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.

Speech at Speaker’s Corner – 25 Oct 2008

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:

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 ( 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

SCMP: Angry investors protest

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:

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?

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

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

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.

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.

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.

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.

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

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. "

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.


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)

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)?

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:

Willing to accept at least 50% compensation:

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.

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.

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.

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.


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.


You should avoid investing in Land Banking. Learn from the lesson of Minibond and avoid these types of products.

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 <>, 63195835

Channel NewsAsia
.... looking for an elderly investor from the "vulnerable group" who has received an offer from the financial institution
Contact Ryan Huang, 6350 3690

NHK Broadcasting
.... looking for a particular Lehman-linked product investor who has lost $100,000 or more. s, Contact Cindy Wong, +603 2163 3078

Draft: Letter to request for Open Forum


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,


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:

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

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?


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.


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?


I think that the investors should ask the distributor to arrange an open forum to discuss these matters to be discussed.

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.


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.

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.

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.

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.

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

Leonard Loo

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

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.

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 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 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.

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 I want the investors to have a strong heart that there is still a good chance to win this battle.

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

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.


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

Dear Simon Chan

I suggest that you read the views of the investors expressecd in:

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.

Here is the lyrics:

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!


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!


Can someone change these words to reflect the frustration and anger of the investors of the structured products. Please send to me at 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.

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.


MAS reply to Parliamentary Questions on Credit Linked Securities

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.


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.

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?

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


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.

(Particulars of 127 signatories)

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

Fraudalent misrepresentation and clear mis-selling

Extrcted from:

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.

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.

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.


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.


Sunday, October 19, 2008

Petition #3 - Fair and equal compensation to all buyers

This Petiton is authored by Albert Tan ( 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.

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.

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:

If you volunteer, please send your particulars (i.e. name, e-mail address, telephone number, and postal code, language) to 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.

Here are the volunteers
Soh Poh Huat,, 96826130, PD 520341, English, Hokkien
Rachel Chung,, 9846 6598
Yong Shan Chie,, 96931951, PD 128712

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.

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?


Please write to the trustee. Use this template:

Speaker's Corner - Credit linked securities

Suing for defamatory remarks


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.”

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.

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 to update your particulars.

Conscience, integrity and trust - a leader's hallmark

Comment posted in

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

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