS hold a press conference when HKMA has already achieved so much and are closed to a resolution! But our MAS STILL DON"T GET IT! Our MAS still thinks that Minibonds is just mis-sold, mis-represented to the old & un-educated.
Check first before you make this assumption. If only they bothered to even take a cursory look at the Minibond fact sheets they will know that it was designed to deceive & mislead on a mass scale. I don't know if the people & bosses in MAS have even bothered to look at the Minibond fact sheets or are they still at 10,000 feet.
MAS, please ask yourselves a few questions. Why should 1,000 Singaporeans sign a petition to ask you and Commercial Affairs Department to investigate the FIs if it is only the old, uneducated who have been cheated? If we are bluffing about being cheated, why be so silly to petition the Commercial Affairs Dept to investigate? This is mass cheating not isolated cheating. I hope you get it.
Ask yourselves why are so many people in Hong Kong & Singapore protesting not just the old and uneducated? Ask yourselves, why should the banks in Hong Kong agree to buy back ALL their customers' minibonds & not just from the old and uneducated? The banks are not silly or charitable. If it is a few isolated cases, they will only compensate these few cases. Why compensate so much more? Please open your eyes & investigate properly before you say anything.
I fully sympthize with the old & uneducated being taken advantaged of by the banks. It is totally unbecoming of the banks to do such things. But the old & uneducated are not the only ones being cheated. Do not assume that the educated cannot be cheated. MAS, you are already tardy, do not further damage your reputation by jumping to the wrong conclusions so fast without proper fact finding. We have all been taught that ASSUME makes an ASS of U&ME. Please check if what you think/say is an assumption or a fact. Please don't mess up again and cause us further anguish & frustrations.
New list of investors sorted by distributor
I am sending out today and tomorrow, the new list of investors sorted out by distributor (i.e. bank or finance company).
I hope that leaders can come forward from each group to contact the other investors and organise meetings for the investors to get together. It is better to communicate according to the distributor, as follows:
1. To help write the statement of claim
2. To help lodge the statement with the financial institution
3. To accompany each other for the interview with the institution
4. To discuss collective legal action
Will the leaders send your particulars to me, i.e. name, e-mail address and contact number (optional). I will publish your particulars for other investors to contact you.
Investors who have not provided the name of their distributor can send an e-mail to tan_yvonne@imi.sg to update your particulars.
I hope that leaders can come forward from each group to contact the other investors and organise meetings for the investors to get together. It is better to communicate according to the distributor, as follows:
1. To help write the statement of claim
2. To help lodge the statement with the financial institution
3. To accompany each other for the interview with the institution
4. To discuss collective legal action
Will the leaders send your particulars to me, i.e. name, e-mail address and contact number (optional). I will publish your particulars for other investors to contact you.
Investors who have not provided the name of their distributor can send an e-mail to tan_yvonne@imi.sg to update your particulars.
Conscience, integrity and trust - a leader's hallmark
Comment posted in http://www.theonlinecitizen.com/
A man should be upright, not be kept upright.” - Marcus Aurelius
“The glue that holds all relationships together — including the relationship between the leader and the led is trust, and trust is based on integrity.” - Brian Tracy
“Integrity is not a 90 percent thing, not a 95 percent thing; either you have it or you don’t.” - Peter Scotese
“You must consider the bottom line, but make it integrity before profits.” - Denis Waitley
“The integrity of men is to be measured by their conduct, not by their professions.” - Junius
“I cannot and will not recant anything, for to go against conscience is neither right nor safe. Here I stand, I can do no other, so help me God. Amen.” - Martin Luther
“It is far better to be trusted and respected that it is to be liked.” - Source Unknown
““Nothing is at last sacred but the integrity of your own mind.” - Ralph Waldo Emerson
“In failing circumstances no one can be relied on to keep their integrity.” - Ralph Waldo Emerson
“Integrity simple means not violating one’s own identity.” - Erich Fromm
“Integrity is what we do, what we say, and what we say we do.” - Don Galer
“It is part of a good man to do great and noble deeds, though he risk everything.” - Plutarch
“The person who is slowest in making a promise is most faithful in its performance.” - Jean Jacques Rousseau
“A man can do only what a man can do. But if he does that each day he can sleep at night and do it again the next day.” - Albert Schweitzer
“It is his nature, not his standing, that makes the good man.” - Publilius Syrus
“Achievement is not the most important thing — Authenticity is” - Source Unknown
“The slow man with integrity will ultimately catch the swift one who has none.” - Source Unknown
“Losers make promises they often break. Winners make commitments they always keep.” - Denis Waitley
“No man should advocate a course in private that he’s ashamed to admit in public.” - George Mcgovern
A man should be upright, not be kept upright.” - Marcus Aurelius
“The glue that holds all relationships together — including the relationship between the leader and the led is trust, and trust is based on integrity.” - Brian Tracy
“Integrity is not a 90 percent thing, not a 95 percent thing; either you have it or you don’t.” - Peter Scotese
“You must consider the bottom line, but make it integrity before profits.” - Denis Waitley
“The integrity of men is to be measured by their conduct, not by their professions.” - Junius
“I cannot and will not recant anything, for to go against conscience is neither right nor safe. Here I stand, I can do no other, so help me God. Amen.” - Martin Luther
“It is far better to be trusted and respected that it is to be liked.” - Source Unknown
““Nothing is at last sacred but the integrity of your own mind.” - Ralph Waldo Emerson
“In failing circumstances no one can be relied on to keep their integrity.” - Ralph Waldo Emerson
“Integrity simple means not violating one’s own identity.” - Erich Fromm
“Integrity is what we do, what we say, and what we say we do.” - Don Galer
“It is part of a good man to do great and noble deeds, though he risk everything.” - Plutarch
“The person who is slowest in making a promise is most faithful in its performance.” - Jean Jacques Rousseau
“A man can do only what a man can do. But if he does that each day he can sleep at night and do it again the next day.” - Albert Schweitzer
“It is his nature, not his standing, that makes the good man.” - Publilius Syrus
“Achievement is not the most important thing — Authenticity is” - Source Unknown
“The slow man with integrity will ultimately catch the swift one who has none.” - Source Unknown
“Losers make promises they often break. Winners make commitments they always keep.” - Denis Waitley
“No man should advocate a course in private that he’s ashamed to admit in public.” - George Mcgovern
General advice to investors of structured products
1. Lodge your complain
The first priority is for each investor to lodge a formal complaint with the financial institution indicating how they had been misled into investing in the structured product. MAS have asked the financial institution to deal with the complaint expeditiously and not to take an “overly legalistic approach”. They also advised that is not necessary for the investor’s statement to be made under oath (i.e. no need for statutory declaration).
It is important for the investor to make a truthful statement to outline how they were misled into investing in the product. Many investors told me that they were misled by the advertisement, sales brochure, and/or assurances and explanation by the sales representative (given verbally or by e-mail).
Many investors were told, or had led to believe, in some of all of the following statements:
> That the funds are invested in the bonds of the reference entitles
> That all of the reference entitles have to fail, before we lose our entire principal
> That their principal is protected, if we keep the investment to the maturity date
I wish to give the following guidelines to prepare your statement to support your complaint with the financial institution. You must give a truthful statement, to the best of your knowledge and memory.
Your statement should cover the following points:
> Your name, NRIC, address, telephone
> How did you get involved in the investment?
> Which financial institution, branch, amount invested, date
> What happened when you purchased the investment?
> Were you alone or accompanied by another person? Who?
> What did the representative (who sold the investment to you) tell you about investment?
> Did the representative tell you about any guarantee on your investment?
> Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
> Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
> Do you have any other statements to make regarding this matter?
If you fear that the financial institution will challenge with by using the forms that you have signed (for which you were not properly briefed), you can prepare your statement under oath (i.e. statutory declaration) with the assistance of a lawyer.
You can contact Glenn Knight (Telephone Ms Ivy Goh 68999888). His fee is $120 plus GST to prepare the statutory declaration.
2. Outside of “vulnerable group”
MAS have asked the financial institutions to give priority to the vulnerable investors. These are the elderly, low educated and the first time investors. The financial institutions have agreed to take full responsibility for these vulnerable investors who have been mis-sold. The full responsibility includes compensation for part or the full amount that they have lost. This is an encouraging first step.
I wish to ask the other investors, who do not fall into the “vulnerable group” to be patient and to strong. If you have been equally misled into investing in these structured products, and it seems to be clearly the case, you have a strong case to ask for compensation. But, you have to be reasonable in your expectation and may have to accept partial compensation that is lower than the “vulnerable investors”.
You should take the first step now and lodge your complaint.
3. Structured products not connected with Lehman Brothers
If you have bought any structured product that is not connected with Lehman Brothers, you can also file a complaint now against the distributor for mis-selling, if the structured product is different from what you had been led to believe at the point of sale.
For example, if you were told that it is “like a bond” or “low risk” and it actually had credit default swaps or were invested in high risk assets (such as collateralised debt obligations), you can file a complaint now. Do not wait for any of the swaps or assets to fail.
4. Interview with the financial institution
After lodging your complaint, you will be asked by the financial institution to attend an interview. You can attend it with a family member or friend.
At the interview, you have to state the truth as contained in your statement. You should explain the circumstances in which you were sold the structured product and the assurances and explanations that you have received from the sales representative. You can explain your low risk profile and preference.
If the financial institution shows the forms that you have signed, you can reply that you were not informed about the content or that it was not explained to you or that it was written by the sales representative without your consent (if this was indeed the truth).
You should state the truth and not worry about its legal implications. Let this matter be decided by the independent person or by the higher authority. Just state the truth, to the best of your memory.
MAS have asked the financial institution to avoid taking “an overly legalistic approach).
5. Negotiate with the financial institution
The financial institution is required to give you a reply within three weeks. If they offer compensation, you can discuss with them to reach an acceptable sum.
You should consider for 50% to 80% of your invested sum, depending on your personal circumstances. (This is a rough guide only. You can decide what is best for yourself).
If they reject your complaint, you can ask them to state their reasons in writing.
6. Complaint to FiDREC
If your complaint cannot be settled directly with the financial institution, you can send it to the FiDREC (see www.fidrec.com.sg). You can visit their office and get the help of their full time officer.
FiDREC is independent of the financial institution. The officer will explain to you on how the process works.
7. Collective legal action
You can consider collective legal action if the matter is not resolved at FiDREC.
Legal action can be expensive. You should consider it only as the last resort.
If several investors are willing to take collective legal action, you can approach a lawyer and get the lawyer to brief the investors as a group. You should also find out the legal cost and how they are to be shared by the investors.
8. Contact with fellow investors
I will be putting you in contact with fellow investors who bought the structured product from the same financial institution. I will give you the name, e-mail address and contact numbers of the other investors. You can call or e-mail them. You can appoint a leader among the group to arrange meetings.
You can meet on Saturdays from 5 to 7 pm at Speaker’s Corner in Hong Lim Green. I will book the place for the next few weeks.
9. Get updates from my Blog
You can get updates from my blogs:
www.tankinlian.blogspot.com
Do not send individual e-mails to ask me on matters that can be found in my blog. I have to cope with 50 to 100 e-mails a day and cannot find the time to attend to each person individually. It is even difficult for me to read your e-mail and give a reply.
Tan Kin Lian
www.tankinlian.blogspot.com
kinlian@gmail.com
The first priority is for each investor to lodge a formal complaint with the financial institution indicating how they had been misled into investing in the structured product. MAS have asked the financial institution to deal with the complaint expeditiously and not to take an “overly legalistic approach”. They also advised that is not necessary for the investor’s statement to be made under oath (i.e. no need for statutory declaration).
It is important for the investor to make a truthful statement to outline how they were misled into investing in the product. Many investors told me that they were misled by the advertisement, sales brochure, and/or assurances and explanation by the sales representative (given verbally or by e-mail).
Many investors were told, or had led to believe, in some of all of the following statements:
> That the funds are invested in the bonds of the reference entitles
> That all of the reference entitles have to fail, before we lose our entire principal
> That their principal is protected, if we keep the investment to the maturity date
I wish to give the following guidelines to prepare your statement to support your complaint with the financial institution. You must give a truthful statement, to the best of your knowledge and memory.
Your statement should cover the following points:
> Your name, NRIC, address, telephone
> How did you get involved in the investment?
> Which financial institution, branch, amount invested, date
> What happened when you purchased the investment?
> Were you alone or accompanied by another person? Who?
> What did the representative (who sold the investment to you) tell you about investment?
> Did the representative tell you about any guarantee on your investment?
> Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
> Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
> Do you have any other statements to make regarding this matter?
If you fear that the financial institution will challenge with by using the forms that you have signed (for which you were not properly briefed), you can prepare your statement under oath (i.e. statutory declaration) with the assistance of a lawyer.
You can contact Glenn Knight (Telephone Ms Ivy Goh 68999888). His fee is $120 plus GST to prepare the statutory declaration.
2. Outside of “vulnerable group”
MAS have asked the financial institutions to give priority to the vulnerable investors. These are the elderly, low educated and the first time investors. The financial institutions have agreed to take full responsibility for these vulnerable investors who have been mis-sold. The full responsibility includes compensation for part or the full amount that they have lost. This is an encouraging first step.
I wish to ask the other investors, who do not fall into the “vulnerable group” to be patient and to strong. If you have been equally misled into investing in these structured products, and it seems to be clearly the case, you have a strong case to ask for compensation. But, you have to be reasonable in your expectation and may have to accept partial compensation that is lower than the “vulnerable investors”.
You should take the first step now and lodge your complaint.
3. Structured products not connected with Lehman Brothers
If you have bought any structured product that is not connected with Lehman Brothers, you can also file a complaint now against the distributor for mis-selling, if the structured product is different from what you had been led to believe at the point of sale.
For example, if you were told that it is “like a bond” or “low risk” and it actually had credit default swaps or were invested in high risk assets (such as collateralised debt obligations), you can file a complaint now. Do not wait for any of the swaps or assets to fail.
4. Interview with the financial institution
After lodging your complaint, you will be asked by the financial institution to attend an interview. You can attend it with a family member or friend.
At the interview, you have to state the truth as contained in your statement. You should explain the circumstances in which you were sold the structured product and the assurances and explanations that you have received from the sales representative. You can explain your low risk profile and preference.
If the financial institution shows the forms that you have signed, you can reply that you were not informed about the content or that it was not explained to you or that it was written by the sales representative without your consent (if this was indeed the truth).
You should state the truth and not worry about its legal implications. Let this matter be decided by the independent person or by the higher authority. Just state the truth, to the best of your memory.
MAS have asked the financial institution to avoid taking “an overly legalistic approach).
5. Negotiate with the financial institution
The financial institution is required to give you a reply within three weeks. If they offer compensation, you can discuss with them to reach an acceptable sum.
You should consider for 50% to 80% of your invested sum, depending on your personal circumstances. (This is a rough guide only. You can decide what is best for yourself).
If they reject your complaint, you can ask them to state their reasons in writing.
6. Complaint to FiDREC
If your complaint cannot be settled directly with the financial institution, you can send it to the FiDREC (see www.fidrec.com.sg). You can visit their office and get the help of their full time officer.
FiDREC is independent of the financial institution. The officer will explain to you on how the process works.
7. Collective legal action
You can consider collective legal action if the matter is not resolved at FiDREC.
Legal action can be expensive. You should consider it only as the last resort.
If several investors are willing to take collective legal action, you can approach a lawyer and get the lawyer to brief the investors as a group. You should also find out the legal cost and how they are to be shared by the investors.
8. Contact with fellow investors
I will be putting you in contact with fellow investors who bought the structured product from the same financial institution. I will give you the name, e-mail address and contact numbers of the other investors. You can call or e-mail them. You can appoint a leader among the group to arrange meetings.
You can meet on Saturdays from 5 to 7 pm at Speaker’s Corner in Hong Lim Green. I will book the place for the next few weeks.
9. Get updates from my Blog
You can get updates from my blogs:
www.tankinlian.blogspot.com
Do not send individual e-mails to ask me on matters that can be found in my blog. I have to cope with 50 to 100 e-mails a day and cannot find the time to attend to each person individually. It is even difficult for me to read your e-mail and give a reply.
Tan Kin Lian
www.tankinlian.blogspot.com
kinlian@gmail.com
Interview with Sunday Times
1. At what point did you decide to take action and act for the investors?
Reply: I was shocked to read in the papers about the failure of the Minibonds, High Notes and Jubilee Notes, due to the collapse of Lehman Brothers. I did not like these structured products, but but I was not aware (until the collapse) that it could be so serious. I believe that there is something seriously wrong with the creation and marketing of these products, and that there is some possible wrong doing. I decided to organise a Petition to ask the Government to investigate if there were any wrong doing. This was done about one month ago. The Petition attracted 983 signatories.
2. Why did you decide to act for them, especially since you're not a victim yourself?
Reply: I consider it to be a public duty. If I find that there is something wrong and some many people are affected so badly, it is my responsibility as a citizen to help them to find redress. Actually, this is the resonsibility of the people in the Government. Perhaps they are too busy or not aware of the seriousness of the problem. I hope to raise their awareness, so that they can come forward to use their immense resources to do what needs to be done. After that, I can take a rest.
3. What incensed you the most about this whole saga?
Reply: Occasionally, I get angry. Most of the time, I am quite calm, in spite of the tremendous pressures that I faced in dealing with many distressed investors asking desperately for help.
I am angry that these structured products were allowed to be marketed to retail investors and that they were pushed by the financial institutions who has the responsibility to make the appropriate recommendation to the retail investors. I am angry that, even now, these parties are still not coming forward to do "the right thing". They are adding to the distress of the investors.
I appeal to them to act:
http://tankinlian.blogspot.com/2008/10/act-honourably.html
4. Do you personally know anyone who has bought these failed products?
Reply: I get to know many, many people who have bought these failed products, after the Petition was launched. They told some many heart rending stories to me. I passed their particulars (with their consent) to many journalists from the various mainstream papers, to interview them.
5. Many have hailed you as a hero in this saga. What are your thoughts on that?
Reply: I understand from history that many heroes died in the battle. I hope that I can survive and live to an older age.
6. What is the most heart rending story you've heard from any of the investors?
Reply: There are too many stories that fit into this category. I do not wish to degrade any of them, by singling out one story.
7. How do you think MAS has dealt with this crisis? Are you satisfied with what they've done?
Reply: I do not wish to pass any judgement on MAS. I have suggested in my Petition and in my blog, various actions that MAS could take to resolve this crisis. I hope that they will invite me for a dicussion on some of these suggestions. I also hope that they will adopt some of these suggestions to help resolve the crisis.
8. How do you think the petition and affidavits will help?
Reply: The Petition ask the Singapore Government to investigate if any of the laws had been breached. They are the Financial Advisers Act (section 27), Securities and Futures Act (section 199) and the Trustees Act and to take the appropriate action (if these laws have been breached).
The statutory declaration (previously referred to as the affidavit) allows the investors to give their honest statment under oath, regarding the assurances and explanations that they have received verbally from the sales representatives. They need to have a sworn statement as these statements may contradict the standard forms that they have signed (where the contents were not properly explained to them). We need the statutory declarations of hundreds or maybe thousands of investors to confirm that they were indeed given the wrong information to make their decisions.
9. What do you hope to see happen?
Reply: I hope that there can be a fair settlement. I hope that the financial institutions will offer to compensiate the investors for 50% to 80% of their loss.
Reply: I was shocked to read in the papers about the failure of the Minibonds, High Notes and Jubilee Notes, due to the collapse of Lehman Brothers. I did not like these structured products, but but I was not aware (until the collapse) that it could be so serious. I believe that there is something seriously wrong with the creation and marketing of these products, and that there is some possible wrong doing. I decided to organise a Petition to ask the Government to investigate if there were any wrong doing. This was done about one month ago. The Petition attracted 983 signatories.
2. Why did you decide to act for them, especially since you're not a victim yourself?
Reply: I consider it to be a public duty. If I find that there is something wrong and some many people are affected so badly, it is my responsibility as a citizen to help them to find redress. Actually, this is the resonsibility of the people in the Government. Perhaps they are too busy or not aware of the seriousness of the problem. I hope to raise their awareness, so that they can come forward to use their immense resources to do what needs to be done. After that, I can take a rest.
3. What incensed you the most about this whole saga?
Reply: Occasionally, I get angry. Most of the time, I am quite calm, in spite of the tremendous pressures that I faced in dealing with many distressed investors asking desperately for help.
I am angry that these structured products were allowed to be marketed to retail investors and that they were pushed by the financial institutions who has the responsibility to make the appropriate recommendation to the retail investors. I am angry that, even now, these parties are still not coming forward to do "the right thing". They are adding to the distress of the investors.
I appeal to them to act:
http://tankinlian.blogspot.com/2008/10/act-honourably.html
4. Do you personally know anyone who has bought these failed products?
Reply: I get to know many, many people who have bought these failed products, after the Petition was launched. They told some many heart rending stories to me. I passed their particulars (with their consent) to many journalists from the various mainstream papers, to interview them.
5. Many have hailed you as a hero in this saga. What are your thoughts on that?
Reply: I understand from history that many heroes died in the battle. I hope that I can survive and live to an older age.
6. What is the most heart rending story you've heard from any of the investors?
Reply: There are too many stories that fit into this category. I do not wish to degrade any of them, by singling out one story.
7. How do you think MAS has dealt with this crisis? Are you satisfied with what they've done?
Reply: I do not wish to pass any judgement on MAS. I have suggested in my Petition and in my blog, various actions that MAS could take to resolve this crisis. I hope that they will invite me for a dicussion on some of these suggestions. I also hope that they will adopt some of these suggestions to help resolve the crisis.
8. How do you think the petition and affidavits will help?
Reply: The Petition ask the Singapore Government to investigate if any of the laws had been breached. They are the Financial Advisers Act (section 27), Securities and Futures Act (section 199) and the Trustees Act and to take the appropriate action (if these laws have been breached).
The statutory declaration (previously referred to as the affidavit) allows the investors to give their honest statment under oath, regarding the assurances and explanations that they have received verbally from the sales representatives. They need to have a sworn statement as these statements may contradict the standard forms that they have signed (where the contents were not properly explained to them). We need the statutory declarations of hundreds or maybe thousands of investors to confirm that they were indeed given the wrong information to make their decisions.
9. What do you hope to see happen?
Reply: I hope that there can be a fair settlement. I hope that the financial institutions will offer to compensiate the investors for 50% to 80% of their loss.
Ask for a full refund now
Dear Mr Tan
First, I'd like to THANK and APPLAUD you for being "the voice" of many low/middle-income Singaporeans especially the retirees who have invested large sums of money into high-risk products without realising the consequences.
My reason for writing this is, like these retirees, I am a victim of sorts . When I look into bank's products, my only concern is to invest in 100% CAPITAL GUARANTEED products. When I met up with the Citibank Personal Banker on several occasions, I stressed this primary concern to her. I even elaborated by saying something like "at the end of the tenor, I want 100% of my capital back". However, I was sold the Merrill Lynch Jubilee Series 8 product which had a 100% CAPITAL PROTECTION . I only realised this when I received the prospectus AFTER signing and paying for this investment.
When I brought this up, I received a 3-way telephone call from the PB's head and another person. I related to her my concern and how I was misled into believing that I bought a 100% CAPITAL GUARANTEED product. She assured me that I will get my 100% capital back based on 2 conditions :
1. I have to hold to maturity the principal amount
2. Nothing happens to Merrill Lynch
She said that our conversations are recorded so I should not worry.
REPLY
I advice you to lodge a complaint for mis-selling and to ask for a FULL refund of your money. If the bank does not agree, you should escalate it to Fidrec (www.fidrec.com.sg) or complain to MAS.
First, I'd like to THANK and APPLAUD you for being "the voice" of many low/middle-income Singaporeans especially the retirees who have invested large sums of money into high-risk products without realising the consequences.
My reason for writing this is, like these retirees, I am a victim of sorts . When I look into bank's products, my only concern is to invest in 100% CAPITAL GUARANTEED products. When I met up with the Citibank Personal Banker on several occasions, I stressed this primary concern to her. I even elaborated by saying something like "at the end of the tenor, I want 100% of my capital back". However, I was sold the Merrill Lynch Jubilee Series 8 product which had a 100% CAPITAL PROTECTION . I only realised this when I received the prospectus AFTER signing and paying for this investment.
When I brought this up, I received a 3-way telephone call from the PB's head and another person. I related to her my concern and how I was misled into believing that I bought a 100% CAPITAL GUARANTEED product. She assured me that I will get my 100% capital back based on 2 conditions :
1. I have to hold to maturity the principal amount
2. Nothing happens to Merrill Lynch
She said that our conversations are recorded so I should not worry.
REPLY
I advice you to lodge a complaint for mis-selling and to ask for a FULL refund of your money. If the bank does not agree, you should escalate it to Fidrec (www.fidrec.com.sg) or complain to MAS.
Do not succumb to greed
Dear Mr. Tan,
I have been following your blog for close to a year and from there I have learnt a great deal of things I can never learn from my lecturers or from the textbooks or courses that I take in school.
I attended your talk at NUS earlier today and I would like to thank you for sharing with us so many words of wisdom and financial knowledge that can only be accumulated through many decades of hard work and experience. Being a Computer Science major who spends a great deal of time on my studies, I had struggled even with simple financial terms like “unit trust” and “bonds”, but all thanks to you, I now have better knowledge of what they are.
Even though this is the first time that I have met you and I do not know you personally, you come across as a modest person from humble backgrounds, unlike many of the so-called ‘elites’ in modern Singapore who can never understand the lives of the commoners. What I have also learnt from you is not just about money, but also about life: to stay healthy and lead a good life, to know the limits and not succumb to the sin of greed, to learn to let it go when it is our time to leave this world and not leave a mountain of debt accumulated from medical expenses behind for our family.
Being a Singaporean, I must admit that I feel shameful for a government that focuses all its attention on making money and accumulating wealth, leaving welfare for the disadvantaged and old in society to the hands of the altruistic few.
I wish you all the best in your quest for the rights of the victims in the minibonds crisis, and the very best of health and happy lives for you and your family.
PX
I have been following your blog for close to a year and from there I have learnt a great deal of things I can never learn from my lecturers or from the textbooks or courses that I take in school.
I attended your talk at NUS earlier today and I would like to thank you for sharing with us so many words of wisdom and financial knowledge that can only be accumulated through many decades of hard work and experience. Being a Computer Science major who spends a great deal of time on my studies, I had struggled even with simple financial terms like “unit trust” and “bonds”, but all thanks to you, I now have better knowledge of what they are.
Even though this is the first time that I have met you and I do not know you personally, you come across as a modest person from humble backgrounds, unlike many of the so-called ‘elites’ in modern Singapore who can never understand the lives of the commoners. What I have also learnt from you is not just about money, but also about life: to stay healthy and lead a good life, to know the limits and not succumb to the sin of greed, to learn to let it go when it is our time to leave this world and not leave a mountain of debt accumulated from medical expenses behind for our family.
Being a Singaporean, I must admit that I feel shameful for a government that focuses all its attention on making money and accumulating wealth, leaving welfare for the disadvantaged and old in society to the hands of the altruistic few.
I wish you all the best in your quest for the rights of the victims in the minibonds crisis, and the very best of health and happy lives for you and your family.
PX
Ask MAS for advice to sort out this type of problem
Dear Mr Tan,
I need your advice as I am thoroughly confused as to how and to whom tolodge my complaint. I hold a Minibond Series 7. It was issued by a Personal Financial Manager at Hong Leong Finance, yet the receipt showed DMG & Partners and the Note Trustee to the holders of Minibond Notes is HSBC.
As far as I was concerned, I thought I had simply invested my money with Hong Leong Finance with a quarterly payout of 4.25%. I was told itwas very safe and the worse case scenerio was that the quarterly payout would be less than 4.25% or that the minibond would be recalled andthat the principal sum would be returned. I was surprised to have received the receipt from DMG & Partners, let alone learn that the investment was linked to Lehman Brothers.
REPLY
I suggest that you write to MAS and ask them. You can copy to me.
I need your advice as I am thoroughly confused as to how and to whom tolodge my complaint. I hold a Minibond Series 7. It was issued by a Personal Financial Manager at Hong Leong Finance, yet the receipt showed DMG & Partners and the Note Trustee to the holders of Minibond Notes is HSBC.
As far as I was concerned, I thought I had simply invested my money with Hong Leong Finance with a quarterly payout of 4.25%. I was told itwas very safe and the worse case scenerio was that the quarterly payout would be less than 4.25% or that the minibond would be recalled andthat the principal sum would be returned. I was surprised to have received the receipt from DMG & Partners, let alone learn that the investment was linked to Lehman Brothers.
REPLY
I suggest that you write to MAS and ask them. You can copy to me.
Not an isolated case
Posted in Straits Times Forum
stalingrad
Today, 12:47 PM
I am somewhat amused by MAS’s reaction or the lack thereof recently. MAS asked the victims to complain to the FIs. Isn’t that similar to the police asking the victim in a robbery case to complain to the robber, and the one in a rape case to complain to the rapist? If someone is dealt with by one or two individuals of an FI unfairly and it is just an isolated case, then the approach adopted by MAS would be correct. The FI in this case is not part of the incident, and therefore will probably take actions to deal with the employees involved and take corrective actions such as compensating the victim.
But it seems to me the case involving the minibonds and similar products is not an isolated case and it does not involve just a few employees. Rather, it is probably a systemic problem and involves the banks systematically hiding truths from potential buyers and providing misleading information, and preying on the old, the retired and vulnerable, and the trusting type who does not read every fine print. In other words, the top brass of the FIs themselves are probably involved in the mis-selling. The fact that the reference entities are splashed across the top of the product information sheet in bold print, and even the bond ratings of the entities are shown prominently while hiding the key information like the role of Lehman and the CDS nature of the product in fine print, is prima facie evidence that the issuer and the FIs were out to mislead and to hide the truths about such products. In that case, what use is it for the victims to complain to the FIs? Instead of asking the victims to do that, MAS themselves should play a leading role to seek redress for the victims starting from the beginning.
One may even argue that there is malice involved, and this case should be treated as a fraud case, and call for not only a return of the original investment funds, but also punitive damages, which are only fair given that by investing in these bogus products, the victims have lost returns they could have earned otherwise. Thus, a good lawyer should be able to give the victim not only the full refund, but say 50% more as a compensation for their suffering and opportunity costs.
http://comment.straitstimes.com/showthread.php?t=14126&page=14
stalingrad
Today, 12:47 PM
I am somewhat amused by MAS’s reaction or the lack thereof recently. MAS asked the victims to complain to the FIs. Isn’t that similar to the police asking the victim in a robbery case to complain to the robber, and the one in a rape case to complain to the rapist? If someone is dealt with by one or two individuals of an FI unfairly and it is just an isolated case, then the approach adopted by MAS would be correct. The FI in this case is not part of the incident, and therefore will probably take actions to deal with the employees involved and take corrective actions such as compensating the victim.
But it seems to me the case involving the minibonds and similar products is not an isolated case and it does not involve just a few employees. Rather, it is probably a systemic problem and involves the banks systematically hiding truths from potential buyers and providing misleading information, and preying on the old, the retired and vulnerable, and the trusting type who does not read every fine print. In other words, the top brass of the FIs themselves are probably involved in the mis-selling. The fact that the reference entities are splashed across the top of the product information sheet in bold print, and even the bond ratings of the entities are shown prominently while hiding the key information like the role of Lehman and the CDS nature of the product in fine print, is prima facie evidence that the issuer and the FIs were out to mislead and to hide the truths about such products. In that case, what use is it for the victims to complain to the FIs? Instead of asking the victims to do that, MAS themselves should play a leading role to seek redress for the victims starting from the beginning.
One may even argue that there is malice involved, and this case should be treated as a fraud case, and call for not only a return of the original investment funds, but also punitive damages, which are only fair given that by investing in these bogus products, the victims have lost returns they could have earned otherwise. Thus, a good lawyer should be able to give the victim not only the full refund, but say 50% more as a compensation for their suffering and opportunity costs.
http://comment.straitstimes.com/showthread.php?t=14126&page=14
Lehman Structured notes on Wheat and Milk
If you have invested in the
Lehman Structured notes on Wheat and Milk
please contact:
chee kong wong <ck_wong11@yahoo.com.sg>
Lehman Structured notes on Wheat and Milk
please contact:
chee kong wong <ck_wong11@yahoo.com.sg>
Saturday, October 18, 2008
Breach of the law - arguments
983 investors signed a Petition to the Government to carry out a full and independent investigation into whether there was any wrong doing involved in the creation and marketing of the credit linked securities, such as the mini bond, high notes, jubilee notes and pinnacle notes.
In an accompanying letter sent to the Monetary Authority of Singapore, I identified three laws that could have been breached:
1) Securities and Futures Act (section 199)
2) Financial Adviser’s Act (section 27)
3) Trustees Act
Let me explain these points.
Securities and Futures Act
This law requires the seller of a security to provide truthful and reliable information to the buyer. The seller cannot give false or misleading information and cannot withhold any relevant information. Any breach of this law is an offence that can lead to civil or criminal action.
I like to ask MAS to see if the actual nature and risk of the credit linked security has been properly disclosed in the advertisement, sales material or the prospectus.
Are they disclosed in a transparent and clear manner? If not, was the disclosure done in a manner that can be considered to be misleading?
Many investors said that they were misled into thinking that they had invested in the bonds issued by the six or eight reference entities and that all of these entities had to fail before they lose their entire capital
How did this mistaken belief came about?
Financial Advisers Act
This law requires the financial adviser or the representative to understand the needs, risk profile and preference of the investor and to recommend the appropriate products.
Many of the investors wanted to have a safe investment. They are risk adverse.
Did the representative carry out their responsibility properly? Why did they recommend a product that has turned out to be so risky? Did the representative understand the nature and risk of the product?
Trustee Act
This law requires people in a position of trust to look after the best interest of their client. Does this law apply to the trustee and the arranger of the securities?
Did they discharge their duty according to the law? Were the payments made out of the fund in accordance with what has been authorised in the prospectus? Were the dealings made at the correct prices and are fair to the investors? How are conflict of interest resolved?
Should the trustee have to render a full statement of account to the investors?
I hope that the Government looks into these areas, to see if there were any wrong doing that led to such large losses among the investing public.
If there were wrong doing, the Government can take the appropriate action to bring the offenders to Court and to seek suitable compensation for the losses suffered by the investors.
I hope that the Government can play an active role to minimize the losses of the investors and ensure that the underlying securities are NOT un-wound at fire sale prices.
In an accompanying letter sent to the Monetary Authority of Singapore, I identified three laws that could have been breached:
1) Securities and Futures Act (section 199)
2) Financial Adviser’s Act (section 27)
3) Trustees Act
Let me explain these points.
Securities and Futures Act
This law requires the seller of a security to provide truthful and reliable information to the buyer. The seller cannot give false or misleading information and cannot withhold any relevant information. Any breach of this law is an offence that can lead to civil or criminal action.
I like to ask MAS to see if the actual nature and risk of the credit linked security has been properly disclosed in the advertisement, sales material or the prospectus.
Are they disclosed in a transparent and clear manner? If not, was the disclosure done in a manner that can be considered to be misleading?
Many investors said that they were misled into thinking that they had invested in the bonds issued by the six or eight reference entities and that all of these entities had to fail before they lose their entire capital
How did this mistaken belief came about?
Financial Advisers Act
This law requires the financial adviser or the representative to understand the needs, risk profile and preference of the investor and to recommend the appropriate products.
Many of the investors wanted to have a safe investment. They are risk adverse.
Did the representative carry out their responsibility properly? Why did they recommend a product that has turned out to be so risky? Did the representative understand the nature and risk of the product?
Trustee Act
This law requires people in a position of trust to look after the best interest of their client. Does this law apply to the trustee and the arranger of the securities?
Did they discharge their duty according to the law? Were the payments made out of the fund in accordance with what has been authorised in the prospectus? Were the dealings made at the correct prices and are fair to the investors? How are conflict of interest resolved?
Should the trustee have to render a full statement of account to the investors?
I hope that the Government looks into these areas, to see if there were any wrong doing that led to such large losses among the investing public.
If there were wrong doing, the Government can take the appropriate action to bring the offenders to Court and to seek suitable compensation for the losses suffered by the investors.
I hope that the Government can play an active role to minimize the losses of the investors and ensure that the underlying securities are NOT un-wound at fire sale prices.
Speech at Speaker's Corner - 11 Oct 2008
Embargoed, 6 p.m. Saturday 18 October 2008
Yesterday, on 17 October, the Monetary Authority of Singapore held a press conference on the sale of structured products to retail investors.
MAS said in its release:
QUOTE
7. MAS urges any affected investor who has a genuine claim that you were mis-sold the product to make sure you lodge your complaint with your FIs. MAS requires FIs to have a rigorous process to look into every complaint and resolve them fairly, giving due weight to the views of the independent parties.
8. Clearly, there is a range of investors who bought these products. Some are well-educated professionals. Others are sophisticated investors. The group we are most concerned with are the vulnerable customers. We are focussing on cases of mis-selling to vulnerable customers and on cases where the products were clearly inappropriate for them given their circumstances. We have required the FIs to give priority to these cases. They should not take an overly legalistic approach to mis-selling in dealing with these cases.
9. For cases where there are sufficient indications that the product was mis-sold or that it was clearly inappropriate given the investor’s profile and circumstances, the FI should take responsibility. Several FIs have assured MAS that they will take full responsibility in such cases. We welcome this commitment and expect all FIs that have sold these products to take the same approach. They must do the right thing and ensure a quick and fair resolution for these customers. We have communicated this to their CEOs.
UNQUOTE
Lodge your complain
The first priority is for each investor to lodge a formal complaint with the financial institution indicating how they had been misled into investing in the structured product. MAS has asked the financial institution to deal with the complaint expeditiously and not to take an “overly legalistic approach”. They also advised that is not necessary for the investor’s statement to be made under oath (i.e. no need for statutory declaration).
It is important for the investor to make a truthful statement to outline how they were misled into investing in the product. Many investors told me that they were misled by the advertisement, sales brochure, and/or assurances and explanation by the sales representative (given verbally or by e-mail).
Many investors were told, or had led to believe, in some of all of the following statements:
a) That the funds are invested in the bonds of the reference entitles
b) That all of the reference entitles have to fail, before we lose our entire principal
c) That their principal is protected, if we keep the investment to the maturity date
I wish to give the following guidelines to prepare your statement to support your complaint with the financial institution. You must give a truthful statement, to the best of your knowledge and memory.
Your statement should cover the following points:
1. Your name, NRIC, address, telephone
2. How did you get involved in the investment?
3. Which financial institution, branch, amount invested, date
4. What happened when you purchased the investment?
5. Were you alone or accompanied by another person? Who?
6. What did the representative (who sold the investment to you) tell you about investment?
7. Did the representative tell you about any guarantee on your investment?
8. Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
9. Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
10. Do you have any other statements to make regarding this matter?
I will ask the contact person for each group (according to the distributor financial institution) to help the other investors, especially those that were not well educated, to prepare the statement and to help you to lodge it with the financial institution.
Vulnerable investors
MAS has asked the financial institutions to give priority to the vulnerable investors. These are the elderly, low educated and the first time investors. The financial institutions have agreed to take full responsibility for these vulnerable investors who have been mis-sold. The full responsibility includes compensation for part or the full amount that they have lost. This is a an encouraging first step.
I wish to ask the other investors, who do not fall into the “vulnerable group” to be patient and to strong. If you have been equally misled into investing in these structured products, and it seems to be clearly the case, you have a strong case to ask for compensation. But, you have to be reasonable in your expectation and may have to accept partial compensation that is lower than the “vulnerable investors”.
Let us take this at the next step. In the meantime, you should lodge your complaint.
Formal inquiries by MAS
MAS has also said that they have been conducting formal inquiries into allegations of breaches of the law, inadequate internal controls by the financial institutions or poor sales practices by their representatives. They will an announcement on any actions we are taking when our inquiries are completed.
If the laws have been broken or if there were failures in the internal controls and/or sales practices, there is a better chance for the investors to get a higher compensation from the culpable parties. Let us wait for the results of this investigation.
Replacement Manager
The MAS statement said that the trustee for the Lehman Minibond Programme is carefully considers all options and acts in the interests of investors. If a new swap counterparty is available, investors would have the opportunity to vote on this option. To assist investors make an informed decision, MAS will appoint an independent financial adviser. The outcome will be known by the end of next week.
If a replacement manager can be found, it will may the investors to reduce the loss as the underlying assets can be kept until a better time to realise a higher value. I am in contact with one party based in Hong Kong that has expressed interest to take over the management. They are now in touch with the trustees and the regulator.
I hope that other parties, especially the financial institutions based in Singapore, will come forward to make a bid for this contract.
Appeal to the Media
I wish to appeal to the media to convey the message to the other investors of these structured products who have not yet lodge their complaints.
Please inform them that they should lodge their complaints now, if they have been misled into investing in these products.
Tan Kin Lian
Yesterday, on 17 October, the Monetary Authority of Singapore held a press conference on the sale of structured products to retail investors.
MAS said in its release:
QUOTE
7. MAS urges any affected investor who has a genuine claim that you were mis-sold the product to make sure you lodge your complaint with your FIs. MAS requires FIs to have a rigorous process to look into every complaint and resolve them fairly, giving due weight to the views of the independent parties.
8. Clearly, there is a range of investors who bought these products. Some are well-educated professionals. Others are sophisticated investors. The group we are most concerned with are the vulnerable customers. We are focussing on cases of mis-selling to vulnerable customers and on cases where the products were clearly inappropriate for them given their circumstances. We have required the FIs to give priority to these cases. They should not take an overly legalistic approach to mis-selling in dealing with these cases.
9. For cases where there are sufficient indications that the product was mis-sold or that it was clearly inappropriate given the investor’s profile and circumstances, the FI should take responsibility. Several FIs have assured MAS that they will take full responsibility in such cases. We welcome this commitment and expect all FIs that have sold these products to take the same approach. They must do the right thing and ensure a quick and fair resolution for these customers. We have communicated this to their CEOs.
UNQUOTE
Lodge your complain
The first priority is for each investor to lodge a formal complaint with the financial institution indicating how they had been misled into investing in the structured product. MAS has asked the financial institution to deal with the complaint expeditiously and not to take an “overly legalistic approach”. They also advised that is not necessary for the investor’s statement to be made under oath (i.e. no need for statutory declaration).
It is important for the investor to make a truthful statement to outline how they were misled into investing in the product. Many investors told me that they were misled by the advertisement, sales brochure, and/or assurances and explanation by the sales representative (given verbally or by e-mail).
Many investors were told, or had led to believe, in some of all of the following statements:
a) That the funds are invested in the bonds of the reference entitles
b) That all of the reference entitles have to fail, before we lose our entire principal
c) That their principal is protected, if we keep the investment to the maturity date
I wish to give the following guidelines to prepare your statement to support your complaint with the financial institution. You must give a truthful statement, to the best of your knowledge and memory.
Your statement should cover the following points:
1. Your name, NRIC, address, telephone
2. How did you get involved in the investment?
3. Which financial institution, branch, amount invested, date
4. What happened when you purchased the investment?
5. Were you alone or accompanied by another person? Who?
6. What did the representative (who sold the investment to you) tell you about investment?
7. Did the representative tell you about any guarantee on your investment?
8. Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
9. Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
10. Do you have any other statements to make regarding this matter?
I will ask the contact person for each group (according to the distributor financial institution) to help the other investors, especially those that were not well educated, to prepare the statement and to help you to lodge it with the financial institution.
Vulnerable investors
MAS has asked the financial institutions to give priority to the vulnerable investors. These are the elderly, low educated and the first time investors. The financial institutions have agreed to take full responsibility for these vulnerable investors who have been mis-sold. The full responsibility includes compensation for part or the full amount that they have lost. This is a an encouraging first step.
I wish to ask the other investors, who do not fall into the “vulnerable group” to be patient and to strong. If you have been equally misled into investing in these structured products, and it seems to be clearly the case, you have a strong case to ask for compensation. But, you have to be reasonable in your expectation and may have to accept partial compensation that is lower than the “vulnerable investors”.
Let us take this at the next step. In the meantime, you should lodge your complaint.
Formal inquiries by MAS
MAS has also said that they have been conducting formal inquiries into allegations of breaches of the law, inadequate internal controls by the financial institutions or poor sales practices by their representatives. They will an announcement on any actions we are taking when our inquiries are completed.
If the laws have been broken or if there were failures in the internal controls and/or sales practices, there is a better chance for the investors to get a higher compensation from the culpable parties. Let us wait for the results of this investigation.
Replacement Manager
The MAS statement said that the trustee for the Lehman Minibond Programme is carefully considers all options and acts in the interests of investors. If a new swap counterparty is available, investors would have the opportunity to vote on this option. To assist investors make an informed decision, MAS will appoint an independent financial adviser. The outcome will be known by the end of next week.
If a replacement manager can be found, it will may the investors to reduce the loss as the underlying assets can be kept until a better time to realise a higher value. I am in contact with one party based in Hong Kong that has expressed interest to take over the management. They are now in touch with the trustees and the regulator.
I hope that other parties, especially the financial institutions based in Singapore, will come forward to make a bid for this contract.
Appeal to the Media
I wish to appeal to the media to convey the message to the other investors of these structured products who have not yet lodge their complaints.
Please inform them that they should lodge their complaints now, if they have been misled into investing in these products.
Tan Kin Lian
Fall outside "vulnerable investors"
MAS has asked the financial institutions to give priority to the vulnerable investors. These are the elderly, low educated and the first time investors. The financial institutions have agreed to take full responsibility for these vulnerable investors who have been mis-sold. The full responsibility includes compensation for part or the full amount that they have lost. This is a an encouraging first step.
I wish to ask the other investors, who do not fall into the “vulnerable group” to be patient and to strong. If you have been equally misled into investing in these structured products, and it seems to be clearly the case, you have a strong case to ask for compensation. But, you have to be reasonable in your expectation and may have to accept partial compensation that is lower than the “vulnerable investors”.
Let us take this at the next step. In the meantime, you should lodge your complaint.
I wish to ask the other investors, who do not fall into the “vulnerable group” to be patient and to strong. If you have been equally misled into investing in these structured products, and it seems to be clearly the case, you have a strong case to ask for compensation. But, you have to be reasonable in your expectation and may have to accept partial compensation that is lower than the “vulnerable investors”.
Let us take this at the next step. In the meantime, you should lodge your complaint.
Statutory declaration - Glenn Knight
Mr. Tan,
We have approached Glenn Knight to do statutory declaration and show him our complaint letter to Hong Leong and MAS. He was patient, listened and jotted down notes. Glenn told us that some victims from Maybank are also meeting up with him.
Glenn highlighted that for the class suit against HONG LEONG to be strong, we should gather more victims. This would be a good case to show that there was a certain pattern of behaviour by the bank to mislead the customers.
Those who have been mis-sold and heard similar things from their own RM during the sales pitch such as:-
1) This is a low-risk product.
2) The principal is protected.
3) Minibonds is a BONDS.
4) Lehman Brothers not mentioned.
5) bankruptcy of Lehman Brothers not mentioned.
If you are interested, you can book an appointment with him. To save precious time, do DO YOUR HOMEWORK! Those victims from Maybank can also contact him.
To prepare this declaration, you have to provide the answers to the following questions:
1. Your name, NRIC, address, telephone
2. How did you get involved in the investment?
3. Which financial institution, branch, amount invested, date
4. What happened when you purchased the investment?
5. Were you alone or accompanied by another person? Who?
6. What did the representative (who sold the investment to you) tell you about investment?
7. Did the representative tell you about any guarantee on your investment?
8. Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
9. Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
10. Do you have any other statements to make regarding this matter?
The lawyer fees include the fee payable to the Commissioner of Oath.
Fee $120 plus GST
Bernard & Rada Law Corporation
50 Robinson Road #08-00
VTB Building
Singapore 068882
Call Mr. Glenn Knight or his secretary, Ms Ivy Goh (Tel: 68999888)
Julie
We have approached Glenn Knight to do statutory declaration and show him our complaint letter to Hong Leong and MAS. He was patient, listened and jotted down notes. Glenn told us that some victims from Maybank are also meeting up with him.
Glenn highlighted that for the class suit against HONG LEONG to be strong, we should gather more victims. This would be a good case to show that there was a certain pattern of behaviour by the bank to mislead the customers.
Those who have been mis-sold and heard similar things from their own RM during the sales pitch such as:-
1) This is a low-risk product.
2) The principal is protected.
3) Minibonds is a BONDS.
4) Lehman Brothers not mentioned.
5) bankruptcy of Lehman Brothers not mentioned.
If you are interested, you can book an appointment with him. To save precious time, do DO YOUR HOMEWORK! Those victims from Maybank can also contact him.
To prepare this declaration, you have to provide the answers to the following questions:
1. Your name, NRIC, address, telephone
2. How did you get involved in the investment?
3. Which financial institution, branch, amount invested, date
4. What happened when you purchased the investment?
5. Were you alone or accompanied by another person? Who?
6. What did the representative (who sold the investment to you) tell you about investment?
7. Did the representative tell you about any guarantee on your investment?
8. Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
9. Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
10. Do you have any other statements to make regarding this matter?
The lawyer fees include the fee payable to the Commissioner of Oath.
Fee $120 plus GST
Bernard & Rada Law Corporation
50 Robinson Road #08-00
VTB Building
Singapore 068882
Call Mr. Glenn Knight or his secretary, Ms Ivy Goh (Tel: 68999888)
Julie
Lost the sense of bonding and togetherness
Dear Mr. Tan Kin Lian
I am a retiree in my sixties and, like you, my heart sentiments and empathies are for the man-in-the- street, ordinary Singapore citizens, and the senior citizens, who are not able to express themselves on their plights and miseries, for lack of ability, education, literacy, IT skills and media know how.
The plight of the poor misguided uncles and aunties, and including my wife and I, who laboured all their lives trusting in the government's promise of a better life, when they can retire with their CPF nest eggs, have just had their dreams shattered and crumbled by the latest chain of events from the financial collapse from around the world. Some of us may be in the same age bracket as a few of our longstanding national leaders, some of whom have passed on, and some who are still giving counsel on the affairs of state. How does one compare the earning of a poor cleaner or bus or taxi driver, with that of those whose monthly salary income is 2000 times as much, or whose lifetime savings is not even one fifth of one months salary of some.
It is not my mission and agenda to protest against the establishment, just for protest sake. But we are now talking about retirees and hardworking citizens who have saved diligently and conscientiously for nearly all their working lives, and as they now walk into their sunset years, they have just suddenly seen the sun go down, without being sure whether it will rise up again the next day.
This is a very sad and human tragedy for Singaporean leaders to address quickly. There is no point in building more of the asset rich Singapore hardware, when the national heartware is in tatters. We have to offer a temple of hope, in order to create a real sense of community belonging in this small so called ' Red Dot island paradise'
Whilst we are shut out our city to entertain and accomodate our foreign guests, as they pop champagne and feast on caviar and veal, whilst they watch some silly machine zooming by, our taxi drivers, retailers and restaurants are hurting from lack of patronage and support. Whilst Rome burns, we are makiing sport.
It is paradox, and an irony, when well qualified and able young Singapore born sons and daughters, leave this 'island paradise' for greener pastures in Australia, NZ, the U.S., Canada, and may not come back home, and we then encourage new alien migrants from neighbouring feeder countries, offering them PR or Singapore citizenship after two years, because they can play better ping pong, or badminton, or football to add to our talent pool.
On the one hand we have full born and bred political opposition members who risk and sacrifice all they have and owned to speak up for the silent Singaporeans, but they are crucified on our court altar, for their their defiance and different points of view. Are we supposed to behave like obedient Singaporean sheep that goes "baa baa, yes sir, yes sir, you're
I am a retiree in my sixties and, like you, my heart sentiments and empathies are for the man-in-the- street, ordinary Singapore citizens, and the senior citizens, who are not able to express themselves on their plights and miseries, for lack of ability, education, literacy, IT skills and media know how.
The plight of the poor misguided uncles and aunties, and including my wife and I, who laboured all their lives trusting in the government's promise of a better life, when they can retire with their CPF nest eggs, have just had their dreams shattered and crumbled by the latest chain of events from the financial collapse from around the world. Some of us may be in the same age bracket as a few of our longstanding national leaders, some of whom have passed on, and some who are still giving counsel on the affairs of state. How does one compare the earning of a poor cleaner or bus or taxi driver, with that of those whose monthly salary income is 2000 times as much, or whose lifetime savings is not even one fifth of one months salary of some.
It is not my mission and agenda to protest against the establishment, just for protest sake. But we are now talking about retirees and hardworking citizens who have saved diligently and conscientiously for nearly all their working lives, and as they now walk into their sunset years, they have just suddenly seen the sun go down, without being sure whether it will rise up again the next day.
This is a very sad and human tragedy for Singaporean leaders to address quickly. There is no point in building more of the asset rich Singapore hardware, when the national heartware is in tatters. We have to offer a temple of hope, in order to create a real sense of community belonging in this small so called ' Red Dot island paradise'
Whilst we are shut out our city to entertain and accomodate our foreign guests, as they pop champagne and feast on caviar and veal, whilst they watch some silly machine zooming by, our taxi drivers, retailers and restaurants are hurting from lack of patronage and support. Whilst Rome burns, we are makiing sport.
It is paradox, and an irony, when well qualified and able young Singapore born sons and daughters, leave this 'island paradise' for greener pastures in Australia, NZ, the U.S., Canada, and may not come back home, and we then encourage new alien migrants from neighbouring feeder countries, offering them PR or Singapore citizenship after two years, because they can play better ping pong, or badminton, or football to add to our talent pool.
On the one hand we have full born and bred political opposition members who risk and sacrifice all they have and owned to speak up for the silent Singaporeans, but they are crucified on our court altar, for their their defiance and different points of view. Are we supposed to behave like obedient Singaporean sheep that goes "baa baa, yes sir, yes sir, you're