Sunday, November 30, 2008
Speech at Speaker's Corner, 29 Nov 2008
Speaker’s Corner – 29 November 2008
Speech by Tan Kin Lian
1. Investors should see their Member of Parliament
I suggest that you should see your Member of Parliament, together with other investors living in your area. If you aleady saw your MP before, you can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you. You can ask your MP to ask MAS:
1. What is the outcome of petition #1 which ask MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? Did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act?
2. How many investors had their cases resolved by the financial institutions? How many cases were rejected by the financial institutions or have made offers that were rejected by the investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?
3. How many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?
It is the duty of the MP to ask these questions on your behalf. Your MP can also raise them in Parliament.
2. Material facts should be disclosed in Prospectus
Investors have been told that they the prospectus contained a warning ‘you could lose all or a substantial part of your investment’ in bold print, on the page 1 or 2”. But what if the prospectus did not disclose material facts?
The New Paper’s Doctor Money wrote on 4 November 2008:
“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.
They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.
Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”
You can ask a lawyer whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act. This section reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).
Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”
3. Ask for information in writing
The investors had approached the relationship manager who sold the notes to them. The RM was not able to give them a satisfactory answer. These investors then approached me for the answer.
I am not able to give you the answer. I do not have the answers, as there are many series and each series is different from the other series.
You should send the questions in writing (by letter or e-mail) and ask the relationship manager to give you the reply in writing. If you do not get a satisfactory reply, you should lodge a written complaint with MAS. If the RM does not know, it is the RM’s duty to get from the product issuer.
As an investor, you have the right to get relevant information on the product that you were sold. You are also entitled to be informed by the trustee or arranger, whenever they are significant changes that affect your product.
Act to safeguard your interest. Do not accept slipshod answers. Lodge your complaint.
4. Experience with FIDREC
If you have gone through FIDREC, please send the outcome to me, so that your experience can be shared with other investors.
Although you are covered under a confidentiality agreement, it should be all right to give general information – did you accept the adjudication, how many interviews did you attend, how long did it take you to present your case, how long does FIDREC take to give an answer.
This information will be helpful to other investors who are waiting for FIDREC adjudication.
I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.
So far, the replies given were discouraging. Many complaints have been lodged to FIDREC. It takes a long time to settle a case.
5. Mental health concerns during difficult times
I wish to read to you a letter sent by an investor, with the initial FO:
Dear Mr. Tan,
First of all, thank you for all the help and information that you provided in your blog and in Hong Lim Park.
With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.
Sad to say, I am also exposed to one of the products and have to go through emotional “struggle” everyday.
On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money …
I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.
> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …
It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.
BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”
This list will go on and on and on and on … …
My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.
This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.
FO
6. Class action
The various groups are still talking to several lawyers to find out about their approach towards a class action. They are still not clear about the estimated legal fees and the chance of success.
I am now talking to a few senior lawyers to see if there are any misrepresentations in the prospectus, pricing statements, sales brochures and advertisements.
If necessary, we will arrange for a Queens Council in the UK to give a written opinion. We will find out the cost and how to finance it.
7. Special meeting for next Saturday, 6 December, 5 p.m.
This will be a special day to commemorate the second anniversary of The Online Citizen. I will be speaking at this event. I shall be talking on a matter that is relevant to the investors of the credit linked notes.
If you are free, do come to this special event and give your support.
Tan Kin Lian
Speech by Tan Kin Lian
1. Investors should see their Member of Parliament
I suggest that you should see your Member of Parliament, together with other investors living in your area. If you aleady saw your MP before, you can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you. You can ask your MP to ask MAS:
1. What is the outcome of petition #1 which ask MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? Did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act?
2. How many investors had their cases resolved by the financial institutions? How many cases were rejected by the financial institutions or have made offers that were rejected by the investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?
3. How many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?
It is the duty of the MP to ask these questions on your behalf. Your MP can also raise them in Parliament.
2. Material facts should be disclosed in Prospectus
Investors have been told that they the prospectus contained a warning ‘you could lose all or a substantial part of your investment’ in bold print, on the page 1 or 2”. But what if the prospectus did not disclose material facts?
The New Paper’s Doctor Money wrote on 4 November 2008:
“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.
They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.
Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”
You can ask a lawyer whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act. This section reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).
Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”
3. Ask for information in writing
The investors had approached the relationship manager who sold the notes to them. The RM was not able to give them a satisfactory answer. These investors then approached me for the answer.
I am not able to give you the answer. I do not have the answers, as there are many series and each series is different from the other series.
You should send the questions in writing (by letter or e-mail) and ask the relationship manager to give you the reply in writing. If you do not get a satisfactory reply, you should lodge a written complaint with MAS. If the RM does not know, it is the RM’s duty to get from the product issuer.
As an investor, you have the right to get relevant information on the product that you were sold. You are also entitled to be informed by the trustee or arranger, whenever they are significant changes that affect your product.
Act to safeguard your interest. Do not accept slipshod answers. Lodge your complaint.
4. Experience with FIDREC
If you have gone through FIDREC, please send the outcome to me, so that your experience can be shared with other investors.
Although you are covered under a confidentiality agreement, it should be all right to give general information – did you accept the adjudication, how many interviews did you attend, how long did it take you to present your case, how long does FIDREC take to give an answer.
This information will be helpful to other investors who are waiting for FIDREC adjudication.
I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.
So far, the replies given were discouraging. Many complaints have been lodged to FIDREC. It takes a long time to settle a case.
5. Mental health concerns during difficult times
I wish to read to you a letter sent by an investor, with the initial FO:
Dear Mr. Tan,
First of all, thank you for all the help and information that you provided in your blog and in Hong Lim Park.
With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.
Sad to say, I am also exposed to one of the products and have to go through emotional “struggle” everyday.
On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money …
I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.
> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …
It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.
BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”
This list will go on and on and on and on … …
My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.
This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.
FO
6. Class action
The various groups are still talking to several lawyers to find out about their approach towards a class action. They are still not clear about the estimated legal fees and the chance of success.
I am now talking to a few senior lawyers to see if there are any misrepresentations in the prospectus, pricing statements, sales brochures and advertisements.
If necessary, we will arrange for a Queens Council in the UK to give a written opinion. We will find out the cost and how to finance it.
7. Special meeting for next Saturday, 6 December, 5 p.m.
This will be a special day to commemorate the second anniversary of The Online Citizen. I will be speaking at this event. I shall be talking on a matter that is relevant to the investors of the credit linked notes.
If you are free, do come to this special event and give your support.
Tan Kin Lian
Friday, November 28, 2008
Speaker's Corner 5 pm on 29 Nov - change of plan
There will be an Indian Cultural event at Hong Lim park tomorrow at the same time as my speech. The tents occupy most of the open spaces. I like to ask those who read this message to skip the meeting tomorrow. I will post my speech here.
There is space in a corner of the park for a small crowd For those who miss this announcement and turn up at Hong Lim park tomorrow, I will distribute a hard copy of my speech on the spot.
There is space in a corner of the park for a small crowd For those who miss this announcement and turn up at Hong Lim park tomorrow, I will distribute a hard copy of my speech on the spot.
The Standard : Legco first on Lehman fizzles out
Standard, The (Hong Kong) - Wednesday, November 26, 2008
Author: Diana Lee
The first open meeting of the Legislative Council subcommittee probing the Lehman minibonds saga got bogged down in party bickering yesterday and failed to reach agreement on confidentiality.
Civic Party legislator Ronny Tong Ka-wah said meetings should be transparent and documents made available unless witnesses request confidentiality. This demand must be justified with evidence submitted to subcommittee members and the legal adviser, he said.
``In principle we should not accept a general request. I would not accept, for example, a bank claiming each and every document is confidential,'' Tong said.
However Democratic Alliance for the Betterment and Progress of Hong Kong legislator Chan Kam-lam disagreed, saying mutual respect and mutual trust should exist between witnesses and subcommittee members.
``Even individual people have their privacy, so why not companies?'' Chan asked.
The Democratic Party's James To Kun-sun said mutual trust has nothing to do with the probe.
``We are here to find out the truth,'' To argued. ``What if the banks claim the staff training manual [for selling structured financial products] is classified material? ``What's the point of a public hearing if everything could be treated as classified so easily? We talk about mutual trust among legislators, not between witnesses and legislators.'' Lawmakers also failed to compromise on whether legislators should sign a confidentiality agreement.
The pan-democrats said they did not object but raised doubts about the effect such a pledge would have on lawmakers.
Philip Wong Yu-hong, subcommittee vice chairman and a commercial sector lawmaker, said ensuring lawmakers will keep the confidential submissions confidential is more important. Classifying what is confidential is another issue.
The Legco Secretariat will host a briefing on December 4 to inform lawmakers on matters they should know about the Lehman probe, including the general principles of what information should be treated as classified and confidential.
Meanwhile, Emily Lau Wai-hing of the Frontier, again failed to persuade members to support the pan-democrats' demand for a smaller subcommittee, which currently has 24 members.
Subcommittee chairman Raymond Ho Chung-tai said he hoped the discussion on the subcommittee's size is finally over and that members may unite to face the challenges ahead.
When the subcommittee meets will be decided on Friday. It is expected to host meetings every Tuesday and Friday morning starting early next year.
Author: Diana Lee
The first open meeting of the Legislative Council subcommittee probing the Lehman minibonds saga got bogged down in party bickering yesterday and failed to reach agreement on confidentiality.
Civic Party legislator Ronny Tong Ka-wah said meetings should be transparent and documents made available unless witnesses request confidentiality. This demand must be justified with evidence submitted to subcommittee members and the legal adviser, he said.
``In principle we should not accept a general request. I would not accept, for example, a bank claiming each and every document is confidential,'' Tong said.
However Democratic Alliance for the Betterment and Progress of Hong Kong legislator Chan Kam-lam disagreed, saying mutual respect and mutual trust should exist between witnesses and subcommittee members.
``Even individual people have their privacy, so why not companies?'' Chan asked.
The Democratic Party's James To Kun-sun said mutual trust has nothing to do with the probe.
``We are here to find out the truth,'' To argued. ``What if the banks claim the staff training manual [for selling structured financial products] is classified material? ``What's the point of a public hearing if everything could be treated as classified so easily? We talk about mutual trust among legislators, not between witnesses and legislators.'' Lawmakers also failed to compromise on whether legislators should sign a confidentiality agreement.
The pan-democrats said they did not object but raised doubts about the effect such a pledge would have on lawmakers.
Philip Wong Yu-hong, subcommittee vice chairman and a commercial sector lawmaker, said ensuring lawmakers will keep the confidential submissions confidential is more important. Classifying what is confidential is another issue.
The Legco Secretariat will host a briefing on December 4 to inform lawmakers on matters they should know about the Lehman probe, including the general principles of what information should be treated as classified and confidential.
Meanwhile, Emily Lau Wai-hing of the Frontier, again failed to persuade members to support the pan-democrats' demand for a smaller subcommittee, which currently has 24 members.
Subcommittee chairman Raymond Ho Chung-tai said he hoped the discussion on the subcommittee's size is finally over and that members may unite to face the challenges ahead.
When the subcommittee meets will be decided on Friday. It is expected to host meetings every Tuesday and Friday morning starting early next year.
To each his own
TO EACH HIS OWN
Author Unknown
Nov 27 2008
I cannot change the way I am,
I never really try,
God made me different and unique,
I never ask him why.
If I appear peculiar,
There's nothing I can do,
You must accept me as I am,
As I've accepted you.
God made a casting of each life,
Then threw the mold away,
Each child is different from the rest,
Unlike as night from day.
So often we will criticize,
The things that others do,
But, do you know, they do not think,
The same as me and you.
So God in all his wisdom,
Who knows us all by name,
He didn't want us to be bored,
That's why we're not the same
Author Unknown
Nov 27 2008
I cannot change the way I am,
I never really try,
God made me different and unique,
I never ask him why.
If I appear peculiar,
There's nothing I can do,
You must accept me as I am,
As I've accepted you.
God made a casting of each life,
Then threw the mold away,
Each child is different from the rest,
Unlike as night from day.
So often we will criticize,
The things that others do,
But, do you know, they do not think,
The same as me and you.
So God in all his wisdom,
Who knows us all by name,
He didn't want us to be bored,
That's why we're not the same
The Online Citizen interview an investor
Listen to this interview of the experience of an investor in the minibonds:
http://theonlinecitizen.com/2008/11/toc-exclusive-interview-with-investor-who-lost-150000/#comments
The Online Citizen wishes to have other investors to come forward to share their experience. I hope that more can come forward. We need the authority to hear about how they have been misled into the wrong investment that cause a total loss of their savings.
If you are willing to be interviewed, send an e-mail to kinlian@gmail.com.
http://theonlinecitizen.com/2008/11/toc-exclusive-interview-with-investor-who-lost-150000/#comments
The Online Citizen wishes to have other investors to come forward to share their experience. I hope that more can come forward. We need the authority to hear about how they have been misled into the wrong investment that cause a total loss of their savings.
If you are willing to be interviewed, send an e-mail to kinlian@gmail.com.
Thursday, November 27, 2008
Speaker's Corner 5 p.m. Sat 29 Nov
There will be a meeting of investors of the credit linked notes at Speaker's Corner at 5 p.m. on Sat 29 Nov.
Agenda
1. See your MP
2. Misrepresenation in prospectus
3. Ask for information in writing
4. Experience with FIDREC
5. Mental health concerns
6. Class action
7. Special meeting on Sat 6 Dec
Agenda
1. See your MP
2. Misrepresenation in prospectus
3. Ask for information in writing
4. Experience with FIDREC
5. Mental health concerns
6. Class action
7. Special meeting on Sat 6 Dec
Bonus is likely to remain low
I organised a collective protest against the bonus cut made by NTUC Income earlier this year. I reached a settlement as follows:
http://tankinlian.blogspot.com/search?q=collective+protest+settlement
I promised policyholders that I would monitor the situation and give an update.
Recently, I decided to surrender my Living policy, which was affected by the bonus cut. I received a surrender value that included the special bonus to compensate for the bonus cut. In this case, I was slightly better off (with the special bonus included).
During the past six months, there has been turmoil in the financial market resulting in a large markdown of asset prices. I do not know whether the "compensating" special bonus will be withdrawn or reduced in the next few years of the global financial crisis.
Earlier, I wanted to press for the bonus cuts in past years to be restored due to the good financial results up to 2007. With the large drop in asset price in 2008, it will now be difficult to press for this measure. It is also likely that future bonus will remain at a low level, until after the global economy has recovered.
On the bright side, the cash value of a life insurance policy remain largely protection (although the yield is low) during a bad period. It does not suffer the capital loss that comes from shares and other investments.
http://tankinlian.blogspot.com/search?q=collective+protest+settlement
I promised policyholders that I would monitor the situation and give an update.
Recently, I decided to surrender my Living policy, which was affected by the bonus cut. I received a surrender value that included the special bonus to compensate for the bonus cut. In this case, I was slightly better off (with the special bonus included).
During the past six months, there has been turmoil in the financial market resulting in a large markdown of asset prices. I do not know whether the "compensating" special bonus will be withdrawn or reduced in the next few years of the global financial crisis.
Earlier, I wanted to press for the bonus cuts in past years to be restored due to the good financial results up to 2007. With the large drop in asset price in 2008, it will now be difficult to press for this measure. It is also likely that future bonus will remain at a low level, until after the global economy has recovered.
On the bright side, the cash value of a life insurance policy remain largely protection (although the yield is low) during a bad period. It does not suffer the capital loss that comes from shares and other investments.
An apology to Chee Soon Juan and his sister
I refer to this posting:
http://tankinlian.blogspot.com/2008/10/protest-outside-dbs-headquarters.html
The posting in my blog was written by somebody else in CNA forum. I reproduced the mesaage in my blog but overlooked to mention the author. It gave the wrong impression that the message was written by me.
I wish to apologise to Chee Soon Juan and his sister for the damage that is caused to them by the statement, “what many stupid and selfish politicians in Singapore have done and seek self destruction.” This statement came from the original posting (by someone else).
I do not personally share this sentiment and wish to acknowledge their personal sacrifice in fighting for what they believe in.
http://tankinlian.blogspot.com/2008/10/protest-outside-dbs-headquarters.html
The posting in my blog was written by somebody else in CNA forum. I reproduced the mesaage in my blog but overlooked to mention the author. It gave the wrong impression that the message was written by me.
I wish to apologise to Chee Soon Juan and his sister for the damage that is caused to them by the statement, “what many stupid and selfish politicians in Singapore have done and seek self destruction.” This statement came from the original posting (by someone else).
I do not personally share this sentiment and wish to acknowledge their personal sacrifice in fighting for what they believe in.
Wednesday, November 26, 2008
A sense of responsibility: Obama
http://www.channelnewsasia.com/stories/afp_world/view/392333/1/.html
WASHINGTON: President-elect Barack Obama has chastised US auto executives for being "tone deaf" for flying on corporate jets to Washington to beg for bailout money, and said he believed bank executives should forgo their end-of-year bonuses.
In the advanced excerpt of an interview to be broadcast Wednesday and released by ABC News late Tuesday, the president elect focused on responsibility.
Bank executives forgoing bonuses is "an example of taking responsibility," Obama said.
"If you are already worth tens of millions of dollars, and you are having to lay off workers, the least you can do is say, 'I'm willing to make some sacrifice as well', because I recognize that there are people who are a lot less well off, who are going through some pretty tough times ," Obama told ABC News.
As for the incident in which the heads of Ford, Chrysler and General Motors flew their private jets to Washington last week to ask Congress for bailout money, Obama said: "I thought maybe they're a little tone deaf to what's happening in America right now."
He described it as "a chronic problem, not just for the auto industry ... (but) for the captains of industry generally.
"When people are pulling down hundred million dollar bonuses on Wall Street, and taking enormous risks with other people's money, that indicates a sense that you don't have any perspective on what's happening to ordinary Americans," Obama said.
And when the "auto makers are getting paid far more than their counterparts at Toyota, or at Honda, and yet they're losing money a lot faster than Japanese auto makers are, that tells me that they're not seeing what's going on out there."
Obama said he hoped his presidency will help "usher in ... a return to an ethic of responsibility. That if you're placed in a position of power, then you've got responsibilities to your workers. You've got a responsibility to your community. Your shareholders."
He added: "And that's true ... for members of Congress, that's true for the president, that's true for cabinet members, that's true for parents.
"I want all of us to start thinking a little bit more, not just about what's good for me, but let's start thinking about what's good for our children, what's good for our country. The more we do that, the better off we're going to be," he said.
WASHINGTON: President-elect Barack Obama has chastised US auto executives for being "tone deaf" for flying on corporate jets to Washington to beg for bailout money, and said he believed bank executives should forgo their end-of-year bonuses.
In the advanced excerpt of an interview to be broadcast Wednesday and released by ABC News late Tuesday, the president elect focused on responsibility.
Bank executives forgoing bonuses is "an example of taking responsibility," Obama said.
"If you are already worth tens of millions of dollars, and you are having to lay off workers, the least you can do is say, 'I'm willing to make some sacrifice as well', because I recognize that there are people who are a lot less well off, who are going through some pretty tough times ," Obama told ABC News.
As for the incident in which the heads of Ford, Chrysler and General Motors flew their private jets to Washington last week to ask Congress for bailout money, Obama said: "I thought maybe they're a little tone deaf to what's happening in America right now."
He described it as "a chronic problem, not just for the auto industry ... (but) for the captains of industry generally.
"When people are pulling down hundred million dollar bonuses on Wall Street, and taking enormous risks with other people's money, that indicates a sense that you don't have any perspective on what's happening to ordinary Americans," Obama said.
And when the "auto makers are getting paid far more than their counterparts at Toyota, or at Honda, and yet they're losing money a lot faster than Japanese auto makers are, that tells me that they're not seeing what's going on out there."
Obama said he hoped his presidency will help "usher in ... a return to an ethic of responsibility. That if you're placed in a position of power, then you've got responsibilities to your workers. You've got a responsibility to your community. Your shareholders."
He added: "And that's true ... for members of Congress, that's true for the president, that's true for cabinet members, that's true for parents.
"I want all of us to start thinking a little bit more, not just about what's good for me, but let's start thinking about what's good for our children, what's good for our country. The more we do that, the better off we're going to be," he said.
No reply from financial institution after four weeks
Hi Mr. Tan,
I think you should bring attention to the investers that under Step 3 outlined by MAS, the financial institution is required to give a reply within 4 weeks:
http://www.mas.gov.sg/consumer/structured_products/fidrec_3_step_process.html has
I have not received a reply after 4 weeks. Why doesn't MAS take action against the FI?
REPLY
I suggest that you should lodge a complaint directly with MAS on this matter.
I think you should bring attention to the investers that under Step 3 outlined by MAS, the financial institution is required to give a reply within 4 weeks:
http://www.mas.gov.sg/consumer/structured_products/fidrec_3_step_process.html has
I have not received a reply after 4 weeks. Why doesn't MAS take action against the FI?
REPLY
I suggest that you should lodge a complaint directly with MAS on this matter.
End of Free Financial Advice
The FSA of UK (equivalent to MAS) is introducing this new measure in 2012. It will have great impact on how financial products are sold. Our approach in Singapore is modelled on the UK - so I expect that similar measures will be introduced here. It will prevent the sale of financial products that are bad for customers.
From the Telegraph in UK, 25 Nov 2008
The days of consumers getting "free" financial advice look numbered under new regulatory guidelines which are aimed at improving the way financial products are sold.
The Financial Services Authority (FSA) has outlined new guidelines that effectively outlaw commission payments, which have been seen by many consumers as a way of getting "free" advice.
The FSA has made it clear that it is concerned that these payments are used to disguise the cost of financial products, and may create bias in an adviser's recommendations.
A spokesman for the FSA said it hoped its proposals would restore consumers' trust in the financial services industry at a time when many "need real help and advice with their retirement and savings planning". The changes are due to come into force in 2012.
The regulator's review contains three key proposals. Probably the biggest change is to the way advisers are remunerated.
For the first time all advisers, whether they are independent financial advisers or sales agents, will have to declare and agree with the customer in advance exactly what the advice costs. Consumers will then have the option of paying for it in advance or opting for the cost to be taken from their savings over a period of time.
A spokesman for the FSA said: "Commission as we know it will disappear for ever. We want to sever the providers' involvement with the advisers' fees." The FSA has not ruled out banning commission completely at a later date.
Another major change is that all advisers will now have to take advanced qualifications, equivalent to the first year of a degree course, if they are offering full advice to consumers. At present 80pc of advisers do not have these qualifications.
Andrew Fisher, the chief executive of Towry Law, a firm of financial advisers, said: "This is brilliant news for consumers. The smoke and mirrors, lies and obfuscation that have been used to disguise consumer fees will be stopped.
"Individuals thought that commission meant 'free' advice but it was always paid for, either by raising product charges or by reducing the value of a consumer's investment. For the first time, any commission charge will now explicitly be linked to consumers' savings and will have to be agreed upfront."
The FSA said its framework would provide a mix of services, so "less sophisticated" investors who could not afford to pay for full advice were not excluded. Many companies are expected to offer "guided sales", where consumers are given basic financial information.
If this led to a recommendation to buy a certain product, however, the sales person would still be required to have the appropriate professional qualifications and be upfront about any product charges. The FSA said: "It must always be made clear at the outset whether consumers are paying for independent advice or a sales service."
Trevor Matthews, the president of the Chartered Insurance Institute said these proposals should "kick-start" the process "of moving to higher levels of competence and and professionalism". He added: "The biggest challenge for the long term future of this industry is to restore trust in financial services, which has been dented for too long." He said today's proposals go some way to addressing this issue.
David Elms, the chief executive of IFA Promotion, said he welcomed the proposals but was awaiting details on how they would be implemented.
He added: "We want to see the same standards applied to all advisers, whether they are recommending products from across the spectrum of providers or selling just one company's products.
"This should enable consumers to understand the choices available to them."
From the Telegraph in UK, 25 Nov 2008
The days of consumers getting "free" financial advice look numbered under new regulatory guidelines which are aimed at improving the way financial products are sold.
The Financial Services Authority (FSA) has outlined new guidelines that effectively outlaw commission payments, which have been seen by many consumers as a way of getting "free" advice.
The FSA has made it clear that it is concerned that these payments are used to disguise the cost of financial products, and may create bias in an adviser's recommendations.
A spokesman for the FSA said it hoped its proposals would restore consumers' trust in the financial services industry at a time when many "need real help and advice with their retirement and savings planning". The changes are due to come into force in 2012.
The regulator's review contains three key proposals. Probably the biggest change is to the way advisers are remunerated.
For the first time all advisers, whether they are independent financial advisers or sales agents, will have to declare and agree with the customer in advance exactly what the advice costs. Consumers will then have the option of paying for it in advance or opting for the cost to be taken from their savings over a period of time.
A spokesman for the FSA said: "Commission as we know it will disappear for ever. We want to sever the providers' involvement with the advisers' fees." The FSA has not ruled out banning commission completely at a later date.
Another major change is that all advisers will now have to take advanced qualifications, equivalent to the first year of a degree course, if they are offering full advice to consumers. At present 80pc of advisers do not have these qualifications.
Andrew Fisher, the chief executive of Towry Law, a firm of financial advisers, said: "This is brilliant news for consumers. The smoke and mirrors, lies and obfuscation that have been used to disguise consumer fees will be stopped.
"Individuals thought that commission meant 'free' advice but it was always paid for, either by raising product charges or by reducing the value of a consumer's investment. For the first time, any commission charge will now explicitly be linked to consumers' savings and will have to be agreed upfront."
The FSA said its framework would provide a mix of services, so "less sophisticated" investors who could not afford to pay for full advice were not excluded. Many companies are expected to offer "guided sales", where consumers are given basic financial information.
If this led to a recommendation to buy a certain product, however, the sales person would still be required to have the appropriate professional qualifications and be upfront about any product charges. The FSA said: "It must always be made clear at the outset whether consumers are paying for independent advice or a sales service."
Trevor Matthews, the president of the Chartered Insurance Institute said these proposals should "kick-start" the process "of moving to higher levels of competence and and professionalism". He added: "The biggest challenge for the long term future of this industry is to restore trust in financial services, which has been dented for too long." He said today's proposals go some way to addressing this issue.
David Elms, the chief executive of IFA Promotion, said he welcomed the proposals but was awaiting details on how they would be implemented.
He added: "We want to see the same standards applied to all advisers, whether they are recommending products from across the spectrum of providers or selling just one company's products.
"This should enable consumers to understand the choices available to them."
Singapore Dance Theatre performs Nutcracker
Dear Friend,
Singapore Dance Theatre performs Nutcracker
I hope that, in spite of the stress from the credit linked notes, your family is still in the mood to celebrate the December holidays.
I suggest bringing your family to watch the performance of the Nutcracker by the Singapore Dance Theatre. More details (i.e. ticket price, performance dates, booking instructions) are shown in this video clip:
http://www.youtube.com/watch?v=5WSo2D-nMjY
Performing nights: Dec 12, 13, 17, 18, 19, 29.
I am the deputy chairman of the SDT. If you can support the SDT, it will be much appreciated.
Tan Kin Lian
Singapore Dance Theatre performs Nutcracker
I hope that, in spite of the stress from the credit linked notes, your family is still in the mood to celebrate the December holidays.
I suggest bringing your family to watch the performance of the Nutcracker by the Singapore Dance Theatre. More details (i.e. ticket price, performance dates, booking instructions) are shown in this video clip:
http://www.youtube.com/watch?v=5WSo2D-nMjY
Performing nights: Dec 12, 13, 17, 18, 19, 29.
I am the deputy chairman of the SDT. If you can support the SDT, it will be much appreciated.
Tan Kin Lian
Tuesday, November 25, 2008
Suggestion: how to approach legal action
Dear Mr. Tan
I would like to suggest the followings:
1) Use the online petition, one for each product (Minibond, High notes ....), to gather all investors who are in favor in legal action
2) Call a meeting for all interested investors to have a preliminary discussion and to select a committee to conduct a feasibility study.
3) The meeting will identify the scope for the feasibility study.
4) The feasibility study may include :
a) study the sales brochures/newspaper advertisements/prospectus to identify common grounds for the law suit (consult financial experts/lawyers if necessary)
b) cost and return analysis
c) study other similar class action cases (US, Hong Kong, Taiwan …)
d) identify the parties for the law suit (Lehman Brothers, FIs, MAS…)
e) identify where to file the law suit (local or US)
f) work out an action plan
Pang
REPLY
I agree with you. I shall organise the survey (using online petiton) to gather the investors willing to take action.
I would like to suggest the followings:
1) Use the online petition, one for each product (Minibond, High notes ....), to gather all investors who are in favor in legal action
2) Call a meeting for all interested investors to have a preliminary discussion and to select a committee to conduct a feasibility study.
3) The meeting will identify the scope for the feasibility study.
4) The feasibility study may include :
a) study the sales brochures/newspaper advertisements/prospectus to identify common grounds for the law suit (consult financial experts/lawyers if necessary)
b) cost and return analysis
c) study other similar class action cases (US, Hong Kong, Taiwan …)
d) identify the parties for the law suit (Lehman Brothers, FIs, MAS…)
e) identify where to file the law suit (local or US)
f) work out an action plan
Pang
REPLY
I agree with you. I shall organise the survey (using online petiton) to gather the investors willing to take action.
Singapore Kopitiam Forum
You can visit this forum to have discusison about your specific topic on credit linked notes or other investments.
http://forums.delphiforums.com/n/mb/list.asp?webtag=sunkopitiam&ctx=32768&cacheTag=x10-28
http://forums.delphiforums.com/n/mb/list.asp?webtag=sunkopitiam&ctx=32768&cacheTag=x10-28
Swiss petition for national referendum to end "corporate rip off"
We can learn from the Swiss.
Mr Minder has embarked on a truly Swiss course of action to prevent such excesses in the future. Using Switzerland's system of direct democracy, he has collected the required 100,000 signatures to hold a nationwide referendum to end, as he puts it, "the corporate rip off."
http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/7741561.stm
Investors should see their Member of Parliament
I sent another e-mail to the investors to see their Member of Parliament in groups. I know that some investors had already seen their MP and the MP asked them to see the MAS or the financial institution or argued that they should have "their eyes open".
You can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you: The MP should:
1. Ask MAS what is the outcome of petition #1, asking MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act? What is the outcome of the investigation?
2. Ask how many investors had their cases resolved at the first leve, i.e. the financial institutions? How many cases were rejected by the financial instituions or made offers that were not accepted by investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?
3. Ask MAS how many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?
It is the duty of your MP to ask these questions, on your behalf, to MAS or to ask them in Parliament.
You can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you: The MP should:
1. Ask MAS what is the outcome of petition #1, asking MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act? What is the outcome of the investigation?
2. Ask how many investors had their cases resolved at the first leve, i.e. the financial institutions? How many cases were rejected by the financial instituions or made offers that were not accepted by investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?
3. Ask MAS how many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?
It is the duty of your MP to ask these questions, on your behalf, to MAS or to ask them in Parliament.
Why I wanted 100,000 signatures
Discussion in www.theonlinecitizen.com
http://theonlinecitizen.com/2008/11/help-get-100000-signatures-for-tan-kin-lian-to-run/
smallvoice585 on November 25th, 2008 2.31 am
Dear Tan Kin Lian,
With due respect, sir, I believe that you are not ready for politics yet. Though you have been a PAP member for 30 years, you have not been engaged in any grassroots work in the last 20 years. You also have no experience in electioneering. You do not have a dedicated or well-organised support structure around you.
People know you to be a long-time CEO of NTUC Income for 30 years; recently as an on-line protester against insurance bonus cuts; and lately, as a champion of burnt financial product investors. I’m afraid that’s not enough to gain credibility as the next big thing in alternative politics. People need to know your stand, views and ideas on a full spectrum of political issues articulated consistently over a significant period of time. They need to see proof of a wider range of leadership qualities required in political office.
Of course, please do not misconstrue that I’m trying to discourage you.
But the 100,000 signatures that this article is calling for is in my view totally irrelevant. True politicians do not ask for a show of hands before entering the fray - they offer themselves as instruments for their beliefs and willingly submit themselves to the caprice of public opinion. That is, you do not ask for support before you commit, but you should commit first and see if you’re getting any support. If you are not ready for this uncertainty, then it speaks volumes about your dedication to your political cause.
Tan Kin Lian on November 25th, 2008 5.19 am
Hi smallvoice585
You are correct. I am not “ready” for politics …. in the conventional way. There are many examples of more capable people who came into politics during the past 20 years. Most of them did not survive. Only two did, and they have a lot of difficulty in building up their base of support.
You are also correct about the lack of a political machinery. It takes more than this political machinery for an alternative party to succeed- as it has to compete with the incumbent that has more resources beyond its own political machinery..
I wanted to take a different approach - to create awareness, to educate the public. The recent event involving the 10,700 investors of the credit linked notes show how bad things can be - that the government can just ignore the call to do the right thing and enforce the law.
If more people come forward to voice their views, it may wake up the current leaders and create the change that is desriable and good for the country. An important change is to recognise that the elected leaders should represent the people, and that a free contest is for the good of the country.
Many people said that an alternative party needs more than one person. How do you expect other people to come forward? They are not willing to sacrifice their career. They will be subject to discrimination. Maybe 100,000 signatures will change their mind.
Will my approach work? Some people think so. Others are sceptical. I am willing to give it a try. If it does not, I can go back and retire.
http://theonlinecitizen.com/2008/11/help-get-100000-signatures-for-tan-kin-lian-to-run/
smallvoice585 on November 25th, 2008 2.31 am
Dear Tan Kin Lian,
With due respect, sir, I believe that you are not ready for politics yet. Though you have been a PAP member for 30 years, you have not been engaged in any grassroots work in the last 20 years. You also have no experience in electioneering. You do not have a dedicated or well-organised support structure around you.
People know you to be a long-time CEO of NTUC Income for 30 years; recently as an on-line protester against insurance bonus cuts; and lately, as a champion of burnt financial product investors. I’m afraid that’s not enough to gain credibility as the next big thing in alternative politics. People need to know your stand, views and ideas on a full spectrum of political issues articulated consistently over a significant period of time. They need to see proof of a wider range of leadership qualities required in political office.
Of course, please do not misconstrue that I’m trying to discourage you.
But the 100,000 signatures that this article is calling for is in my view totally irrelevant. True politicians do not ask for a show of hands before entering the fray - they offer themselves as instruments for their beliefs and willingly submit themselves to the caprice of public opinion. That is, you do not ask for support before you commit, but you should commit first and see if you’re getting any support. If you are not ready for this uncertainty, then it speaks volumes about your dedication to your political cause.
Tan Kin Lian on November 25th, 2008 5.19 am
Hi smallvoice585
You are correct. I am not “ready” for politics …. in the conventional way. There are many examples of more capable people who came into politics during the past 20 years. Most of them did not survive. Only two did, and they have a lot of difficulty in building up their base of support.
You are also correct about the lack of a political machinery. It takes more than this political machinery for an alternative party to succeed- as it has to compete with the incumbent that has more resources beyond its own political machinery..
I wanted to take a different approach - to create awareness, to educate the public. The recent event involving the 10,700 investors of the credit linked notes show how bad things can be - that the government can just ignore the call to do the right thing and enforce the law.
If more people come forward to voice their views, it may wake up the current leaders and create the change that is desriable and good for the country. An important change is to recognise that the elected leaders should represent the people, and that a free contest is for the good of the country.
Many people said that an alternative party needs more than one person. How do you expect other people to come forward? They are not willing to sacrifice their career. They will be subject to discrimination. Maybe 100,000 signatures will change their mind.
Will my approach work? Some people think so. Others are sceptical. I am willing to give it a try. If it does not, I can go back and retire.
Monday, November 24, 2008
Buyer beware
Letter by Adrian Tan
Much has been said and written about “Buyer beware”, investing “with their eyes open” and “I think the prospectus says ‘you could lose all or a substantial part of your investment in the Notes’ in bold print, on page 1 or 2”.
But what if the prospectus did not disclose material facts?
The New Paper’s Doctor Money ( Larry Haverkamp) wrote on 4 November 2008 that
“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.
They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.
Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”
Investors in Minibonds and HN5, Jubilee and Pinnacle Notes should be asking lawyers whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act which reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).
And if they are, what are the remedies and against whom. As Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”
Breaches of section 243(1)(a) are something MAS is surely investigating because we have been assured, MAS is looking, “thoroughly into every possible breach of regulation, poor internal regulation or sales practices. And it will take action where necessary”.
Adrian Tan
Much has been said and written about “Buyer beware”, investing “with their eyes open” and “I think the prospectus says ‘you could lose all or a substantial part of your investment in the Notes’ in bold print, on page 1 or 2”.
But what if the prospectus did not disclose material facts?
The New Paper’s Doctor Money ( Larry Haverkamp) wrote on 4 November 2008 that
“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.
They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.
Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”
Investors in Minibonds and HN5, Jubilee and Pinnacle Notes should be asking lawyers whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act which reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).
And if they are, what are the remedies and against whom. As Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”
Breaches of section 243(1)(a) are something MAS is surely investigating because we have been assured, MAS is looking, “thoroughly into every possible breach of regulation, poor internal regulation or sales practices. And it will take action where necessary”.
Adrian Tan
Singapore's investments in global banks
I received a report from an analyst.
Temasek and GIC invested a total of SGD 36.7 billion in the global banks, namely Barclays, UBS, Merrill Lynch and Citigroup. The invstment in Barclays was made 18 months ago. The others was made nearly 12 months ago.
The value of these investments dropped by slightly more than 50%, or about SGD 18.5 billion. During the same period, the global stockmarket dropped by about the same extent. (Earlier, I thought that the global banks performed worse that the market, but it does not seem to be the case).
Temasek and GIC invested a total of SGD 36.7 billion in the global banks, namely Barclays, UBS, Merrill Lynch and Citigroup. The invstment in Barclays was made 18 months ago. The others was made nearly 12 months ago.
The value of these investments dropped by slightly more than 50%, or about SGD 18.5 billion. During the same period, the global stockmarket dropped by about the same extent. (Earlier, I thought that the global banks performed worse that the market, but it does not seem to be the case).
Ask for information in writing
Dear Mr. Tan,
I hve invested into Jubilee Series 8 Notes which will mature in 2.5 yrs time in Jan 2011. A fix rate of 3.15% per year is paid. The arranger of the Notes is Merrill Lynch who has since taken over by BOA. The trustee is HSBC Institutional Trust Services (S) Ltd. Currently the value of the Notes is 84% of the purchase price.
I have asked the RM many times but he is also not sure where the money is invested in and whether the Notes will default since more and more bad news are disclosed nowadays. I asked for the prospectus from the RM and took pain to go thru' the 100 pages but just not understand at all. I has no choice but to visit one of the branch and one of the RM verbally told me that it is invested in Merrill Lynch's bond.
I hope you can assist by enlightening me the following:-
a. where the money is invested in?
b. I understand that BOA is taking over Merrill Lynch. Could BOA just take over Merrill Lynch's assets but not its liabilities? If this is possible, then I think most likely the Notes will terminate and worthless.
REPLY
I am at a lost. There are so many series and each series is different from the other series.
I suggest that you should ask the issuer (Merill Lynch) to give you the reply to your questions in writing. If they do not, you should lodge a complaint with MAS.
I hve invested into Jubilee Series 8 Notes which will mature in 2.5 yrs time in Jan 2011. A fix rate of 3.15% per year is paid. The arranger of the Notes is Merrill Lynch who has since taken over by BOA. The trustee is HSBC Institutional Trust Services (S) Ltd. Currently the value of the Notes is 84% of the purchase price.
I have asked the RM many times but he is also not sure where the money is invested in and whether the Notes will default since more and more bad news are disclosed nowadays. I asked for the prospectus from the RM and took pain to go thru' the 100 pages but just not understand at all. I has no choice but to visit one of the branch and one of the RM verbally told me that it is invested in Merrill Lynch's bond.
I hope you can assist by enlightening me the following:-
a. where the money is invested in?
b. I understand that BOA is taking over Merrill Lynch. Could BOA just take over Merrill Lynch's assets but not its liabilities? If this is possible, then I think most likely the Notes will terminate and worthless.
REPLY
I am at a lost. There are so many series and each series is different from the other series.
I suggest that you should ask the issuer (Merill Lynch) to give you the reply to your questions in writing. If they do not, you should lodge a complaint with MAS.
Pinnacle Notes Series 9 and 10
Pinnacle Notes series 9 and 10 was sold in November 2007 - just a year ago. At that time, the subprime and CDO market was already in trouble. The issuer put in 150 underlying assets and sold them to the retail investors.
The issuer did state, in the adverstisement, that the money would be invested in the CDOs. However, the are required under the Security and Futures Act to disclose all relevant information to help the investors make an informed decision. Did they meet this standard?
It is extremely difficult for the investors to ask for information to see if the Securities and Futures Act have been breached. I hope that the MAS will investigate this matter separately. Morgan Stanley is still around, and they should be able to provide the information for the investigation.
I hope that this investigation is carried out openly, so that the investors are satisfied that they have been treated fairly and have not been "cheated".
Here are some relevant information:
http://tankinlian.blogspot.com/2007/11/pinnacle-notes-series-9-10.html
http://tankinlian.blogspot.com/2008/11/credit-default-of-pinnacle-notes-series.html
I hope that some lawyers can advice if it is possible for the investors to take a mandamus case to compel the MAS to invstigate this matter?
I hope that the investors of series 9 and 10 get together (for each series) and study if there were gaps in the prospectus that failed to described the risk of this product. You can meet with an experienced lawyer to discuss this matter. The lawyer can get a written expert opinion from overseas. If there was material misrepresentation of the securities, it may be possible to get the court to declare the transaction as void and for the investors to get a full refund.
The issuer did state, in the adverstisement, that the money would be invested in the CDOs. However, the are required under the Security and Futures Act to disclose all relevant information to help the investors make an informed decision. Did they meet this standard?
It is extremely difficult for the investors to ask for information to see if the Securities and Futures Act have been breached. I hope that the MAS will investigate this matter separately. Morgan Stanley is still around, and they should be able to provide the information for the investigation.
I hope that this investigation is carried out openly, so that the investors are satisfied that they have been treated fairly and have not been "cheated".
Here are some relevant information:
http://tankinlian.blogspot.com/2007/11/pinnacle-notes-series-9-10.html
http://tankinlian.blogspot.com/2008/11/credit-default-of-pinnacle-notes-series.html
I hope that some lawyers can advice if it is possible for the investors to take a mandamus case to compel the MAS to invstigate this matter?
I hope that the investors of series 9 and 10 get together (for each series) and study if there were gaps in the prospectus that failed to described the risk of this product. You can meet with an experienced lawyer to discuss this matter. The lawyer can get a written expert opinion from overseas. If there was material misrepresentation of the securities, it may be possible to get the court to declare the transaction as void and for the investors to get a full refund.
Experience with FIDREC
I wish to ask investors, who have gone through FIDREC, to share your experience.
While you are covered under some confidentiality agreement, it should be all right to give some public information about whethere you accepted or rejected the adjuication, or the number of interviews and length of time taken to present your case.
This information will be helpful to other investors who are waiting for FIDREC adjudication.
I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.
While you are covered under some confidentiality agreement, it should be all right to give some public information about whethere you accepted or rejected the adjuication, or the number of interviews and length of time taken to present your case.
This information will be helpful to other investors who are waiting for FIDREC adjudication.
I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.
Guide on FIDREC process
MAS has put out a good guide on the FIDREC process. Please read it:
http://www.mas.gov.sg/consumer/structured_products/fidrec_faqs.html
Key Things to Note About the FIDReC Fast-Track Dispute Resolution Processes for Disputes relating to the Lehman Minibond Programme, DBS High Notes 5, Merrill Lynch Jubilee Series 3 LinkEarner Notes and Morgan Stanley Pinnacle Series 9 and 10 Notes
http://www.mas.gov.sg/consumer/structured_products/fidrec_faqs.html
Key Things to Note About the FIDReC Fast-Track Dispute Resolution Processes for Disputes relating to the Lehman Minibond Programme, DBS High Notes 5, Merrill Lynch Jubilee Series 3 LinkEarner Notes and Morgan Stanley Pinnacle Series 9 and 10 Notes
Morgan Stanley website on Pinnacle Notes
Dear Mr. Tan,
I was trying to find out more about Pinnacle Notes by entering the Morgan Stanley website. Lo and behold, we need to sign in agreeing to all the terms before I can view any information at the FRONT PAGE.
Can you ask MAS
[1] Is this the right practice?
[2] Is this morally right practice?
[3] Is this trying to reduce information flow to investor?
[4] I thought the Pinnacle is selling to "public" through retail network, but information sudden becomes only to privy. Is this infringing the basis of sale of Pinnacle Notes?
[5] Can MAS conduct an investigation on this type of practice to restrict information to investors?
This has been the darkest moment for my wife and myself. Frankly, the hopelessness is not due to the loss of money (altough it is a lot of money) but the loss of confidence in the system.
LKH
REPLY
Please write directly to ask MAS. I will post your e-mail in my blog also.
I was trying to find out more about Pinnacle Notes by entering the Morgan Stanley website. Lo and behold, we need to sign in agreeing to all the terms before I can view any information at the FRONT PAGE.
Can you ask MAS
[1] Is this the right practice?
[2] Is this morally right practice?
[3] Is this trying to reduce information flow to investor?
[4] I thought the Pinnacle is selling to "public" through retail network, but information sudden becomes only to privy. Is this infringing the basis of sale of Pinnacle Notes?
[5] Can MAS conduct an investigation on this type of practice to restrict information to investors?
This has been the darkest moment for my wife and myself. Frankly, the hopelessness is not due to the loss of money (altough it is a lot of money) but the loss of confidence in the system.
LKH
REPLY
Please write directly to ask MAS. I will post your e-mail in my blog also.
Risk analysis form - wrong statements
You should ask the distributor to send you a copy of the risk analysis form. See here:
http://tankinlian.blogspot.com/2008/11/risk-analysis-form.html
If you find any wrong statements in the form, you should write a letter formally to the distributor to correct the statements. If possible, try to find evidence that the statements were wrong - e..g regarding your risk appetide, etc.
If the wrong statements were fraudalent, you can lodge a police report against the sales representative.
One investor found that a statement was entered into the form without his knowledge, and he is able to prove it. He has decided to lodge a police report about the fraudalent act. This will strengthen his case to ask for a full refund.
http://tankinlian.blogspot.com/2008/11/risk-analysis-form.html
If you find any wrong statements in the form, you should write a letter formally to the distributor to correct the statements. If possible, try to find evidence that the statements were wrong - e..g regarding your risk appetide, etc.
If the wrong statements were fraudalent, you can lodge a police report against the sales representative.
One investor found that a statement was entered into the form without his knowledge, and he is able to prove it. He has decided to lodge a police report about the fraudalent act. This will strengthen his case to ask for a full refund.
Gathering 100,000 signatures
Several people have written e-mails to encourage me to represent the views of the people through the political arena. I have sent these e-mails to The Online Citizen (after removing their names) for publication.
You can read them at http://www.theonlinecitizen.com/.
I will keep this blog largely focused on financial and insurance matters, especially the credit linked notes. There will be some mention about the "gathering 100,000 signatures" but it will be somewhat subdued. It will take a few months to gather the signatures, so this matter will quieten down after a few days.
Most investors have been badly affected by the credit linked notes. Your loss could have been reduced or avoided, if there were greater accountability by the authority. I suggest that you should print out the petition form and get 20 signatures or more.
You can read them at http://www.theonlinecitizen.com/.
I will keep this blog largely focused on financial and insurance matters, especially the credit linked notes. There will be some mention about the "gathering 100,000 signatures" but it will be somewhat subdued. It will take a few months to gather the signatures, so this matter will quieten down after a few days.
Most investors have been badly affected by the credit linked notes. Your loss could have been reduced or avoided, if there were greater accountability by the authority. I suggest that you should print out the petition form and get 20 signatures or more.
Strategy on credit linked notes
My next step is to help the investors to identify suitable lawyers to take up a legal case on the misrepresentation in the advertisements and prospectus on the credit linked notes.
It is possible to identify a group of investors who have been misled by these materials and to claim for a full refund, based on the misrepresentation of the product.
The investors will have to identity the grounds of misrepresentation and to discuss it with the lawyer.
I hope that this will encourage the distributor to offer a fair settlement out of court. A fair settlement in my view should be 50% of the amount lost by the investor, i.e. both parties share the loss equally.
It is possible to identify a group of investors who have been misled by these materials and to claim for a full refund, based on the misrepresentation of the product.
The investors will have to identity the grounds of misrepresentation and to discuss it with the lawyer.
I hope that this will encourage the distributor to offer a fair settlement out of court. A fair settlement in my view should be 50% of the amount lost by the investor, i.e. both parties share the loss equally.
Low compensation offered by HLF
Dear Mr Tan,
I have received some updates from HLF regarding the Minibonds.
Both of my elderly aunts (one is mid 70s, the other is 59) have both received the calls from HLF last week regarding the "compensation" regarding to their MiniBonds investment. The total sum invested was $90,000, and HLF actually proposed to return them $250 each to compensate for their losses. This is outright ridiculous! HLF had clearly taken their money thru mis-selling, and now they are offering $250 each as good-will! Both of my aunts rejected this compensation and seeks to bring this case up to FIReC.
Thank u for everything u hv done for us!
Anne
I have received some updates from HLF regarding the Minibonds.
Both of my elderly aunts (one is mid 70s, the other is 59) have both received the calls from HLF last week regarding the "compensation" regarding to their MiniBonds investment. The total sum invested was $90,000, and HLF actually proposed to return them $250 each to compensate for their losses. This is outright ridiculous! HLF had clearly taken their money thru mis-selling, and now they are offering $250 each as good-will! Both of my aunts rejected this compensation and seeks to bring this case up to FIReC.
Thank u for everything u hv done for us!
Anne
Sunday, November 23, 2008
Tan Kin Lian eyes elected presidency
This is the headline of an article in the Sunday Times.
The front page has the following message: "Im game to be elected president or member of parliament if people wants me" Tan Kin Lian now opens up on his political ambition.
My "political ambition" has been summarised in this posting in my blog on 2 November 2008:
http://tankinlian.blogspot.com/2008/11/political-ambitions.html
It is also reflected in the article written by Nur Dianah Suhaimi. It reflects my views quite fairly. The headline is an exaggeration and gives a distorted angle.
My friend said that the article may backfire on me. My supporters may not be able to get 100,000 signatures. Why not ask for 50,000?
I told my friend, "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea." I am willing to leave this to the voice of the people.
The front page has the following message: "Im game to be elected president or member of parliament if people wants me" Tan Kin Lian now opens up on his political ambition.
My "political ambition" has been summarised in this posting in my blog on 2 November 2008:
http://tankinlian.blogspot.com/2008/11/political-ambitions.html
It is also reflected in the article written by Nur Dianah Suhaimi. It reflects my views quite fairly. The headline is an exaggeration and gives a distorted angle.
My friend said that the article may backfire on me. My supporters may not be able to get 100,000 signatures. Why not ask for 50,000?
I told my friend, "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea." I am willing to leave this to the voice of the people.
Issuers of toxic notes should take more of the blame
Dear Mr Tan
I have been tracking news of Minbonds, Pinnacles and Jubilee Notes (MPJ) series actively. Some points I have observed and wished to highlight
1. Distributors with advisory roles distributing the MPJ series have recieved alot of flak for their sale, esp DBS Bank. I am not sure how much revenue these distributors are paid for each $1000 invested but a educated guess would be not more than 5-10%, Its pretty amazing how so much flak is diverted on them as opposed to the issuer (manufacturer) of these products. Lehman is insolvent now, yet, Morgan Stanley (Pinnacle issuer) and Merrill Lynch (Jubilee) have offices in Singapore and they have recieved less attention as opposed to DBS bank. As issuers of the notes, margains are definitely higher than distributors like DBS, yet I see Morgan Stanley/ Merrill Lynch relatively unscathed by all these. Surely there are no protests and investor wanting justice. I am not sure if some of the investors are even aware that Merrill Lynch/ Morgan Stanley are the issuers for them and not the local banks.
2. The main issue here are the bankrupty of the underlying asserts that causes the credit events leading to the default of the notes, I have gone through the prospectus and none of the underlying assert was mentioned. In fact alot of, esp less savvy investors, believed that the funds are invested in the 6/7 major reputable and not the underlying 150 firms. Since the underlying sercurities were not in the prospectus except that at point of printing all are rated double AA rating. If the distributors are not informed of this, is it fair to blame them wholly ?Further with a margain spread of 10-15%, does investor really expect the banks to pay them 100% of their investments? Can the banks then blame MAS as these MPJ investments were approved by MAS for sale.
3. My point here is to let lay the blame on the right parties who are primarily responsible for all these. Local Banks/distributors may have some smaller responsibilities but Morgan stanley and Merril lynch should rightly be held responsible for all misleading marketing info (since all marketing brochures pertaining to the product is issued by these 2 investment banks). Charges of continous issuance of series for pinnacle series continued despite the dismal performance of series 1/2 , yet the series were allowed to launch till series 15...
I hope you can post my comments as despite all the emtions about investments, I think we should be going after the parties who are PRIMARILY responsible for all these saga then the local distributors. In some ways, they may be victims as well since I believe noen of them knows abt the details of the investments as well.
DRAW
I have been tracking news of Minbonds, Pinnacles and Jubilee Notes (MPJ) series actively. Some points I have observed and wished to highlight
1. Distributors with advisory roles distributing the MPJ series have recieved alot of flak for their sale, esp DBS Bank. I am not sure how much revenue these distributors are paid for each $1000 invested but a educated guess would be not more than 5-10%, Its pretty amazing how so much flak is diverted on them as opposed to the issuer (manufacturer) of these products. Lehman is insolvent now, yet, Morgan Stanley (Pinnacle issuer) and Merrill Lynch (Jubilee) have offices in Singapore and they have recieved less attention as opposed to DBS bank. As issuers of the notes, margains are definitely higher than distributors like DBS, yet I see Morgan Stanley/ Merrill Lynch relatively unscathed by all these. Surely there are no protests and investor wanting justice. I am not sure if some of the investors are even aware that Merrill Lynch/ Morgan Stanley are the issuers for them and not the local banks.
2. The main issue here are the bankrupty of the underlying asserts that causes the credit events leading to the default of the notes, I have gone through the prospectus and none of the underlying assert was mentioned. In fact alot of, esp less savvy investors, believed that the funds are invested in the 6/7 major reputable and not the underlying 150 firms. Since the underlying sercurities were not in the prospectus except that at point of printing all are rated double AA rating. If the distributors are not informed of this, is it fair to blame them wholly ?Further with a margain spread of 10-15%, does investor really expect the banks to pay them 100% of their investments? Can the banks then blame MAS as these MPJ investments were approved by MAS for sale.
3. My point here is to let lay the blame on the right parties who are primarily responsible for all these. Local Banks/distributors may have some smaller responsibilities but Morgan stanley and Merril lynch should rightly be held responsible for all misleading marketing info (since all marketing brochures pertaining to the product is issued by these 2 investment banks). Charges of continous issuance of series for pinnacle series continued despite the dismal performance of series 1/2 , yet the series were allowed to launch till series 15...
I hope you can post my comments as despite all the emtions about investments, I think we should be going after the parties who are PRIMARILY responsible for all these saga then the local distributors. In some ways, they may be victims as well since I believe noen of them knows abt the details of the investments as well.
DRAW
Plea to MAS - investors of Pinnacle Notes
Managing Director,
Monetary Authority of Singapore
82 individual holders of Pinnacle Notes arranged by Morgan Stanley Asia (S) Pte Ltd have co-signed a self-explanatory Plea to MAS on their plight in their investment in the said Notes. On their behalf, I am handing over herewith the Plea together with their signature sheets and details as stated therein.
We hope that MAS will respond positively to our Plea as we are at our wit’s end as to how to protect whatever good values that remain in our investments. We have also enclosed Morgan Stanley’s latest indicative valuation of various Pinnacle Notes which one of us had obtained through his broker. As you can see, many of these have devalued down to barest values. We understand that these devaluations had occurred rapidly in recent weeks. On top of that, we are in the dark as to the timing and exact root causes of the devaluation. Morgan Stanley is also not providing such information to us even though some of us had asked for them through our brokers.
We will be most happy to take your response in any form you deem appropriate, be it directly to me on their behalf, through a press statement or any other means.
As a matter of courtesy, I wish to advise you that I will shortly be posting a copy of the Plea, in a website which the signors have agreed, to enable them to access a copy for their records as most of them did not get one for keeps at the time of the signing at Hong Lim Park due to lack of photo-copying facilities at the site.
Thank you.
signed
sb
www.tankinlian.com/forms/PleaToMAS.pdf
Monetary Authority of Singapore
82 individual holders of Pinnacle Notes arranged by Morgan Stanley Asia (S) Pte Ltd have co-signed a self-explanatory Plea to MAS on their plight in their investment in the said Notes. On their behalf, I am handing over herewith the Plea together with their signature sheets and details as stated therein.
We hope that MAS will respond positively to our Plea as we are at our wit’s end as to how to protect whatever good values that remain in our investments. We have also enclosed Morgan Stanley’s latest indicative valuation of various Pinnacle Notes which one of us had obtained through his broker. As you can see, many of these have devalued down to barest values. We understand that these devaluations had occurred rapidly in recent weeks. On top of that, we are in the dark as to the timing and exact root causes of the devaluation. Morgan Stanley is also not providing such information to us even though some of us had asked for them through our brokers.
We will be most happy to take your response in any form you deem appropriate, be it directly to me on their behalf, through a press statement or any other means.
As a matter of courtesy, I wish to advise you that I will shortly be posting a copy of the Plea, in a website which the signors have agreed, to enable them to access a copy for their records as most of them did not get one for keeps at the time of the signing at Hong Lim Park due to lack of photo-copying facilities at the site.
Thank you.
signed
sb
www.tankinlian.com/forms/PleaToMAS.pdf
Manifesto - the future of Singapore
KC asked me to write a manifesto of what I want to do, if I get into public office. My views are already reflected in several postings in my blog. They cover moral values, economic and social issues, etc.
I like to invite other readers to post your views about what you like to see regarding the future of Singapore.
I like to invite other readers to post your views about what you like to see regarding the future of Singapore.
Battle of the mind and the heart
Dear Sir,
I am writing this e-mail in response to the statement: "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea. I am willing to leave this to the voice of the people...."
Frankly, I do not agree with some of the things you have said and the way you have said them, and some of the things you did and the way you do them, but I believe what you are doing is for the sake of the Republic and her people and not for any personal gain or ambition.
From your statements, I can somehow sense that your mind is constantly asking you to opt out while your heart is begging you to take this course.
This further cement my views that you are doing this for the right reason and you strongly believe in serving the people of the Republic.
By giving you my support and my signature, I am also taking away your option (1/100,000) to opt out and to take your views and strengths to a bigger stage and platform where you have the power to do more for the people you care so much for.
I would like to further suggest that you consider writing a Manifesto to set out your strategic direction and outlines of any prospective legislation changes you would like to bring about if you are elected to public office and why you would like to change them.
Best Regards
KC
I am writing this e-mail in response to the statement: "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea. I am willing to leave this to the voice of the people...."
Frankly, I do not agree with some of the things you have said and the way you have said them, and some of the things you did and the way you do them, but I believe what you are doing is for the sake of the Republic and her people and not for any personal gain or ambition.
From your statements, I can somehow sense that your mind is constantly asking you to opt out while your heart is begging you to take this course.
This further cement my views that you are doing this for the right reason and you strongly believe in serving the people of the Republic.
By giving you my support and my signature, I am also taking away your option (1/100,000) to opt out and to take your views and strengths to a bigger stage and platform where you have the power to do more for the people you care so much for.
I would like to further suggest that you consider writing a Manifesto to set out your strategic direction and outlines of any prospective legislation changes you would like to bring about if you are elected to public office and why you would like to change them.
Best Regards
KC
Reveal your identity
Somebody asked me to "be fair" and allow his critical comment to be posted. I agreed to his request.
Normally, I expect a person to use his real name, if he wish to post a comment to criticise any person or view. If you do not wish to reveal your identity, you should post your view neutrally and do not attack or pass judgement on another person.
Normally, I expect a person to use his real name, if he wish to post a comment to criticise any person or view. If you do not wish to reveal your identity, you should post your view neutrally and do not attack or pass judgement on another person.
Useful role for financial advisers
I believe that financial advisers (i.e. insurance agents and sales representatives) have the responsibility to give appropriate advice to the consumers and they should be fairly paid for their time and effort.
The commission system and sales targets are the source of the malpractice. If a distributor or adviser can earn $6,000 (3% of $200,000) to sell a credit linked note within 30 minutes, something must be wrong. Of course, the adviser will say that the product is good, safe, approved by MAS, etc.
I encourage financial advisers to give independent and good advice for a fee of $100 or $150 an hour and to keep the advice within 1 or 2 hours. A doctor is also paid for the time that is spent to treat a patient, and does not receive a commission for the medicine that is prescribed.
The commission system and sales targets are the source of the malpractice. If a distributor or adviser can earn $6,000 (3% of $200,000) to sell a credit linked note within 30 minutes, something must be wrong. Of course, the adviser will say that the product is good, safe, approved by MAS, etc.
I encourage financial advisers to give independent and good advice for a fee of $100 or $150 an hour and to keep the advice within 1 or 2 hours. A doctor is also paid for the time that is spent to treat a patient, and does not receive a commission for the medicine that is prescribed.
Moral values and ethics
I posted a blog on my moral values and ethics, as follow:
http://tankinlian.blogspot.com/2008/11/personal-values-and-characters.html
Many people agree that it is important to have good values, as they drive our conduct and relations with other people.
A retired teacher lamented to me that in recent years, our young students are taught technical and work skills, but are lacking in moral values and ethics. Nowadays, it seems to be all right to "cheat" people to increase profits. Just say, "caveat emptor".
I hope that some of the moral values will wake our government leaders to do the right thing - the values of honesty, courage, fairness, looking after the interest of others - to name just a few.
A few readers were uncomfortable about my statement of values. They felt that I should not be "preaching" these values. I think that it is the duty of all members of society to articulate the values that should guide the future of our society. I hope that more people can come forward to express their views on this matter.
http://tankinlian.blogspot.com/2008/11/personal-values-and-characters.html
Many people agree that it is important to have good values, as they drive our conduct and relations with other people.
A retired teacher lamented to me that in recent years, our young students are taught technical and work skills, but are lacking in moral values and ethics. Nowadays, it seems to be all right to "cheat" people to increase profits. Just say, "caveat emptor".
I hope that some of the moral values will wake our government leaders to do the right thing - the values of honesty, courage, fairness, looking after the interest of others - to name just a few.
A few readers were uncomfortable about my statement of values. They felt that I should not be "preaching" these values. I think that it is the duty of all members of society to articulate the values that should guide the future of our society. I hope that more people can come forward to express their views on this matter.
Investors to see your Member of Parliament
I have sent the following message to the investors to meet their Member of Parliament in a group.
Some investors said that they have met their MP earlier, and their MP have not acted. You should see the MP again, and again.
It is the duty of the MP to look after your interest. As many people are affected, you should continue to see your MP - until the MP has taken the appropriate action.
All the best!
Dear Friends,
I suggest that you should contact the other investors in your constituency and arrange to see your Member of Parliament at the Meet-the-People session. Tell your MP about how you were misled into investing in the credit linked notes. Let the MP know about this matter for the victims directly. Ask your MP to take up the matter in Parliament or with MAS.
You can get information about your MP from this website:http://www.parliament.gov.sg/
The investors in your postal sector are shown in the attached Excel spreadsheet. I hope that a few of you can take the lead to contact the other investors and organise the visit to see your MP.
Some investors said that they have met their MP earlier, and their MP have not acted. You should see the MP again, and again.
It is the duty of the MP to look after your interest. As many people are affected, you should continue to see your MP - until the MP has taken the appropriate action.
All the best!
Dear Friends,
I suggest that you should contact the other investors in your constituency and arrange to see your Member of Parliament at the Meet-the-People session. Tell your MP about how you were misled into investing in the credit linked notes. Let the MP know about this matter for the victims directly. Ask your MP to take up the matter in Parliament or with MAS.
You can get information about your MP from this website:http://www.parliament.gov.sg/
The investors in your postal sector are shown in the attached Excel spreadsheet. I hope that a few of you can take the lead to contact the other investors and organise the visit to see your MP.
Speak up for our rights
Dear Mr. Tan
It is very courageous of you to give a voice and help those Lehman and Pinnacle investors. I hope you do not get into trouble with the authority or banks.
You know I feel our senior X has tamed us Singaporean over the course of 20-30 years to just obey the authority. Whatever is implemented by the government, to just accept it!!!
We Singaporean do not dare to stand up for our rights and do not have a voice of our own unlike Hong Kongers, Thailand, Koreans who dare to street protest. But I do not think that street protest is not good for the economy.
If not for you, I do not think the Lehman/Pinnacle investors would dare to go to speakers corner or question the banks/ stock brokerage.
Mrs Y
It is very courageous of you to give a voice and help those Lehman and Pinnacle investors. I hope you do not get into trouble with the authority or banks.
You know I feel our senior X has tamed us Singaporean over the course of 20-30 years to just obey the authority. Whatever is implemented by the government, to just accept it!!!
We Singaporean do not dare to stand up for our rights and do not have a voice of our own unlike Hong Kongers, Thailand, Koreans who dare to street protest. But I do not think that street protest is not good for the economy.
If not for you, I do not think the Lehman/Pinnacle investors would dare to go to speakers corner or question the banks/ stock brokerage.
Mrs Y
Saturday, November 22, 2008
Assessment of liability
Dear Mr. Tan
My car lately got involved in an accident (side collision) at no fault of mine. The driver cut into my lane, done damage to my car and twisted the whole story to say it was my fault.
I had no evidences against him(no pics, no eye witness), hence, the verdict of the liability status given by INCOME was, I am to be responsible for 50% of this accident's fault.
But I am the victim of the accident. Yet I am to be responsible for the other party's irresponsible driving.
I disputed against this 50% liability status with INCOME. But their assessment still stands. But deriving at the liability status basing merely on statement provided, has done unjustice to my case. INCOME did not carried out any professional inspection
on my car, to at least gathered some 'collision evidence', like the angle and dent on my car, how can it be possibly me swerving into the other party's lane.
I wish to know who i can turn to dispute against this unfair assessment?
Mdm Ong
REPLY
Income has to make the assessment based on the available evidence. Under this type of situation, an assessemnt of 50% liability seems to be reasonable - especially as you are not able to produce evidence that the other party swerve to hit your car.
It is possible that the other party could have made a statement that you swerve your car to hit his car. It is one person's word against another.
If you still feel aggrieved about the decision, you can lodge a complaint with FIDREC (www.fidrec.com.sg).
Dear Mr Tan
Thank you for taking your precious time to answer my question. Indeed, the other party has made the statement to say that my car swerve into his lane, which is an falseful allegation.
I had told INCOME I will raise my dispute to FiDREC and INCOME has actually asked me to go ahead with it for any mediation.
I guess for this case, I will have to let it rest and just blame it on my bad luck. I think FiDREC can't do much about it since I do not have any evidence against the other party.
Mdm Ong
My car lately got involved in an accident (side collision) at no fault of mine. The driver cut into my lane, done damage to my car and twisted the whole story to say it was my fault.
I had no evidences against him(no pics, no eye witness), hence, the verdict of the liability status given by INCOME was, I am to be responsible for 50% of this accident's fault.
But I am the victim of the accident. Yet I am to be responsible for the other party's irresponsible driving.
I disputed against this 50% liability status with INCOME. But their assessment still stands. But deriving at the liability status basing merely on statement provided, has done unjustice to my case. INCOME did not carried out any professional inspection
on my car, to at least gathered some 'collision evidence', like the angle and dent on my car, how can it be possibly me swerving into the other party's lane.
I wish to know who i can turn to dispute against this unfair assessment?
Mdm Ong
REPLY
Income has to make the assessment based on the available evidence. Under this type of situation, an assessemnt of 50% liability seems to be reasonable - especially as you are not able to produce evidence that the other party swerve to hit your car.
It is possible that the other party could have made a statement that you swerve your car to hit his car. It is one person's word against another.
If you still feel aggrieved about the decision, you can lodge a complaint with FIDREC (www.fidrec.com.sg).
Dear Mr Tan
Thank you for taking your precious time to answer my question. Indeed, the other party has made the statement to say that my car swerve into his lane, which is an falseful allegation.
I had told INCOME I will raise my dispute to FiDREC and INCOME has actually asked me to go ahead with it for any mediation.
I guess for this case, I will have to let it rest and just blame it on my bad luck. I think FiDREC can't do much about it since I do not have any evidence against the other party.
Mdm Ong
Risk analysis form
Ask for your risk analysis form from the financial institution that you bought the credit linked notes. You may need it to file your complaint:
http://tankinlian.blogspot.com/2008/11/ask-for-your-risk-analysis-form.html
http://tankinlian.blogspot.com/2008/11/ask-for-your-risk-analysis-form.html
Misrepresentation about the risk of CDOs
Dear Mr. Tan
After reading the explanations from many financial experts, I realize that the real risk for the minibond is the 150 securities CDO.
Out of the 150 securities, if 11 or more credits events then the investor will loose some of their principal. If 13 or more credit events then investors will lose all of their principal.
The risk for this condition is extremely high because this is equivalent to any 2 credit events out of 23 securities (or any 1 out of 11.5).
Since bank should be much safer than others, it is not unreasonable to assume that on average, the risk of one security is 2 times the risk of one bank Then the risk of 13 or more credit events will be about 23 times (2 x 150/13 = 23.1) the risk of credit event for one bank
Moreover, the pricing statement did not disclose the identities of the 150 securities referenced by the synthetic CDO. This makes it difficult for us to assess the risk. The sales brochures and newspaper advertisements did not even mention the 150 securities CDO.
Can we sue the Financial Institutions for the omitting of these important information in the pricing statement/sales brochures/newspaper advertisements ?
Pang
REPLY
In my view, this omission is material. The investors can sue the financial institution.
It is better for the government to act and take action to enforce the law (i.e. Securities and Futures Act) which requires the seller of securities to provide relevant, reliable and complete information about the securities being sold to the public.
After reading the explanations from many financial experts, I realize that the real risk for the minibond is the 150 securities CDO.
Out of the 150 securities, if 11 or more credits events then the investor will loose some of their principal. If 13 or more credit events then investors will lose all of their principal.
The risk for this condition is extremely high because this is equivalent to any 2 credit events out of 23 securities (or any 1 out of 11.5).
Since bank should be much safer than others, it is not unreasonable to assume that on average, the risk of one security is 2 times the risk of one bank Then the risk of 13 or more credit events will be about 23 times (2 x 150/13 = 23.1) the risk of credit event for one bank
Moreover, the pricing statement did not disclose the identities of the 150 securities referenced by the synthetic CDO. This makes it difficult for us to assess the risk. The sales brochures and newspaper advertisements did not even mention the 150 securities CDO.
Can we sue the Financial Institutions for the omitting of these important information in the pricing statement/sales brochures/newspaper advertisements ?
Pang
REPLY
In my view, this omission is material. The investors can sue the financial institution.
It is better for the government to act and take action to enforce the law (i.e. Securities and Futures Act) which requires the seller of securities to provide relevant, reliable and complete information about the securities being sold to the public.
Complaints in Hong Kong and Taiwan
Dear Mr. Tan,
I have found these links in youtube.com : MiniBond saga in Hong Kong
http://www.youtube.com/watch?v=ICtDCRVqPqI&feature=related (part 1)
http://www.youtube.com/watch?v=j9ykXyDj3zY&feature=related (part 2)
They explain in Cantonese on how difficult it is to understand the products. I think these clips will be helpful to explain some facts to the old folks, and those who still don't know what has happened to cause BIG losses to their investments.
Here is an explanation in English:
http://www.youtube.com/watch?v=iV0YiTl6ea0
After spending many days of searching on Google, Yahoo, Youtube and most importantly reading your blog, I still don't understand the operation and structure behind the product that I bought. I strongly believe that most of the RMs don't know that their products are in fact so risky and the reward is not in the fair proportion to the risk.
To be fair and kind (as all Singaporeans are), I think these RMs are also very stressful now to be involved in all this "mess".
My wife told me that in a Taiwanese news that she watched last night, mentioned that angry, distressed and fustrated investors are crowding around a bank to demand for refund. The Structed Deposits saga in just beginning in Taiwan as more and more Taiwanese investors start to realise about the real truth behind the painted truth.
I take this opportunity to thank you for posting my previous email to you in your blog (RE : Mental health concerns during difficult times). My wife and I are so touch that at least there is a place to air our sadness as it is extremely unhealthy to bottle up these negative emotions.
Of course, I agree with the replies/comments to my post that we should do it in a constructive and sensible way. Life still has to go on. And that is the main reason motivating me to write the post on mental health.
Last but not least, I hope that more people as knowledgeable, righteous and selfless like you will stand out to help the distressed ones. Wishing You Great Health, Strength and Happiness.
GOD BLESS ALL !
FO
Damage to integrity and character
Hi KL Tan,
I felt sorry for u on the outrageous remarks posted in ST by Mr Chua SY. I strongly suggest that you should sue both ST and the latter for the damage to your integrity and character as a result. Otherwise, the general public may really lead to conclude that you have other agendas in mind as what Mr Chua had written. At the very least, a public apology must be sought from them in order to put this matter to a close.
What are your thoughts ?
NSK
REPLY
Thank you. I do not wish to engage in the "suing" activity.
I felt sorry for u on the outrageous remarks posted in ST by Mr Chua SY. I strongly suggest that you should sue both ST and the latter for the damage to your integrity and character as a result. Otherwise, the general public may really lead to conclude that you have other agendas in mind as what Mr Chua had written. At the very least, a public apology must be sought from them in order to put this matter to a close.
What are your thoughts ?
NSK
REPLY
Thank you. I do not wish to engage in the "suing" activity.
Writing to a Government official
If you wish to write to a Government official, including a Minister, you can get the e-mail or telephone number from this website:
http://www.sgdi.gov.sg
For example, if you type Goh Chok Tong, you will get the following:
GOH CHOK TONG SENIOR MINISTER
DID : 62358577
Email: GOH_CHOK_TONG@PMO.GOV.SG
http://www.sgdi.gov.sg
For example, if you type Goh Chok Tong, you will get the following:
GOH CHOK TONG SENIOR MINISTER
DID : 62358577
Email: GOH_CHOK_TONG@PMO.GOV.SG
Writing to your Member of Parliament
You can find the name and contact of your Member of Parliament from this website:
http://www.parliament.gov.sg/
You can meet your MP at the weekly meet-the-people session.
Your MP came forward to be elected to work for the people, and has the duty to represent the people. If you have any problem, you can see your MP. You should expect your MP to carry out his duty in looking after your interest (provided that your interest is legitimate).
If several of your neighbours share a common problem, you should see your MP together.
http://www.parliament.gov.sg/
You can meet your MP at the weekly meet-the-people session.
Your MP came forward to be elected to work for the people, and has the duty to represent the people. If you have any problem, you can see your MP. You should expect your MP to carry out his duty in looking after your interest (provided that your interest is legitimate).
If several of your neighbours share a common problem, you should see your MP together.
Your experience with credit linked notes
Please share your experience on investing in the credit linked notes, i.e. minibond, pinnacle notes, high notes, jubilee notes. Send your article to kinlian1@gmail.com
http://tankinlian.blogspot.com/2008/11/publish-book-on-credit-linked-notes.html
http://tankinlian.blogspot.com/2008/11/publish-book-on-credit-linked-notes.html
Friday, November 21, 2008
Selling toxic CDO products
Hi Mr Tan,
I should think that the FIs cannot be forgiven for miselling the toxic CDO products. Take for instance the pinnacles notes. Various series have been launched during the past two years. Upon the launching of series 1 , the FIs should have been aware of where the money have gone into and the details of the 100 over companies where the money are invested. Is it justifable that if 8 out of the 150 companies went bust then the investor will lose all the money? Is this a high risk or a definite gone case investment? I believe the FIs know the answer.
If it is a high risks investment then it must have a high return. Is it justifable that the town councils invest into these products to get a modest 5% return? In these product the amount receive at the maturity will be equivalent to our initial investment if nothing goes wrong and thus the return is only about 25 percent. Any mature person will definitely know that it is crazy to invest in this high risk product and getting such a low return. The worst thing is that it is not liquid at all and the investor has very little or no control of his investment.
To think that so many series have been launched and sold to general public as a safe bond like investment instrument of negligible risks is really a shame to these FIs.
In recent years, whenever the RM in the bank want to sell me any product he/she will always say ever since the Asian crisis, MAS has put stricker measures on the financial products and if they mis-represent they will get into trouble.The product they sold have to be MAS APPROVED. Many people like me have been led to believe that the MAS has stepped in to protect the people and we are not suspicious of the RMs' advice.
I really hope that the FIs will admit their mistakes and make compensations to all investors . This will definitely benefit them in long run as the customers will have more faith in investing with the FIs. In order for the FIs not to lose their liquidity I suggest that the money compensated to be put back into the FDs at prevailing interest rates and allowing the investors to withdraw a certain % a year.
Jen
REPLY
I suggest that you send your views to Mr Goh Chok Tong and to MAS.
http://www.sgdi.gov.sg/
GOH CHOK TONG
SENIOR MINISTER
DID : 62358577
Email: GOH_CHOK_TONG@PMO.GOV.SG
I should think that the FIs cannot be forgiven for miselling the toxic CDO products. Take for instance the pinnacles notes. Various series have been launched during the past two years. Upon the launching of series 1 , the FIs should have been aware of where the money have gone into and the details of the 100 over companies where the money are invested. Is it justifable that if 8 out of the 150 companies went bust then the investor will lose all the money? Is this a high risk or a definite gone case investment? I believe the FIs know the answer.
If it is a high risks investment then it must have a high return. Is it justifable that the town councils invest into these products to get a modest 5% return? In these product the amount receive at the maturity will be equivalent to our initial investment if nothing goes wrong and thus the return is only about 25 percent. Any mature person will definitely know that it is crazy to invest in this high risk product and getting such a low return. The worst thing is that it is not liquid at all and the investor has very little or no control of his investment.
To think that so many series have been launched and sold to general public as a safe bond like investment instrument of negligible risks is really a shame to these FIs.
In recent years, whenever the RM in the bank want to sell me any product he/she will always say ever since the Asian crisis, MAS has put stricker measures on the financial products and if they mis-represent they will get into trouble.The product they sold have to be MAS APPROVED. Many people like me have been led to believe that the MAS has stepped in to protect the people and we are not suspicious of the RMs' advice.
I really hope that the FIs will admit their mistakes and make compensations to all investors . This will definitely benefit them in long run as the customers will have more faith in investing with the FIs. In order for the FIs not to lose their liquidity I suggest that the money compensated to be put back into the FDs at prevailing interest rates and allowing the investors to withdraw a certain % a year.
Jen
REPLY
I suggest that you send your views to Mr Goh Chok Tong and to MAS.
http://www.sgdi.gov.sg/
GOH CHOK TONG
SENIOR MINISTER
DID : 62358577
Email: GOH_CHOK_TONG@PMO.GOV.SG
How RMs are taught to sell financial products
Dear Kin Lian,
I read you blog with interest everyday and after hearing about this fiasco with the minibonds. I am glad that I had left the banking sector many years ago. I have no interests in any of the minibonds. Things may have changed now, but I would like to relate my experience as a RM in a local bank then.
I personally feel that banks should try not to sell so many different types of financial products to the mass market.
This should be done by the broking housings as they are more equiped to do so. Anyway back to my experience.
During the haydays when units trust were just being introduced to the markets, I remember Aberdeen Global Tech Fund was trading about 1.90+ many banks were scrambling to earn commission given by the fund houses. (There was an upfront sales charge of 5%, how much given to the bank, I am not sure.) Banks were flushed with Fixed Deposits and management was very short sighted. why? Because it was a liability for the bank to hold fixed deposits.
As bank sales staff, we were like attending fund launches almost every week. The product manager would come in, talk a little about the fund and give us sales target. Also started to say what customers are suited. With sales target, what does it mean? It means you need to milk you customers. We were given customers details especially those that were going to expire and also made to stay after work to make calls to them to `recommend' them this product.
Well, as sales people, we can't argue right. We were employed to do sales. How we achieve it is not they problem, just sell and be rewarded with commissions. But at the same time, we were named Financial Planner. What about this?
I remember that there was this time that the bank was selling `capital protected' funds. Of course we knew that Capital Protected is a marketing gimmick. Your capital is protected less certain charges.
Anyway, I was in mass market sales. There was a bank staff that managed to persuade a customer to place SGD 2.5 milllion in the fund.(Guess what, the fund total size was 50 mil) Any financial planner would know that is not the way. It would be best to diversify to Cash account, Fixed Deposits, Equity funds, etc). We were like shocked when we heard this.
One more point to add, usually bank sales staff have a limited time to do sales and they are taught to close the seal in the shortest time possible. (We were actually taught to close a `long term saving plan' in 15 minutes.(which is actually an insurance plan) I am not against this, but wouldn't it be better to take some more time to explain to customer if she/he actually needs this?
Let me say again, this happened many years ago. I don't know whether is it the same. If you are saying that banks had introduced the FNA (Financial Needs Analysis) signed by the customer, let me ask you one thing, WAS IT DONE PROPERLY? Do you think the aunties and uncles who do not speak English know what this document is about? I can tell you they just sign the document based on the trust of the bank or the sales staff.
This is all I have to say. Thank god I left that industry.
LW
I read you blog with interest everyday and after hearing about this fiasco with the minibonds. I am glad that I had left the banking sector many years ago. I have no interests in any of the minibonds. Things may have changed now, but I would like to relate my experience as a RM in a local bank then.
I personally feel that banks should try not to sell so many different types of financial products to the mass market.
This should be done by the broking housings as they are more equiped to do so. Anyway back to my experience.
During the haydays when units trust were just being introduced to the markets, I remember Aberdeen Global Tech Fund was trading about 1.90+ many banks were scrambling to earn commission given by the fund houses. (There was an upfront sales charge of 5%, how much given to the bank, I am not sure.) Banks were flushed with Fixed Deposits and management was very short sighted. why? Because it was a liability for the bank to hold fixed deposits.
As bank sales staff, we were like attending fund launches almost every week. The product manager would come in, talk a little about the fund and give us sales target. Also started to say what customers are suited. With sales target, what does it mean? It means you need to milk you customers. We were given customers details especially those that were going to expire and also made to stay after work to make calls to them to `recommend' them this product.
Well, as sales people, we can't argue right. We were employed to do sales. How we achieve it is not they problem, just sell and be rewarded with commissions. But at the same time, we were named Financial Planner. What about this?
I remember that there was this time that the bank was selling `capital protected' funds. Of course we knew that Capital Protected is a marketing gimmick. Your capital is protected less certain charges.
Anyway, I was in mass market sales. There was a bank staff that managed to persuade a customer to place SGD 2.5 milllion in the fund.(Guess what, the fund total size was 50 mil) Any financial planner would know that is not the way. It would be best to diversify to Cash account, Fixed Deposits, Equity funds, etc). We were like shocked when we heard this.
One more point to add, usually bank sales staff have a limited time to do sales and they are taught to close the seal in the shortest time possible. (We were actually taught to close a `long term saving plan' in 15 minutes.(which is actually an insurance plan) I am not against this, but wouldn't it be better to take some more time to explain to customer if she/he actually needs this?
Let me say again, this happened many years ago. I don't know whether is it the same. If you are saying that banks had introduced the FNA (Financial Needs Analysis) signed by the customer, let me ask you one thing, WAS IT DONE PROPERLY? Do you think the aunties and uncles who do not speak English know what this document is about? I can tell you they just sign the document based on the trust of the bank or the sales staff.
This is all I have to say. Thank god I left that industry.
LW
Social grace in commenting in other people's blog
I wish to thank Everlearning for this comment in my blog:
Hi Mr. Tan
Coming back to this blog ..... (I was shocked) to read some unhappy comments. As a guest, I have no rights to impose my host in whatever way in his house. I suppose bloggers have to exercise some discreet and courtesy when commenting in other people's blog. This is social grace.
MY VIEWS
I have received several personal attacks and sarcastic comments by people posting anonymously or under a false name. They expect their comments to be published here in the name of "presenting the other view". I expect these people to use their real identity, if they wish their contrary views to be posted.
Hi Mr. Tan
Coming back to this blog ..... (I was shocked) to read some unhappy comments. As a guest, I have no rights to impose my host in whatever way in his house. I suppose bloggers have to exercise some discreet and courtesy when commenting in other people's blog. This is social grace.
MY VIEWS
I have received several personal attacks and sarcastic comments by people posting anonymously or under a false name. They expect their comments to be published here in the name of "presenting the other view". I expect these people to use their real identity, if they wish their contrary views to be posted.
Mental health concerns during difficult times
Dear Mr. Tan,
First of all, thank you for all the help and info you provided in your blog and in Hong Lim Park.
With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.
Sad to say that I am also exposed to one of the products and have to go through emotional “struggle” everday.
On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money … etc
I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.
> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …
It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.
BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”
This list will go on and on and on and on … …
With all said above, I would like to chip in some of my thoughts that I think it will be helpful to all the distressed ones :
Calling all volunteers from appropriate organizations, reach out to these people to help relieve their emotional stress, especially the old folks, uneducated ones and those that are all alone (either they have no friends and relatives to approach for help, or they are afraid to let them know about they involvement in the structured deposit products)
Seek medical help if you are having problem coping with the stress and having problem sleeping at night. I have done so. I have to “force” myself to sleep by taking the medication from my doctor, so that I can handle the routines in the day.
This is a list of useful phone numbers that I have found from the web :
Samaritans of Singapore (SOS. 24 hrs) 1800-221-4444
Singapore Association for Mental Health Helpline 1800-283-7019
Care Corner 800 Hotline (in Mandarin, 10am-10pm daily) 1800-353-5800
Touchline Mon-Sat (10am-10pm)(for 13 to 25 year olds) 1800-377-2252
BABES (For teenage girls facing pregnancy crisis) 1800-833-6666
Pregnancy Crisis Service Mon-Fri (9am-5pm), Sat (9am-1pm) 6339-9770
Association of Women for Action and Research Helpline (AWARE) Mon-Fri (4pm-10pm) 1800-774-5935
National Family Service Centre (FSC) Helpline 1800-2255-372
SENIORS helpline (for older persons and their care-givers) 1800-555-5555
TOUCH Caregivers Centre 1800-352-1622
SAGE helpline Mon-Fri (9am-5pm), Sat (9am-1pm) 1800-3538633
Alcoholics Anonymous 6475-0890
Eating Disorders Helpline - Tel: 6345-3435 (10:00am - 4:00pm Phone Mail Mon-Fri
Source : http://www.giftoflistening.com/resources.html
Thank you Mr. Tan for being so helpful and kind, and taking your time to read this letter.
My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.
This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.
God Bless All !
FO
First of all, thank you for all the help and info you provided in your blog and in Hong Lim Park.
With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.
Sad to say that I am also exposed to one of the products and have to go through emotional “struggle” everday.
On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money … etc
I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.
> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …
It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.
BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”
This list will go on and on and on and on … …
With all said above, I would like to chip in some of my thoughts that I think it will be helpful to all the distressed ones :
Calling all volunteers from appropriate organizations, reach out to these people to help relieve their emotional stress, especially the old folks, uneducated ones and those that are all alone (either they have no friends and relatives to approach for help, or they are afraid to let them know about they involvement in the structured deposit products)
Seek medical help if you are having problem coping with the stress and having problem sleeping at night. I have done so. I have to “force” myself to sleep by taking the medication from my doctor, so that I can handle the routines in the day.
This is a list of useful phone numbers that I have found from the web :
Samaritans of Singapore (SOS. 24 hrs) 1800-221-4444
Singapore Association for Mental Health Helpline 1800-283-7019
Care Corner 800 Hotline (in Mandarin, 10am-10pm daily) 1800-353-5800
Touchline Mon-Sat (10am-10pm)(for 13 to 25 year olds) 1800-377-2252
BABES (For teenage girls facing pregnancy crisis) 1800-833-6666
Pregnancy Crisis Service Mon-Fri (9am-5pm), Sat (9am-1pm) 6339-9770
Association of Women for Action and Research Helpline (AWARE) Mon-Fri (4pm-10pm) 1800-774-5935
National Family Service Centre (FSC) Helpline 1800-2255-372
SENIORS helpline (for older persons and their care-givers) 1800-555-5555
TOUCH Caregivers Centre 1800-352-1622
SAGE helpline Mon-Fri (9am-5pm), Sat (9am-1pm) 1800-3538633
Alcoholics Anonymous 6475-0890
Eating Disorders Helpline - Tel: 6345-3435 (10:00am - 4:00pm Phone Mail Mon-Fri
Source : http://www.giftoflistening.com/resources.html
Thank you Mr. Tan for being so helpful and kind, and taking your time to read this letter.
My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.
This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.
God Bless All !
FO
Much to learn from American politics
When John McCain lost the election, he gave a magnanimous speech conceding defeat and pledging to work with Barack Obama as "my President".
In turn, Obama acknowledged McCain's long record of dedicated public service to America. He pledged to work with McCain.
Obama met with McCain a few weeks later to discuss how they can work together to solve America's problems.
Here is a country with 60 times the population and talent pool of Singapore. They know how to work together to find the best people to solve their problems.
In Singapore, we have a limited talent pool. We need to find a way to tap the best of our limited talents. We should rely on our local talents, instead of foreignt talents who do not have a long term interest of our nation.
In turn, Obama acknowledged McCain's long record of dedicated public service to America. He pledged to work with McCain.
Obama met with McCain a few weeks later to discuss how they can work together to solve America's problems.
Here is a country with 60 times the population and talent pool of Singapore. They know how to work together to find the best people to solve their problems.
In Singapore, we have a limited talent pool. We need to find a way to tap the best of our limited talents. We should rely on our local talents, instead of foreignt talents who do not have a long term interest of our nation.
Top up on margin calls
If you borrow money and pledge shares, the bank will check the prices each day. If the values of your holdings fall below the amount borrowed less a safety margin, the bank ask you to put in additional money. If you do not, you have to sell the shares at its depressed prices. This is called "margin call".
This causes the prices to fall further. As they are no buyers, the prices can drop a lot. This triggers more margin calls.
Solution: do not invest with borrowed money. Invest with long term savings.
This causes the prices to fall further. As they are no buyers, the prices can drop a lot. This triggers more margin calls.
Solution: do not invest with borrowed money. Invest with long term savings.
Thursday, November 20, 2008
Relief loans to repay credit card debts
Many people expect the next big financial crisis to be triggered by the failure of the credit card debts.
I hope that action can be taken to minimise the impact of this impending crisis. I believe that a large number of people borrowed on credit cards due to reduction or loss of their earnings. The high interest rate on the credit cards add to their burden.
I suggest that a relief loan be provided to these people who have runned up the credit card debts for this reason. This relief loan can help them to reduce their heavy debts. My proposal for this relief loan is set out below:
http://tankinlian.blogspot.com/2008/11/relief-loans-to-replace-loss-of.html
I suggest that the banks should give a discount on the repayment of the credit card debts through the relief loan. As they have earned a high rate of interest before, they should take a reduction in return for the repayment of the loan.
I also hope that a limited amount of relief loan be given to other borrowers who have incurred a credit card debt for other reasons, e.g. over-spending.
The relief loan, charged at a modest rate of interest, will give the borrower a better chance to repay the borrowings, and prevent another round of financial crisis.
This targeted approach is better than giving every person a cheque under a stimulus package (as was practiced recently in USA).
I hope that action can be taken to minimise the impact of this impending crisis. I believe that a large number of people borrowed on credit cards due to reduction or loss of their earnings. The high interest rate on the credit cards add to their burden.
I suggest that a relief loan be provided to these people who have runned up the credit card debts for this reason. This relief loan can help them to reduce their heavy debts. My proposal for this relief loan is set out below:
http://tankinlian.blogspot.com/2008/11/relief-loans-to-replace-loss-of.html
I suggest that the banks should give a discount on the repayment of the credit card debts through the relief loan. As they have earned a high rate of interest before, they should take a reduction in return for the repayment of the loan.
I also hope that a limited amount of relief loan be given to other borrowers who have incurred a credit card debt for other reasons, e.g. over-spending.
The relief loan, charged at a modest rate of interest, will give the borrower a better chance to repay the borrowings, and prevent another round of financial crisis.
This targeted approach is better than giving every person a cheque under a stimulus package (as was practiced recently in USA).
Poor return from Living policy
Dear Mr. Tan,
I bought a Living policy with NTUC when you were CEO. Lately, I read that you recommended against the Living policy. Can you clarify?
REPLY
I have just surrendered my Living policy. After paying premium for 12 years, my cash value is still below the total premiums paid.
In the earlier years, the bonus was quite attractive. Later, the bonus was cut due to the economic downturn in 2003.
There was a chance to restore the bonus earlier this year, before the financial crisis, but the management refused to do so. I have decided to terminate the policy as it is likely to provide a poor return over the next few years.
This poor return applies to most life insurance policies issued in recent years. It is better for the consumer to buy term insurance and invest the savings in a low cost investment fund. With the drop in investment values, there is potential for a good return over the next 10 to 20 years.
http://www.tankinlian.com/faq/savings.html
I bought a Living policy with NTUC when you were CEO. Lately, I read that you recommended against the Living policy. Can you clarify?
REPLY
I have just surrendered my Living policy. After paying premium for 12 years, my cash value is still below the total premiums paid.
In the earlier years, the bonus was quite attractive. Later, the bonus was cut due to the economic downturn in 2003.
There was a chance to restore the bonus earlier this year, before the financial crisis, but the management refused to do so. I have decided to terminate the policy as it is likely to provide a poor return over the next few years.
This poor return applies to most life insurance policies issued in recent years. It is better for the consumer to buy term insurance and invest the savings in a low cost investment fund. With the drop in investment values, there is potential for a good return over the next 10 to 20 years.
http://www.tankinlian.com/faq/savings.html
Lodge your complaint now, before the fund collapsed
Dear Mr. Tan,
I have just visited to H. I think you may want to highlight the following:
1. PS6 is not worth 1.7% of original value
2. PS6 now has a high chance of worthless, but no letter was sent. However, the letter dated 10 Nov 2008 from H only said credit event has occurred. It is up to you to research. Thanks to your website, which is very informative.
3. I try to see my wife’s RM and I can sense that they are systematically preventing her from meeting us. They arranged until we insisted, or otherwise they give us a written letter whey we could not see our RM. I thieir strategy is that once you lodge the complaint, the RM dropped out. At it becomes words against words, in cold environment. RM become shun from lying infront of the client.
4. I went to the branch and they originally sent a very junior RM who is only prepared to take complaint and not explaining the product.
5. My RM was on MC although I had scheduled and confirmed meeting with her. Even the branch manager did not even know she is on MC. She said she only started relieving as Br Mgr the day before.
[I had 3 different stories. The counter staff said RM was having outside appointment and will contact her. The relieve RM said she was very sick, but did not know we spoke to our RM the day before. The more senior RM said my RM has stomach flu. The branch manager did not know my RM was on MC until I told her what they told me.]
6. The RM whom met us even dare to say, even if the prospectus is given after sale, as long it is given on the same day, it is considered given BEFORE sale. It shows how green those people they use to speak to us.
IMPORTANT
I think you may want to advise others their complaint for mis-selling, if any, even before the fund collapsed.
As for my case. I am clear it was mis-selling, because the RM today said differently about the product compared to the RM at point of sale. I think it is very likely that the current RM and original RM may not understood the product.
I think we will do a SD and file it, and let nature takes its course, bec it is already a dead horse unless the Authority really takes action.
I really feel painful for those who may not know how to take care of themselves. I am saddened not because of the loss of my $50,000, but how institutions take advantage of ordinary main-street workers’ hard earn saving. This is SOFT TALK for our HARD CASH.
We are grateful that you stood for ordinary men and women, and yet being criticized by the Chua Chap [don’t even bother to remember his name].
LKH
I have just visited to H. I think you may want to highlight the following:
1. PS6 is not worth 1.7% of original value
2. PS6 now has a high chance of worthless, but no letter was sent. However, the letter dated 10 Nov 2008 from H only said credit event has occurred. It is up to you to research. Thanks to your website, which is very informative.
3. I try to see my wife’s RM and I can sense that they are systematically preventing her from meeting us. They arranged until we insisted, or otherwise they give us a written letter whey we could not see our RM. I thieir strategy is that once you lodge the complaint, the RM dropped out. At it becomes words against words, in cold environment. RM become shun from lying infront of the client.
4. I went to the branch and they originally sent a very junior RM who is only prepared to take complaint and not explaining the product.
5. My RM was on MC although I had scheduled and confirmed meeting with her. Even the branch manager did not even know she is on MC. She said she only started relieving as Br Mgr the day before.
[I had 3 different stories. The counter staff said RM was having outside appointment and will contact her. The relieve RM said she was very sick, but did not know we spoke to our RM the day before. The more senior RM said my RM has stomach flu. The branch manager did not know my RM was on MC until I told her what they told me.]
6. The RM whom met us even dare to say, even if the prospectus is given after sale, as long it is given on the same day, it is considered given BEFORE sale. It shows how green those people they use to speak to us.
IMPORTANT
I think you may want to advise others their complaint for mis-selling, if any, even before the fund collapsed.
As for my case. I am clear it was mis-selling, because the RM today said differently about the product compared to the RM at point of sale. I think it is very likely that the current RM and original RM may not understood the product.
I think we will do a SD and file it, and let nature takes its course, bec it is already a dead horse unless the Authority really takes action.
I really feel painful for those who may not know how to take care of themselves. I am saddened not because of the loss of my $50,000, but how institutions take advantage of ordinary main-street workers’ hard earn saving. This is SOFT TALK for our HARD CASH.
We are grateful that you stood for ordinary men and women, and yet being criticized by the Chua Chap [don’t even bother to remember his name].
LKH
Straits Times deleted these sentences
The Straits Times Forum editor published my reply to Chua Sheng Yang but deleted the following sentences:
I can only recall the saying, “None are so blind as those who will not see the truth”.
Mr. Chua made a personal attack on my character in the last three paragraphs of his letter. I am surprised that your newspaper found it fit to print these unsubstantiated remarks, as they are not relevant to the main issue. I shall not respond to them.
I can only recall the saying, “None are so blind as those who will not see the truth”.
Mr. Chua made a personal attack on my character in the last three paragraphs of his letter. I am surprised that your newspaper found it fit to print these unsubstantiated remarks, as they are not relevant to the main issue. I shall not respond to them.
Sieze the opportunity
Some people said that I "siezed the opportunity" to represent the misled investors. This statement has a negative connotation. It does not fairly reflect my intent.
I hope that the Government can help to find a fair collective solution for all investors who have been misled into these investments, regardless of their age or education level (provided that the independent investigation shows that they were misled).
I do not enjoy being the target of personal attacks and cynicism, and to take the burden of attending to so many aggrieved persons asking for assistance. I wish to have a more tranquil life.
I hope that the Government can help to find a fair collective solution for all investors who have been misled into these investments, regardless of their age or education level (provided that the independent investigation shows that they were misled).
I do not enjoy being the target of personal attacks and cynicism, and to take the burden of attending to so many aggrieved persons asking for assistance. I wish to have a more tranquil life.
Explanation on CDS - Vanguard's Bogle
http://www.iddmagazine.com/issues/2008_44/187499-1.html?partner=dealbook&page=1
Suppose you have a house and you insure it against fire for $200,000. Now, suppose that you have 130 neighbors, 65 of whom are betting that it will burn down and 65 of whom are betting that it won't. And, that's approximately the ratio we have got here.
It's supposed to be about $2 trillion debt instruments covered by CDS and $62 [trillion] or $65 trillion of credit default swaps. Half of them are in one side and half of them are in the other. So, you could say "well what's the matter with having your neighbors insuring or betting your house will burn down or betting it won't burn down?"
What's the matter is you have to keep a close eye out for arsonists. So, we have arsonists out there playing the CDS market, to sink your firm, make money for themselves and their hedge funds. They want those premiums to go way up and playing games like that
Suppose you have a house and you insure it against fire for $200,000. Now, suppose that you have 130 neighbors, 65 of whom are betting that it will burn down and 65 of whom are betting that it won't. And, that's approximately the ratio we have got here.
It's supposed to be about $2 trillion debt instruments covered by CDS and $62 [trillion] or $65 trillion of credit default swaps. Half of them are in one side and half of them are in the other. So, you could say "well what's the matter with having your neighbors insuring or betting your house will burn down or betting it won't burn down?"
What's the matter is you have to keep a close eye out for arsonists. So, we have arsonists out there playing the CDS market, to sink your firm, make money for themselves and their hedge funds. They want those premiums to go way up and playing games like that
Personal values and characters
I wish to share some of my personal values that define my character:
> work for the benefit of all, and not for self-interest
> respect other people, including the poor and weak
> be fair
> be honest
> be courageous
I hope that more Singaporeans can share these values, for the good of the people of Singapore.
AFTERNOTE:
I wish to thank Everlearning for the following additional values (which I agree with):
> be humble
> be kind-hearted (or thoughtful or considerate)
> work for the benefit of all, and not for self-interest
> respect other people, including the poor and weak
> be fair
> be honest
> be courageous
I hope that more Singaporeans can share these values, for the good of the people of Singapore.
AFTERNOTE:
I wish to thank Everlearning for the following additional values (which I agree with):
> be humble
> be kind-hearted (or thoughtful or considerate)
Our Continued Fascination with wall street bankers leading to our Downfall ?
Contributed by LA
1) Die die must have wall street bankers here ( somehow, more wall street bankers here = top financial hub )
2) Die die must have wall street bankers advise us.
3) Die die must have wall street bankers to better run our own banks here.
4) Die die must have wall street bankers to better run our sovereign funds. http://asiasentinel.com/index.php?option=com_content&task=view&id=1549&Itemid=233
5) Die die must have wall street bankers sell us ( Town Councils included ) poisonous "investment" products.
Afterwards, ….. we all die ?
P.S. maybe we are all fascinated by their obscene buddy-buddy compensation – how would you like to receive US$25 Million for being a Merrill Lynch banker for just 4 months ?
http://www.fool.com/investing/dividends-income/2008/10/22/another-insane-wall-street-pay-story.aspx
how would you like to crash big name banks and still receive tens of millions dollars - no prior experience required ?
http://whatilearnd.com/post/52449126/golden-parachutes
And we are told off we are greedy for 5% return, and deserve our pain and suffering !
LA
1) Die die must have wall street bankers here ( somehow, more wall street bankers here = top financial hub )
2) Die die must have wall street bankers advise us.
3) Die die must have wall street bankers to better run our own banks here.
4) Die die must have wall street bankers to better run our sovereign funds. http://asiasentinel.com/index.php?option=com_content&task=view&id=1549&Itemid=233
5) Die die must have wall street bankers sell us ( Town Councils included ) poisonous "investment" products.
Afterwards, ….. we all die ?
P.S. maybe we are all fascinated by their obscene buddy-buddy compensation – how would you like to receive US$25 Million for being a Merrill Lynch banker for just 4 months ?
http://www.fool.com/investing/dividends-income/2008/10/22/another-insane-wall-street-pay-story.aspx
how would you like to crash big name banks and still receive tens of millions dollars - no prior experience required ?
http://whatilearnd.com/post/52449126/golden-parachutes
And we are told off we are greedy for 5% return, and deserve our pain and suffering !
LA
A tsunami of hope or terror
http://www.businessspectator.com.au/bs.nsf/Article/A-tsunami-of-hope-or-terror-LHRJP?OpenDocument&src=spb
Here's how it works: a bank will set up a shelf company in Cayman Islands or somewhere with $2 of capital and shareholders other than the bank itself. They are usually charities that could use a little cash, and when some nice banker in a suit shows up and offers them money to sign some documents, they do.
That allows the so-called special purpose vehicle (SPV) to have "deniability", as in "it's nothing to do with us" – an idea the banks would have picked up from the Godfather movies.
The bank then creates a CDS between itself and the SPV. Usually credit default swaps reference a single third party, but for the purpose of the synthetic CDOs, they reference at least 100 companies.
The CDS contracts between the SPV can be $US500 million to $US1 billion, or sometimes more. They have a variety of twists and turns, but it usually goes something like this: if seven of the 100 reference entities default, the SPV has to pay the bank a third of the money; if eight default, it's two-thirds; and if nine default, the whole amount is repayable.
For this, the bank agrees to pay the SPV 1 or 2 per cent per annum of the contracted sum.
Finally the SPV is taken along to Moody's, Standard and Poor's and Fitch's and the ratings agencies sprinkle AAA magic dust upon it, and transform it from a pumpkin into a splendid coach.
The bank's sales people then hit the road to sell this SPV to investors. It's presented as the bank's product, and the sales staff pretend that the bank is fully behind it, but of course it's actually a $2 Cayman Islands company with one or two unknowing charities as shareholders.
It offers a highly-rated, investment-grade, fixed-interest product paying a 1 or 2 per cent premium. Those investors who bother to read the fine print will see that they will lose some or all of their money if seven, eight or nine of a long list of apparently strong global corporations go broke. In 2004-2006 it seemed money for jam. The companies listed would never go broke – it was unthinkable.
Here are some of the companies that are on all of the synthetic CDO reference lists: the three Icelandic banks, Lehman Brothers, Bear Stearns, Freddie Mac, Fannie Mae, American Insurance Group, Ambac, MBIA, Countrywide Financial, Countrywide Home Loans, PMI, General Motors, Ford and a pretty full retinue of US home builders.
In other words, the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees – although they were that too.
They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.
As one part of the bank was furiously selling loans to these companies, another part was furiously selling insurance contracts against them defaulting, to unsuspecting investors who were actually a bit like "Lloyds Names" – the 1500 or so individuals who back the London reinsurance giant.
Except in this case very few of the "names" knew what they were buying. And nobody has any idea how many were sold, or with what total face value.
It is known that some $2 billion was sold to charities and municipal councils in Australia, but that is just the tip of the iceberg in this country. And Australia, of course, is the tiniest tip of the global iceberg of synthetic CDOs. The total undoubtedly runs into trillions of dollars.
All the banks did it, not just Lehman Brothers which had the largest market share, and many of them seem to have invested in the things as well (a bit like a dog eating its own vomit).
Here's how it works: a bank will set up a shelf company in Cayman Islands or somewhere with $2 of capital and shareholders other than the bank itself. They are usually charities that could use a little cash, and when some nice banker in a suit shows up and offers them money to sign some documents, they do.
That allows the so-called special purpose vehicle (SPV) to have "deniability", as in "it's nothing to do with us" – an idea the banks would have picked up from the Godfather movies.
The bank then creates a CDS between itself and the SPV. Usually credit default swaps reference a single third party, but for the purpose of the synthetic CDOs, they reference at least 100 companies.
The CDS contracts between the SPV can be $US500 million to $US1 billion, or sometimes more. They have a variety of twists and turns, but it usually goes something like this: if seven of the 100 reference entities default, the SPV has to pay the bank a third of the money; if eight default, it's two-thirds; and if nine default, the whole amount is repayable.
For this, the bank agrees to pay the SPV 1 or 2 per cent per annum of the contracted sum.
Finally the SPV is taken along to Moody's, Standard and Poor's and Fitch's and the ratings agencies sprinkle AAA magic dust upon it, and transform it from a pumpkin into a splendid coach.
The bank's sales people then hit the road to sell this SPV to investors. It's presented as the bank's product, and the sales staff pretend that the bank is fully behind it, but of course it's actually a $2 Cayman Islands company with one or two unknowing charities as shareholders.
It offers a highly-rated, investment-grade, fixed-interest product paying a 1 or 2 per cent premium. Those investors who bother to read the fine print will see that they will lose some or all of their money if seven, eight or nine of a long list of apparently strong global corporations go broke. In 2004-2006 it seemed money for jam. The companies listed would never go broke – it was unthinkable.
Here are some of the companies that are on all of the synthetic CDO reference lists: the three Icelandic banks, Lehman Brothers, Bear Stearns, Freddie Mac, Fannie Mae, American Insurance Group, Ambac, MBIA, Countrywide Financial, Countrywide Home Loans, PMI, General Motors, Ford and a pretty full retinue of US home builders.
In other words, the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees – although they were that too.
They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.
As one part of the bank was furiously selling loans to these companies, another part was furiously selling insurance contracts against them defaulting, to unsuspecting investors who were actually a bit like "Lloyds Names" – the 1500 or so individuals who back the London reinsurance giant.
Except in this case very few of the "names" knew what they were buying. And nobody has any idea how many were sold, or with what total face value.
It is known that some $2 billion was sold to charities and municipal councils in Australia, but that is just the tip of the iceberg in this country. And Australia, of course, is the tiniest tip of the global iceberg of synthetic CDOs. The total undoubtedly runs into trillions of dollars.
All the banks did it, not just Lehman Brothers which had the largest market share, and many of them seem to have invested in the things as well (a bit like a dog eating its own vomit).
How I was misled (3)
Dear Mr. Tan
I wish I had read your blog before purchasing my pinnacle notes series 6 last year.
The picture painted by the sales representative was so good, I was convinced it was a great investment. I even encouraged my two daughters to invest their hard earned savings, something I have not stopped regretting since the downturn.
On hindsight, I should have realised that there were some things that were not so right. The prospectus was not shown to me although it was sent to me much later, by post, after I had closed the deal. I tried to read it, but the technicality floored me. So many pages of fine print. The copies of the agreement were not sent to me either.
When I called the representative's mobile, he didn't answer my calls. Then I called his office at H and discovered that he had left. Subsequently, the manager very kindly did a trace and delivered the copies by hand to me. By then I had managed to read some of the stuff in the prospectus and realised that I could lose all my money as it was not capital protected. It was too late to do anything except pray, but it looks like prayers didn't help.
I don't know if there is anything left of what we invested. Is there anything that can be done? I have left out the names of the people as I don't know if I should at this stage. I hope you can help in some ways.
Sincerely,
Mary
I wish I had read your blog before purchasing my pinnacle notes series 6 last year.
The picture painted by the sales representative was so good, I was convinced it was a great investment. I even encouraged my two daughters to invest their hard earned savings, something I have not stopped regretting since the downturn.
On hindsight, I should have realised that there were some things that were not so right. The prospectus was not shown to me although it was sent to me much later, by post, after I had closed the deal. I tried to read it, but the technicality floored me. So many pages of fine print. The copies of the agreement were not sent to me either.
When I called the representative's mobile, he didn't answer my calls. Then I called his office at H and discovered that he had left. Subsequently, the manager very kindly did a trace and delivered the copies by hand to me. By then I had managed to read some of the stuff in the prospectus and realised that I could lose all my money as it was not capital protected. It was too late to do anything except pray, but it looks like prayers didn't help.
I don't know if there is anything left of what we invested. Is there anything that can be done? I have left out the names of the people as I don't know if I should at this stage. I hope you can help in some ways.
Sincerely,
Mary
Investing in ETF
Hi Mr. Tan,
I came across your blog on ETF ..
http://tankinlian.blogspot.com/2008/07/invest-in-indexed-fund.html
Given many global banks are currently in stress, can you advice what happen will
happen to Lyxor or STI ETF (value) if in the worst scenario, their parent company like StateStreet or Barclay go under?
John
REPLY
If the fund manager goes under, I believe that it is easy for another fund manager to be appointed to take over their work. The assets are held by trustees in separate accounts. They should not be adversely affected.
This is my guess but I am not a legal expert on such matters.
I came across your blog on ETF ..
http://tankinlian.blogspot.com/2008/07/invest-in-indexed-fund.html
Given many global banks are currently in stress, can you advice what happen will
happen to Lyxor or STI ETF (value) if in the worst scenario, their parent company like StateStreet or Barclay go under?
John
REPLY
If the fund manager goes under, I believe that it is easy for another fund manager to be appointed to take over their work. The assets are held by trustees in separate accounts. They should not be adversely affected.
This is my guess but I am not a legal expert on such matters.
NTUC Income shares
Hi Mr Tan,
I would like to seek your advise with regards to the Income Shares which i had 'invested' in. Are these shares safe to hold on in the midst of the financial meltdown?
While I had trust in NTUC, I'm just afraid the monies collected by Income could be used to invest in junk derivatives and erode Income's financial position.
Would you be able to offer your advise? Many thanks for your time, and do continue the fighting spirit!
Thomas
REPLY
It should be safe. I also have shares in Income and will keep them during the financial crisis.
I would like to seek your advise with regards to the Income Shares which i had 'invested' in. Are these shares safe to hold on in the midst of the financial meltdown?
While I had trust in NTUC, I'm just afraid the monies collected by Income could be used to invest in junk derivatives and erode Income's financial position.
Would you be able to offer your advise? Many thanks for your time, and do continue the fighting spirit!
Thomas
REPLY
It should be safe. I also have shares in Income and will keep them during the financial crisis.
Bank Negara Zeti appointed to financial reform task force
Malaysia is one of the very few countries least affected by subprimes and CDOs....thanks to a large extent to Bank Negara Governor Zeti.
Source: Central Banker Analysis
Published on November 19, 2008
The governor of Malaysia’s central bank says early detection and action is critical to minimising financial crises.
Bank Negara Malaysia governor Dr. Zeti Akhtar Aziz was recently appointed a member of the newly-formed United Nations high level task force to examine possible reforms of the global financial system, including the International Monetary Fund and the World Bank. She tells The Asian Banker that the current global financial crisis might have been less severe if the multilateral financial institutions had exercised a leadership role at an earlier stage.
“We have not really seen the international financial institutions come forward and certainly not at the early stages of the crisis. They are now coming forward to deal with the effects of the crisis,” says Zeti, who will have a hand in recommending reforms of the institutions through the UN task force known as the Commission of Experts on Reforms of the International Monetary and Financial System.
Since the global financial crisis took a more severe turn in October, some world leaders have called for a new financial world order or a review of the role of the Bretton Woods institutions in promoting financial stability.
Aside from Zeti, the other members of the task force include Chukwuma Soludo, Central Bank of Nigeria governor; Jean-Paul Fitoussi, professor of economics at the Institute d’Etudes Politiques de Paris; Avinash Persaud of Barbados, chairman of Intelligence Capital; Yaga Venugopal Reddy, former governor of the Reserve Bank of India; Eisuke Sakakibara, professor at Waseda University; Yu Yongding, director of the Institute of World Economics and Politics. Joseph Stiglitz, Nobel prize winner for economics and former chief economist at the World Bank, will chair the Commission.
With several Asians on the task force, it is seen as a key platform to give the region a greater voice in efforts to reform the global financial system. Zeti says she hopes international financial institutions will engage more with Asia at the international level to better appreciate Asian perspectives and conditions. There are moves towards achieving this, she adds, as there is a growing appreciation of the fact that Asian participation is crucial in unwinding current global imbalances.
Zeti, who was also appointed chair of the Bank for International Settlements Asian Consultative Council, recognises that it is important for the region to have a strong interface with the rest of the world and appreciates the forums that are paving the way for this. The council is currently assessing the spillover effects of the financial crisis and looking at how these may be best managed.
For Zeti, early detection and action is critical. “I believe that crisis may happen from time to time in different parts of the world, but when there is a detection that the crisis is imminent, it is very critical to take early action, because if early action is not taken then what happens is the crisis has to run its full course,” Zeti points out. In Malaysia’s experience, early intervention reduces the costs of a crisis, she adds.
In the wake of the Asian financial crisis, Malaysia set up entities to acquire the non-performing assets of its beleaguered banks and recapitalised some institutions. Zeti says within six months of initiating these institutional arrangements, the banks started lending again, helping the country recover quickly from the Asian financial crisis. “The cost of the crisis was less than 5% of GDP,” she says. “The main reason for early action is to minimise the costs. Once the crisis is prolonged the deterioration that takes place will be greater and the cost of any resolution or repair is going to be much higher.”
In the current situation, Malaysia itself is preparing for tougher times. Zeti says it is closely monitoring financial institutions and that Bank Negara will take pre-emptive action.
“In the previous crisis we had a debt restructuring committee that dealt with it (non-performing corporate loans), and even during normal times we had a small debt restructuring entity for small and medium scale enterprises that include financial advisory services and so on. We also have such services for households to deal with their financial problems before they result in foreclosures or repossessions and so on. This is what we are managing well before it happens,” Zeti explains.
From a regulatory perspective, Bank Negara is looking at the issues that have surfaced in the crisis, including how to deal with non-regulated institutions when they need liquidity, and how to improve the coordination of regulators within the financial system like the relationship between the central bank and the Securities and Exchange Commission. It will be hoping it has taken the right actions early enough to minimise the pain to the financial system.
Source: Central Banker Analysis
Published on November 19, 2008
The governor of Malaysia’s central bank says early detection and action is critical to minimising financial crises.
Bank Negara Malaysia governor Dr. Zeti Akhtar Aziz was recently appointed a member of the newly-formed United Nations high level task force to examine possible reforms of the global financial system, including the International Monetary Fund and the World Bank. She tells The Asian Banker that the current global financial crisis might have been less severe if the multilateral financial institutions had exercised a leadership role at an earlier stage.
“We have not really seen the international financial institutions come forward and certainly not at the early stages of the crisis. They are now coming forward to deal with the effects of the crisis,” says Zeti, who will have a hand in recommending reforms of the institutions through the UN task force known as the Commission of Experts on Reforms of the International Monetary and Financial System.
Since the global financial crisis took a more severe turn in October, some world leaders have called for a new financial world order or a review of the role of the Bretton Woods institutions in promoting financial stability.
Aside from Zeti, the other members of the task force include Chukwuma Soludo, Central Bank of Nigeria governor; Jean-Paul Fitoussi, professor of economics at the Institute d’Etudes Politiques de Paris; Avinash Persaud of Barbados, chairman of Intelligence Capital; Yaga Venugopal Reddy, former governor of the Reserve Bank of India; Eisuke Sakakibara, professor at Waseda University; Yu Yongding, director of the Institute of World Economics and Politics. Joseph Stiglitz, Nobel prize winner for economics and former chief economist at the World Bank, will chair the Commission.
With several Asians on the task force, it is seen as a key platform to give the region a greater voice in efforts to reform the global financial system. Zeti says she hopes international financial institutions will engage more with Asia at the international level to better appreciate Asian perspectives and conditions. There are moves towards achieving this, she adds, as there is a growing appreciation of the fact that Asian participation is crucial in unwinding current global imbalances.
Zeti, who was also appointed chair of the Bank for International Settlements Asian Consultative Council, recognises that it is important for the region to have a strong interface with the rest of the world and appreciates the forums that are paving the way for this. The council is currently assessing the spillover effects of the financial crisis and looking at how these may be best managed.
For Zeti, early detection and action is critical. “I believe that crisis may happen from time to time in different parts of the world, but when there is a detection that the crisis is imminent, it is very critical to take early action, because if early action is not taken then what happens is the crisis has to run its full course,” Zeti points out. In Malaysia’s experience, early intervention reduces the costs of a crisis, she adds.
In the wake of the Asian financial crisis, Malaysia set up entities to acquire the non-performing assets of its beleaguered banks and recapitalised some institutions. Zeti says within six months of initiating these institutional arrangements, the banks started lending again, helping the country recover quickly from the Asian financial crisis. “The cost of the crisis was less than 5% of GDP,” she says. “The main reason for early action is to minimise the costs. Once the crisis is prolonged the deterioration that takes place will be greater and the cost of any resolution or repair is going to be much higher.”
In the current situation, Malaysia itself is preparing for tougher times. Zeti says it is closely monitoring financial institutions and that Bank Negara will take pre-emptive action.
“In the previous crisis we had a debt restructuring committee that dealt with it (non-performing corporate loans), and even during normal times we had a small debt restructuring entity for small and medium scale enterprises that include financial advisory services and so on. We also have such services for households to deal with their financial problems before they result in foreclosures or repossessions and so on. This is what we are managing well before it happens,” Zeti explains.
From a regulatory perspective, Bank Negara is looking at the issues that have surfaced in the crisis, including how to deal with non-regulated institutions when they need liquidity, and how to improve the coordination of regulators within the financial system like the relationship between the central bank and the Securities and Exchange Commission. It will be hoping it has taken the right actions early enough to minimise the pain to the financial system.
Wednesday, November 19, 2008
Town councils should take legal action for mis-selling
This letter has been sent to Straits Times, Today and Zaobao.
Editor
Forum Page
Straits Times
Eight town councils have invested a combined sum of about $16 million in the credit-linked notes, including the minibonds, pinnacle notes, high notes and jubilee notes. Some of these notes are worthless. Others have lost a large part of their value.
The funds of these town councils belong to the residents who pay the conservancy charges. The town councils have the fiduciary duty to invest these funds carefully.
I suggest that the town councils explain if, when making the investment, they were aware that the credit linked notes carry the risk of the entire loss of the principal on a credit event involving any one of 5 to 8 reference entities, and the additional risks of the defaults of a certain number of 100 to 150 underlying assets, cormprising of collateralised debt obligations, subprime mortgages and other risky products?
Were the town councils aware that the risks of these credit linked notes are many times of the risk of default of a single entity? Does the return of around 5% commensurate with this high risk?
Were the town councils misled by the financial adviser who sold the notes or by the mis-representation contained in the sales materials or prospectus. If this is the case, I suggest that the town councils should take a legal case against the distributor for their negligence or bad advice and to seek fair compensation for their losses.
As the sums involved are quite large, the town councils should take the appropriate action to discharge their fiduciary duty to the residents.
If the town councils succeed in their action, the outcome will indirectly benefit over 10,000 helpless individuals who were also misled into investing in these credit linked notes.
Tan Kin Lian
Editor
Forum Page
Straits Times
Eight town councils have invested a combined sum of about $16 million in the credit-linked notes, including the minibonds, pinnacle notes, high notes and jubilee notes. Some of these notes are worthless. Others have lost a large part of their value.
The funds of these town councils belong to the residents who pay the conservancy charges. The town councils have the fiduciary duty to invest these funds carefully.
I suggest that the town councils explain if, when making the investment, they were aware that the credit linked notes carry the risk of the entire loss of the principal on a credit event involving any one of 5 to 8 reference entities, and the additional risks of the defaults of a certain number of 100 to 150 underlying assets, cormprising of collateralised debt obligations, subprime mortgages and other risky products?
Were the town councils aware that the risks of these credit linked notes are many times of the risk of default of a single entity? Does the return of around 5% commensurate with this high risk?
Were the town councils misled by the financial adviser who sold the notes or by the mis-representation contained in the sales materials or prospectus. If this is the case, I suggest that the town councils should take a legal case against the distributor for their negligence or bad advice and to seek fair compensation for their losses.
As the sums involved are quite large, the town councils should take the appropriate action to discharge their fiduciary duty to the residents.
If the town councils succeed in their action, the outcome will indirectly benefit over 10,000 helpless individuals who were also misled into investing in these credit linked notes.
Tan Kin Lian
CPF Medishield
Dear Mr. Tan,
I'm thinking of buying a health insurance but in the market there is so many health insurance. Could you recommend me one company that is providing the best health insurance?
I will be out of job soon, as my company is moving its operations to another country. I'm now 35 years old.
REPLY
I recommend CPF Medishield. As you will be losing a job, there is no need to spend so much money on a private Shield plan.
I'm thinking of buying a health insurance but in the market there is so many health insurance. Could you recommend me one company that is providing the best health insurance?
I will be out of job soon, as my company is moving its operations to another country. I'm now 35 years old.
REPLY
I recommend CPF Medishield. As you will be losing a job, there is no need to spend so much money on a private Shield plan.
Ask MAS to provide guidelines on mis-selling
Dear Mr. Tan
Can you help to lobby MAS to come out with some guidelines on mis-selling. That will help ordinary man a lot.
For examples MAS can say the following situations are high likelihood of mis-selling.
1. Sold product the buyer not originally wanted
2. Concluded sale (such a complicated product) within 30 mins
3. Sold without going through line by line of the marketing brochure
4. Sold without giving prospectus
5. Prospectus was given after sale concluded
6. Sold on repetition of the Reference Entities but did not mention RISK of other link products (just mentioning link is not enough)
7. RM did not read prospectus before selling to the clients
I think you expect your doctor to read the details of the drugs before prescribing it to you or children? I just think that it is not right to sell by mis-representation, but eliminate their responsibility by thick documentation.
LKH
REPLY
I will post your views in my blog first. I will decide later on how to approach MAS.
Can you help to lobby MAS to come out with some guidelines on mis-selling. That will help ordinary man a lot.
For examples MAS can say the following situations are high likelihood of mis-selling.
1. Sold product the buyer not originally wanted
2. Concluded sale (such a complicated product) within 30 mins
3. Sold without going through line by line of the marketing brochure
4. Sold without giving prospectus
5. Prospectus was given after sale concluded
6. Sold on repetition of the Reference Entities but did not mention RISK of other link products (just mentioning link is not enough)
7. RM did not read prospectus before selling to the clients
I think you expect your doctor to read the details of the drugs before prescribing it to you or children? I just think that it is not right to sell by mis-representation, but eliminate their responsibility by thick documentation.
LKH
REPLY
I will post your views in my blog first. I will decide later on how to approach MAS.
A doctor's definition of caveat emptor
Read this letter:
http://www.straitstimes.com/ST%2BForum/Story/STIStory_304035.html
The doctor said nothing about "eyes opened" or "eyes closed" or "greedy investors".
http://www.straitstimes.com/ST%2BForum/Story/STIStory_304035.html
The doctor said nothing about "eyes opened" or "eyes closed" or "greedy investors".
Reply to Chua Sheng Yang
Chua Sheng Yang's letter:
http://www.straitstimes.com/ST%2BForum/Story/STIStory_303479.html
18 November 2008
The Editor
Forum Page
Straits Times
I refer to the letter entitled “Questions on investment products rally” by Chua Sheng Yang (Straits Times, 18 Nov 2008).
I organize the fifth rally on 15 November for the purpose of updating the investors on the status of the three petitions that were sent to the Monetary Authority of Singapore. The text of my speech can be found in my blog, www.tankinlian.blogspot.com.
I did not organize the rally for the purpose of promoting The Online Citizen, as suggested by Mr. Chua.
I do wish to acknowledge the coverage given by The Online Citizen and other online blogs. They help to bring my messages to the investors who were not able to attend the events at Speaker’s Corner.
The first petition, signed by 983 investors and submitted on 9 October 2008, asked the Government to carry out an independent investigation to find out if there were any wrong doings by the financial institutions that created and marketed these credit linked securities and, if there were, to take appropriate action under the law. Specifically, the investigation should look at possible breaches under section 199 of the Securities and Futures Act and section 27 of the Financial Adviser’s Act.
Mr. Chua asked me to state if the people, who are neither elderly nor uneducated, should be entitled to their money back. In my view, all investors who have been misled into these securities through mis-representation and mis-selling (if proven by the findings) should be fairly compensated, regardless of their age and educational level.
I do not expect the Government to reimburse the investors for the financial loss. I only urge the Government to help the investors to get fair compensation for their loss from the financial institutions. I do not expect the compensation to be in full, as the investors have to bear some responsibility.
Several articles, written by journalists and university professors, have been printed in the newspapers explaining the high risk of these securities and how the investors could have been misled. I wonder why people like Mr. Chua choose to ignore them. I can only recall the saying, “None are so blind as those who will not see the truth”.
Mr. Chua made a personal attack on my character in the last three paragraphs of his letter. I am surprised that your newspaper found it fit to print these unsubstantiated remarks, as they are not relevant to the main issue. I shall not respond to them.
Tan Kin Lian
http://www.straitstimes.com/ST%2BForum/Story/STIStory_303479.html
18 November 2008
The Editor
Forum Page
Straits Times
I refer to the letter entitled “Questions on investment products rally” by Chua Sheng Yang (Straits Times, 18 Nov 2008).
I organize the fifth rally on 15 November for the purpose of updating the investors on the status of the three petitions that were sent to the Monetary Authority of Singapore. The text of my speech can be found in my blog, www.tankinlian.blogspot.com.
I did not organize the rally for the purpose of promoting The Online Citizen, as suggested by Mr. Chua.
I do wish to acknowledge the coverage given by The Online Citizen and other online blogs. They help to bring my messages to the investors who were not able to attend the events at Speaker’s Corner.
The first petition, signed by 983 investors and submitted on 9 October 2008, asked the Government to carry out an independent investigation to find out if there were any wrong doings by the financial institutions that created and marketed these credit linked securities and, if there were, to take appropriate action under the law. Specifically, the investigation should look at possible breaches under section 199 of the Securities and Futures Act and section 27 of the Financial Adviser’s Act.
Mr. Chua asked me to state if the people, who are neither elderly nor uneducated, should be entitled to their money back. In my view, all investors who have been misled into these securities through mis-representation and mis-selling (if proven by the findings) should be fairly compensated, regardless of their age and educational level.
I do not expect the Government to reimburse the investors for the financial loss. I only urge the Government to help the investors to get fair compensation for their loss from the financial institutions. I do not expect the compensation to be in full, as the investors have to bear some responsibility.
Several articles, written by journalists and university professors, have been printed in the newspapers explaining the high risk of these securities and how the investors could have been misled. I wonder why people like Mr. Chua choose to ignore them. I can only recall the saying, “None are so blind as those who will not see the truth”.
Mr. Chua made a personal attack on my character in the last three paragraphs of his letter. I am surprised that your newspaper found it fit to print these unsubstantiated remarks, as they are not relevant to the main issue. I shall not respond to them.
Tan Kin Lian
Tuesday, November 18, 2008
Comment on statement by Minister of Finance
Comments posted by ming in CNA Forum:
On a case-by-case basis, with a breezy wave of his hand like some Jedi knight the Minister for Finance wants the crowds at Hong Lim now gathering in strength to disperse. Have faith in the MAS. As the former Managing Director of MAS, Tharman would be in the position to tell us that MAS can be your advocate, prosecutor, judge and juror because they are staffed by so many talented and handpicked scholars. It is superior and efficient because everything is fused into one body just like Singapore.
Let the scales fall from your eyes and you will see that the trust which so many Singaporeans have placed in this system is unjustified. We have been fooled by the decades of prosperity and lulled into believing that obedience is all that is needed to perpetuate the good life. Those who remember their duties as citizens are called mad and suffer the indignity of ostracism. But when the reality hits and you realize that the system is not right, and by virtue of having awakened you become mad, the colossal blunder we have made as a people will chill you to the bone.
Note to the Minister of Finance:
Unless people like Tan Kin Lian are included in an independent investigation to be conducted by a special body that is separate from any governmental group because the investigation must cover how these products were regulated, no one will accept what is concluded. If you want closure Tharman, do the right thing. As the putative Prime Minister, I urge you now to set our country on the course to long term peace and prosperity. As a citizen and a member of the Cabinet, you swore oaths that you would. Now I ask that you make good on it.
http://forum.channelnewsasia.com/viewtopic.php?p=2387433#2387433
On a case-by-case basis, with a breezy wave of his hand like some Jedi knight the Minister for Finance wants the crowds at Hong Lim now gathering in strength to disperse. Have faith in the MAS. As the former Managing Director of MAS, Tharman would be in the position to tell us that MAS can be your advocate, prosecutor, judge and juror because they are staffed by so many talented and handpicked scholars. It is superior and efficient because everything is fused into one body just like Singapore.
Let the scales fall from your eyes and you will see that the trust which so many Singaporeans have placed in this system is unjustified. We have been fooled by the decades of prosperity and lulled into believing that obedience is all that is needed to perpetuate the good life. Those who remember their duties as citizens are called mad and suffer the indignity of ostracism. But when the reality hits and you realize that the system is not right, and by virtue of having awakened you become mad, the colossal blunder we have made as a people will chill you to the bone.
Note to the Minister of Finance:
Unless people like Tan Kin Lian are included in an independent investigation to be conducted by a special body that is separate from any governmental group because the investigation must cover how these products were regulated, no one will accept what is concluded. If you want closure Tharman, do the right thing. As the putative Prime Minister, I urge you now to set our country on the course to long term peace and prosperity. As a citizen and a member of the Cabinet, you swore oaths that you would. Now I ask that you make good on it.
http://forum.channelnewsasia.com/viewtopic.php?p=2387433#2387433
George Washington and the cherry tree
A legend is told about George Washington as a boy. Young George had a new hatchet and with it he cut down a small cherry tree. When his father saw the tree, he was angry. "George," he said. "Did you do that?" George was afraid to admit that he did.
Nevertheless, the boy decided to tell the truth. "Yes, Father," he said, "I cut down the cherry tree with my hatchet. I cannot tell a lie." George Washington's father was proud of George for telling the truth.
Moral of this story
1. No investor would have bought the credit linked notes, if they were told that the real risk is 10 to 15 times of the risk of default of a single entity.
2. The financial institution would not have sold this type of product, if they know that it was toxic and very high risk.
3 The authority would have not "registered" the product for sale.
I hope that the moral of George Washington's story will encourage the parties to come forward and say, "I cannot tell a lie. I made a mistake to buy/ sell / register the product."
Nevertheless, the boy decided to tell the truth. "Yes, Father," he said, "I cut down the cherry tree with my hatchet. I cannot tell a lie." George Washington's father was proud of George for telling the truth.
Moral of this story
1. No investor would have bought the credit linked notes, if they were told that the real risk is 10 to 15 times of the risk of default of a single entity.
2. The financial institution would not have sold this type of product, if they know that it was toxic and very high risk.
3 The authority would have not "registered" the product for sale.
I hope that the moral of George Washington's story will encourage the parties to come forward and say, "I cannot tell a lie. I made a mistake to buy/ sell / register the product."
Revosave and Vivolife
Someone continues to post comments to attack the new products- Revosave and Vivolife, launched by NTUC Income. I have blocked these comments.
If this person submits a fair analysis of the products, I will post them here.
Here are some of my post postings giving general comments about these products:
http://tankinlian.blogspot.com/2008/09/unable-to-pay-premium-till-70-revosave.html
http://tankinlian.blogspot.com/2008/09/twisting-of-ilp-to-revosave.html
http://tankinlian.blogspot.com/2008/02/comparing-anticipation-and-revosave.html
http://tankinlian.blogspot.com/2008/09/advice-on-vivolife.html
If this person submits a fair analysis of the products, I will post them here.
Here are some of my post postings giving general comments about these products:
http://tankinlian.blogspot.com/2008/09/unable-to-pay-premium-till-70-revosave.html
http://tankinlian.blogspot.com/2008/09/twisting-of-ilp-to-revosave.html
http://tankinlian.blogspot.com/2008/02/comparing-anticipation-and-revosave.html
http://tankinlian.blogspot.com/2008/09/advice-on-vivolife.html
Pinnacle Notes 9 and 10
Read my blog dated November 2007, when the product was first advertised:
http://tankinlian.blogspot.com/2007/11/pinnacle-notes-series-9-10.html
http://tankinlian.blogspot.com/2007/11/pinnacle-notes-series-9-10.html
Asians fail to join class action claims
Dear Kin Lian,
I am not one of those affected investors, but I think this class action in US could be something for our institutional investors to think about. Thank you.
Asian investors are missing out on billions of dollars by not taking part in class action lawsuits against US companies whose managers have been accused of improper corporate behaviour, according to a study.
Pension and asset managers in the region failed to claim a combined $1.5bn in compensation between 2000 and 2007, said Goal Group, a class action services specialist.
This article can be found at:
http://www.ft.com/cms/s/0/a74a4388-b409-11dd-8e35-0000779fd18c,_i_email=y.html
I am not one of those affected investors, but I think this class action in US could be something for our institutional investors to think about. Thank you.
Asian investors are missing out on billions of dollars by not taking part in class action lawsuits against US companies whose managers have been accused of improper corporate behaviour, according to a study.
Pension and asset managers in the region failed to claim a combined $1.5bn in compensation between 2000 and 2007, said Goal Group, a class action services specialist.
This article can be found at:
http://www.ft.com/cms/s/0/a74a4388-b409-11dd-8e35-0000779fd18c,_i_email=y.html
Local Banks still focused on garnering new sales at this time!
Dear Mr Tan,
With the recent saga over the few structured products and mini-bonds, we would assumed that the banks' role will be focusing on providing assurance to their existing customers and customer retention.
Yesterday, I received a call from a personal banker from a local bank. He was telling me about a fixed deposit promotion and that I should meet him at the branch as the promotion will be ending soon. Fair enough, I went down to check it out but to my surprise, the banker starts to sell me their insurance plans!
Upon further subtle probing, I realised that the bank are still pressuring their staff to sell and to maintain certain target or they may be the next to go. Is this what the local banks should focus on at this point of time? Is it just another convenient excuse to axe their staff? Or is it trying to compete with rival banks for business?
I read in a recent article that most foreign banks have channelled their sales force to focus entirely on customer service and handling all the related enquries. I believed that this is the correct approach and the least that the banks can do now for their customers.
I cannot even imagine that there are still banks imposing targets on their staffs at this time. Are they encouraging them to mis-sell or misrepresent their products to secure their jobs? Does it matter to them what product they are selling to the customers or if the product is suitable? Will history repeats itself all over again when the customers complained about the products they buy at this time?
As more products are being affected, I believed that the whole episode is here to stay thus I sincerely hope that the local banks will know their priority, have more compassion and adopt the correct approach. It would definitely be better if the MAS can intervene and developed a policy to control the industry.
This is an extremely difficult time for Singaporeans, especially so for many uneducated and unsavvy customers who do not know the avenue to check about their current products.
Mr Seow
With the recent saga over the few structured products and mini-bonds, we would assumed that the banks' role will be focusing on providing assurance to their existing customers and customer retention.
Yesterday, I received a call from a personal banker from a local bank. He was telling me about a fixed deposit promotion and that I should meet him at the branch as the promotion will be ending soon. Fair enough, I went down to check it out but to my surprise, the banker starts to sell me their insurance plans!
Upon further subtle probing, I realised that the bank are still pressuring their staff to sell and to maintain certain target or they may be the next to go. Is this what the local banks should focus on at this point of time? Is it just another convenient excuse to axe their staff? Or is it trying to compete with rival banks for business?
I read in a recent article that most foreign banks have channelled their sales force to focus entirely on customer service and handling all the related enquries. I believed that this is the correct approach and the least that the banks can do now for their customers.
I cannot even imagine that there are still banks imposing targets on their staffs at this time. Are they encouraging them to mis-sell or misrepresent their products to secure their jobs? Does it matter to them what product they are selling to the customers or if the product is suitable? Will history repeats itself all over again when the customers complained about the products they buy at this time?
As more products are being affected, I believed that the whole episode is here to stay thus I sincerely hope that the local banks will know their priority, have more compassion and adopt the correct approach. It would definitely be better if the MAS can intervene and developed a policy to control the industry.
This is an extremely difficult time for Singaporeans, especially so for many uneducated and unsavvy customers who do not know the avenue to check about their current products.
Mr Seow
High risk of credit linked notes
When we invest in a corporate bond, we take the credit risk of one company. If the company goes bust, we lose our invested sum.
When we buy a credit-linked note, we take the risk of 6 to 8 reference entities. If any reference entity goes bust, we lose our invested sum. The risk is mutiplied 6 to 8 times.
In addition, we take the risk of 100 or 150 underlying assets. If a certain number goes bust, we lost our invested sum. This may double the risk of the reference entities.
In all, the risk of losing our invested sum can be 10 to 15 times of the risk of 1 corporate bond. What do we get for this high risk? 5.1% per annum.
Did the sales materials and propectus describe the risks transparently and fully? They did not. In fact, the sales materials were written to mislead the investor. The propectus was not intelligible to the ordinary investor.
The only statement that is readable is "You can lose some or all of your investments on a credit event". This statement applies to most types of investments. It failed to disclose that the risk is 10 to 15 times (or whatever is the correct level of the risk) of the failure of one bond.
Under the Securities & Futures Act, it is an offence to give misleading statements or to hide relevant facts when selling securities to the public. I hope that the authority will take the financial insitution to task for breach of this Act.
When we buy a credit-linked note, we take the risk of 6 to 8 reference entities. If any reference entity goes bust, we lose our invested sum. The risk is mutiplied 6 to 8 times.
In addition, we take the risk of 100 or 150 underlying assets. If a certain number goes bust, we lost our invested sum. This may double the risk of the reference entities.
In all, the risk of losing our invested sum can be 10 to 15 times of the risk of 1 corporate bond. What do we get for this high risk? 5.1% per annum.
Did the sales materials and propectus describe the risks transparently and fully? They did not. In fact, the sales materials were written to mislead the investor. The propectus was not intelligible to the ordinary investor.
The only statement that is readable is "You can lose some or all of your investments on a credit event". This statement applies to most types of investments. It failed to disclose that the risk is 10 to 15 times (or whatever is the correct level of the risk) of the failure of one bond.
Under the Securities & Futures Act, it is an offence to give misleading statements or to hide relevant facts when selling securities to the public. I hope that the authority will take the financial insitution to task for breach of this Act.
Monday, November 17, 2008
None Are So Blind As Those Who Will Not See The Truth
When I read the statements from various high-level ministers about investors who should be aware about the nature of the credit linked notes, I recall a statement: "None Are So Blind As Those Who Will Not See The Truth"
My blog and its target audience
I write this blog to educate the general public about financial planning, insurance and social issues in Singapore.
I advised people against investing in high cost financial products, such as structured products, certain types of life insurance products, time share and land banking.
The people who sell these products dislike my views. They attack me by posting anonymous and mischievous comments in my blog. I have to block these comments.
Some people also use my blog to attack NTUC Income, their agents and products. I also block these comments.
If you wish to submit comments that differ from my views, you can state them honestly and fairly, and use your real name. I will be happy to post them.
If you dislike the views posted in my blog, you should stop visiting it. My blog is not meant for people who make a living selling products that I discourage. You can create your own blog to argue the merits of your products and encourage people to visit your blog.
I advised people against investing in high cost financial products, such as structured products, certain types of life insurance products, time share and land banking.
The people who sell these products dislike my views. They attack me by posting anonymous and mischievous comments in my blog. I have to block these comments.
Some people also use my blog to attack NTUC Income, their agents and products. I also block these comments.
If you wish to submit comments that differ from my views, you can state them honestly and fairly, and use your real name. I will be happy to post them.
If you dislike the views posted in my blog, you should stop visiting it. My blog is not meant for people who make a living selling products that I discourage. You can create your own blog to argue the merits of your products and encourage people to visit your blog.
Match investors' needs
Nov 17, 2008
THE Monetary Authority of Singapore (MAS) may require financial services companies to sell products that better match investors' needs and include clearer risk labels linked to the investments, Finance Minister Tharman Shanmugaratnam said in Parliament on Monday. 'If an investor has been sold a product that's clearly unsuitable, if there are clear-cut cases of a mismatch, then the financial institution will ensure the investor gets proper restitution,' he said. 'That's the way we ensure there's trust in the system.'
Mr Tharman was replying to questions on the MAS probe into complaints by retail investors who said they were misled into buying structured products linked to the now-bankrupt Lehman Brothers Holdings.
Individual investors in Hong Kong, Singapore, and Taiwan have demanded refunds from banks selling them structured notes linked to Lehman.
DBS Group Holdings, Singapore's biggest bank which said late Oct most of the securities are now worthless, has estimated compensation to investors in cases where the bank didn't meet the 'standards' it upheld could amount to as much as $80 million.
Lehman's bankruptcy on Sept 15 sparked protests by investors in Hong Kong and Singapore seeking compensation for the products sold by DBS and other financial services companies.
'What's far more useful is to ensure good disclosure: simple, clear, good disclosure,' said Mr Tharman, adding that the monetary authority will study 'all' investor complaints.
He also said the note buyers should bear the responsibility of the investment outcome if there's no mis-selling by the banks, though he said his 'sympathies' lie with the investors, reported Bloomberg news.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_303359.html
THE Monetary Authority of Singapore (MAS) may require financial services companies to sell products that better match investors' needs and include clearer risk labels linked to the investments, Finance Minister Tharman Shanmugaratnam said in Parliament on Monday. 'If an investor has been sold a product that's clearly unsuitable, if there are clear-cut cases of a mismatch, then the financial institution will ensure the investor gets proper restitution,' he said. 'That's the way we ensure there's trust in the system.'
Mr Tharman was replying to questions on the MAS probe into complaints by retail investors who said they were misled into buying structured products linked to the now-bankrupt Lehman Brothers Holdings.
Individual investors in Hong Kong, Singapore, and Taiwan have demanded refunds from banks selling them structured notes linked to Lehman.
DBS Group Holdings, Singapore's biggest bank which said late Oct most of the securities are now worthless, has estimated compensation to investors in cases where the bank didn't meet the 'standards' it upheld could amount to as much as $80 million.
Lehman's bankruptcy on Sept 15 sparked protests by investors in Hong Kong and Singapore seeking compensation for the products sold by DBS and other financial services companies.
'What's far more useful is to ensure good disclosure: simple, clear, good disclosure,' said Mr Tharman, adding that the monetary authority will study 'all' investor complaints.
He also said the note buyers should bear the responsibility of the investment outcome if there's no mis-selling by the banks, though he said his 'sympathies' lie with the investors, reported Bloomberg news.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_303359.html
Islamic investment products
Dear Mr. Tan Kin Lian,
I am an avid reader of your blog and must thank you very much for all the help and info you provided. Unfortunately I invested in Minibond before getting to know about your blog.
Though not urgent, perhaps you could write something about Islamic Investment products in your blog. I somehow feel that the current fiasco involving Minibond, Jubilee, Pinnacle, High Notes 5 products etc WOULD NOT have occurred had these products been structured according to Islamic investment guidelines.
From the little I know about Islamic investments, they are governed by certain principles viz:-
> Full transparency in the product structure. Product should not knowingly hide bad points and boast about the good points.
> There must be no intent to deceive investors, nor sell knowingly worthless products.
> Product should not involve highly risky companies whose values may swing very high or very low.
> Product should not be speculative in nature, but rather based on solid long-term fundamentals.
> Investment should not be linked to immoral activities eg gambling, drug trafficking, prostitution etc.
> “Interest” should not be paid to investors, but modest “dividends” may be distributed to investors based on product profitability.
> Above all, the investment product must comply with Islamic religious scriptures.
I feel such products are what we need in this age of uncertainty. They will be very reassuring for the bulk of investors who are mainly low-risk type. Certain Middle East countries are moving fast in this direction, including targeting women investors who are traditionally risk-averse and are now coming out of the closet.
In the book that you are planning to write, pls dedicate several detailed chapters on Islamic Investment products. The world is full of western-style investment gurus, but short on Islamic Investment advisers.
I don’t see much of Islamic investment opportunities for the retail sector in Singapore. There are some, but are meant more for institutional investors or having a high entry level. Any pointers on this pls? Thank you very much for your continued efforts to educate investors.
VS
REPLY
I am not knowledgeable on Islamic principles. But, I must say that I like all of the principles that have been described above (except the "above all" principle, which is relevant only to the Muslims).
I am an avid reader of your blog and must thank you very much for all the help and info you provided. Unfortunately I invested in Minibond before getting to know about your blog.
Though not urgent, perhaps you could write something about Islamic Investment products in your blog. I somehow feel that the current fiasco involving Minibond, Jubilee, Pinnacle, High Notes 5 products etc WOULD NOT have occurred had these products been structured according to Islamic investment guidelines.
From the little I know about Islamic investments, they are governed by certain principles viz:-
> Full transparency in the product structure. Product should not knowingly hide bad points and boast about the good points.
> There must be no intent to deceive investors, nor sell knowingly worthless products.
> Product should not involve highly risky companies whose values may swing very high or very low.
> Product should not be speculative in nature, but rather based on solid long-term fundamentals.
> Investment should not be linked to immoral activities eg gambling, drug trafficking, prostitution etc.
> “Interest” should not be paid to investors, but modest “dividends” may be distributed to investors based on product profitability.
> Above all, the investment product must comply with Islamic religious scriptures.
I feel such products are what we need in this age of uncertainty. They will be very reassuring for the bulk of investors who are mainly low-risk type. Certain Middle East countries are moving fast in this direction, including targeting women investors who are traditionally risk-averse and are now coming out of the closet.
In the book that you are planning to write, pls dedicate several detailed chapters on Islamic Investment products. The world is full of western-style investment gurus, but short on Islamic Investment advisers.
I don’t see much of Islamic investment opportunities for the retail sector in Singapore. There are some, but are meant more for institutional investors or having a high entry level. Any pointers on this pls? Thank you very much for your continued efforts to educate investors.
VS
REPLY
I am not knowledgeable on Islamic principles. But, I must say that I like all of the principles that have been described above (except the "above all" principle, which is relevant only to the Muslims).
Remembering Mohideen Gany
Dear Mr Tan,
On behalf of my family, I wish to thank you for your kind concern, visits and support during my father's last few moments.
I know how much my father must have been comforted by your visit and presenceand had valued & treasured those moments when you visted him at the hospital and at home.
He had held NTUC INCOME very dear to his life. I know that for sure as my siblings and I grew up in the midst of his untiring effort, commitment and dedication to the progress and development of NTUC INCOME.
He had been a model and an inspiration to me and we sorely miss him. We are proud of his achievements as the First President of NTUC Summit Club President and for being one of the leading organisers for several years in the 1970's and 80's.
Thanks for remembering him in your blog.
With deep appreciation and thanks
Naseer Ghani
(His Eldest Son)
On behalf of my family, I wish to thank you for your kind concern, visits and support during my father's last few moments.
I know how much my father must have been comforted by your visit and presenceand had valued & treasured those moments when you visted him at the hospital and at home.
He had held NTUC INCOME very dear to his life. I know that for sure as my siblings and I grew up in the midst of his untiring effort, commitment and dedication to the progress and development of NTUC INCOME.
He had been a model and an inspiration to me and we sorely miss him. We are proud of his achievements as the First President of NTUC Summit Club President and for being one of the leading organisers for several years in the 1970's and 80's.
Thanks for remembering him in your blog.
With deep appreciation and thanks
Naseer Ghani
(His Eldest Son)
Interview of investors on Blogs
The Online Citizen and Wayang Party wish to interview investors and upload the interview (on video) into their blogs. This will help to bring the message to the wider public about how the ordinary people have been misled into investing in these toxic products.
If you are willing to share your experience, as a lesson for other people to be careful in the future, please come forward to be interviewed.
You can send an email to kinlian@gmail.com
If you are willing to share your experience, as a lesson for other people to be careful in the future, please come forward to be interviewed.
You can send an email to kinlian@gmail.com
Publish a book on Credit Linked Notes
I wish to collect materials to publish a book to outline the experience of investors of the credit linked notes (i.e. minibonds, pinnacle notes, high notes, jubilee notes, etc).
If you wish to share your personal experience, please write your story (800 to 1200 words) to explain the following:
1. How did you get to invest in these notes
2. What were your told about the product
3. How much did you invest
4. What was your past experience in investing your money?
5. What was your reaction when you learn about the true nature of these credit linked notes?
6. How does the financial loss impact you?
7. What lesson do you wish to share with the future generation?
Please use your real name, contact number, name of product and financial institution. The editor will use another name (to hide your identity) and get your agreement, before your story is published.
Send your story to kinlian1@gmail.com
If you wish to share your personal experience, please write your story (800 to 1200 words) to explain the following:
1. How did you get to invest in these notes
2. What were your told about the product
3. How much did you invest
4. What was your past experience in investing your money?
5. What was your reaction when you learn about the true nature of these credit linked notes?
6. How does the financial loss impact you?
7. What lesson do you wish to share with the future generation?
Please use your real name, contact number, name of product and financial institution. The editor will use another name (to hide your identity) and get your agreement, before your story is published.
Send your story to kinlian1@gmail.com
How I was misled (2)
Dear Mr. Tan,
My UOB fixed deposit has matured during that period. During that time H has a better interest rate offer for fixed deposit. We intend to place the money as fixed deposit with H.
When we were there, the staff at the counter persistently advised us to deposit our money into their investment product. We told her that it was our life saving and we were a low risk taker and would not want to take risk and we would want to place it as fixed deposit and we don’t want to get involve in any investment which we are not sure of.
She continued to show us a brochure on Pinnacle Notes and persistently advised us to reconsider as it is high interest rate return and also very low risk. Thinking that it would be very safe and we are going to put in our saving for sometimes, we agreed to understand further. She directed us to the Financial Manager R.
The Financial Manager R explained to us on the Pinnacles Notes product. She told us how good the product is and told us that it is for 5.5 years saving with higher interest rate of 5.25%. It is also a very low risk investment as the bank is investing on reputable AAA’s companies listed under the Reference Entities stated in the brochure so we don’t have to worry.
They are:
Commonwealth of Australia
Hong Kong Special Adminstrative Region of the People’s Republic of China
Republic of Singapore
Singapore Telecommunications Limited
Temasek Holdings Pte Ltd
She told us that even in the event that US or the whole world goes into financial crisis our deposit and interest will remain and continue to receive the interest every six-monthly. She told us that ONLY if one of the 5 companies goes bankrupt then our deposit will be affected.
We repeatedly highlighted to her that we are very low risk takers and this is our life saving. She kept reassuring us that the companies involved are all AAA and reputable company and we don’t have to worry about that. However, she never mentioned of any other investment on any other companies that the bank does that would affect my deposit.
She also told us that this product is overwhelming and they reopened it again.
To be cautious, I called one of my colleagues for his opinion. He said that the five companies are quite reputable and if the promise is there, then it should be ok.
After some thoughts, we decided to invest in the product since she kept repeatedly said that the risk is very low and ONLY if one of the 5 companies goes bankrupt then our deposit will be affected and the product is going to end soon on 30 Nov 2007 and we may miss the opportunity.
She did mention to us that the investment is not guaranteed return. She repeatedly assured that ONLY if one of the 5 companies goes bankrupt then our deposit will be affected.
She asked us to sign some forms to declare that she have briefed us on the product. She mentioned that it is only for formality sake. We don’t totally understand the content in details. Based on verbal trust of what she had assured us and since it is formality we signed the form as this is our first time investing in such a product.
The forms were given only after we agreed to invest in the product. We didn’t really read the forms in detail. Just like we buy and sell HDB flat where the officer will require us to sign copies and copies of forms, we do not have the time to read all the details especially the small prints. We don’t really fully know and understand what is in the content in the forms.
We totally rely on what the Financial Manager R verbally assured us. The most important aspects of the advice is that she kept repeatedly assuring us that the risk is very low and ONLY if one of the 5 companies in the Reference Entities goes bankrupt then our deposit will be affected. Even if US or the world goes into crisis it will not affect our investment and we will continue to get our interest six monthly. The most important point is that she did not mention of any other investment on any other companies that the bank does that would affect my deposit.
Speech at Speaker's Corner - 15 Nov 2008
1. Petitions to MAS
1 wish to give you an update of the progress of the three Petitions sent to the Monetary Authority of Singapore.
Petition #1 was sent to MAS on 9 October 2008. It was signed by 983 investors of the credit linked securities. It asked the Government to investigate into possible wrong-doings by the financial institutions that created and marketed these securities to the retail investors.
If there were possible wrong doings or breaches of the existing laws, specifically the Securities and Futures Act and the Financial Advisers Act, the Petition ask the Government to take appropriate action against the financial institutions and to seek fair compensation for the investors for their losses.
I met with Dr. Andrew Khoo and his colleagues on 9 October to hand over the Petition, which was addressed to Mr. Goh Chok Tong, chairman of MAS. I briefed Dr. Khoo and his colleagues about the possible areas of breaches of the existing laws.
I have not heard from MAS subsequently on the outcome of this Petition. I have sent two rerquests to Mr. Goh Chok Tong and to Dr. Andrew Khoo for a meeting to discuss the progress. So far, I have not been successful in getting this meeting.
Petition #2 was sent to MAS on 17 October 2008. It was signed by 277 investors. It asked MAS to investigate the sales training and marketing processes of the financial institutions that distributed these securities. Specifically, the investigation should examine if the sales representatives that distributed the securities were trained about the correct features of the securities and on the content of the prospectus, so that they can give the correct information to the investing public.
I have received an acknowledgment to this Petition. I do not know if the MAS intend to carry out any investigation as requested in the Petition.
Petition #4 was sent to MAS on 31 October 2008. It was signed by 1,017 investors. It asked MAS to review the complaint handling process of the financial institutions that distributed the credit linked securities. It asked MAS to set up an independent unit to receive the complaints and to encourage the financial institutions to adopt a collective approach in offering fair compensation to the investors who were misled into investing in these securities.
I have asked for a meeting with a senior official in MAS to discuss this petition and to follow up on the progress of the earlier petitions. My request was declined.
I reminded MAS that I am speaking on behalf of about 1,000 investors. They should not ignore my request for a meeting or to treat me like any single individual with a grievance. Even a single voice should be heard. If 1,000 voices are not loud enough, I wonder what will make our officials hear?
I will continue with my efforts.
2. Letter from an investor
I wish to share with you the views of an investor called SB. It is posted in my blog. This investor is willing to share some responsibility for investing in the credit linked securities carelessly, but is unhappy with the response of the Government leaders. I read his letter to you:
http://www.blogger.com/posts.g?blogID=11702093
I replied to SB that his approach is along the same lines that have been covered in Petition #1. So far, I have not heard from MAS if they intend to carry out an independent investigation into this matter.
3. Statutory declaration
A few weeks ago, I suggested that each investor should get a lawyer to help you to write a statutory declaration. This statement should explain how you were advised into making the investment. If you were given the wrong information or were misled about the credit linked notes, this fact should be stated in the statutory declaration. The lawyer will help you to state this fact properly.
You should make the statutory declaration truthfully and honestly. If you tell a lie, you can be prosecuted under the law. However, if you tell the truth, your statement under oath will have a stronger impact.
If many investors make similar statements about how they were sold or mis-sold on the credit linked notes by the sales representatives from the same financial institution, these declarations taken together will establish a pattern of mis-selling by the financial institution. It will convince an independent and impartial judge about the mis-selling.
The Monetary Authority of Singapore and FIDREC said that the statutory declaration is not necessary.
Subsequently, we learn that many of the financial institutions have rejected the claims of mis-selling made by the investors.
If your claim has been rejected, I advise you to make a statutory declaration now and lodged your complaint again with the financial institution. If they reject it again, you can use your statutory declaration to lodge your complaint to FIDREC.
You have lost many tens or hundred of thousand dollars in making these investments. It is better for you to send $120 to make the statutory declaration and lodge your complaint again.
If the statutory declaration is still rejected by FIDREC, you can join the collective legal action. The statutory declaration can be used for this third step.
4. Collective legal action
My committee is discussing with a few lawyers on the approach to take on a collective legal action.
Our Government leaders and MAS have advised that this should be avoided, and that other avenues are open for the investors to seek their redress.
Many investors have lost faith in their recommended approach.
My committee will help the investors to prepare for collective legal action, but we still advice that the legal action should be taken only as the last resort.
I hope that the MAS will respond to my requests for a meeting to discuss how the matter can be resolved fairly and that a costly legal action can be avoided.
We are still keen to seek an outcome that is fair to the investors and preserve Singapore’s reputation as a financial hub that can be trusted to take care of the interest of the ordinary people.
Tan Kin Lian
1 wish to give you an update of the progress of the three Petitions sent to the Monetary Authority of Singapore.
Petition #1 was sent to MAS on 9 October 2008. It was signed by 983 investors of the credit linked securities. It asked the Government to investigate into possible wrong-doings by the financial institutions that created and marketed these securities to the retail investors.
If there were possible wrong doings or breaches of the existing laws, specifically the Securities and Futures Act and the Financial Advisers Act, the Petition ask the Government to take appropriate action against the financial institutions and to seek fair compensation for the investors for their losses.
I met with Dr. Andrew Khoo and his colleagues on 9 October to hand over the Petition, which was addressed to Mr. Goh Chok Tong, chairman of MAS. I briefed Dr. Khoo and his colleagues about the possible areas of breaches of the existing laws.
I have not heard from MAS subsequently on the outcome of this Petition. I have sent two rerquests to Mr. Goh Chok Tong and to Dr. Andrew Khoo for a meeting to discuss the progress. So far, I have not been successful in getting this meeting.
Petition #2 was sent to MAS on 17 October 2008. It was signed by 277 investors. It asked MAS to investigate the sales training and marketing processes of the financial institutions that distributed these securities. Specifically, the investigation should examine if the sales representatives that distributed the securities were trained about the correct features of the securities and on the content of the prospectus, so that they can give the correct information to the investing public.
I have received an acknowledgment to this Petition. I do not know if the MAS intend to carry out any investigation as requested in the Petition.
Petition #4 was sent to MAS on 31 October 2008. It was signed by 1,017 investors. It asked MAS to review the complaint handling process of the financial institutions that distributed the credit linked securities. It asked MAS to set up an independent unit to receive the complaints and to encourage the financial institutions to adopt a collective approach in offering fair compensation to the investors who were misled into investing in these securities.
I have asked for a meeting with a senior official in MAS to discuss this petition and to follow up on the progress of the earlier petitions. My request was declined.
I reminded MAS that I am speaking on behalf of about 1,000 investors. They should not ignore my request for a meeting or to treat me like any single individual with a grievance. Even a single voice should be heard. If 1,000 voices are not loud enough, I wonder what will make our officials hear?
I will continue with my efforts.
2. Letter from an investor
I wish to share with you the views of an investor called SB. It is posted in my blog. This investor is willing to share some responsibility for investing in the credit linked securities carelessly, but is unhappy with the response of the Government leaders. I read his letter to you:
http://www.blogger.com/posts.g?blogID=11702093
I replied to SB that his approach is along the same lines that have been covered in Petition #1. So far, I have not heard from MAS if they intend to carry out an independent investigation into this matter.
3. Statutory declaration
A few weeks ago, I suggested that each investor should get a lawyer to help you to write a statutory declaration. This statement should explain how you were advised into making the investment. If you were given the wrong information or were misled about the credit linked notes, this fact should be stated in the statutory declaration. The lawyer will help you to state this fact properly.
You should make the statutory declaration truthfully and honestly. If you tell a lie, you can be prosecuted under the law. However, if you tell the truth, your statement under oath will have a stronger impact.
If many investors make similar statements about how they were sold or mis-sold on the credit linked notes by the sales representatives from the same financial institution, these declarations taken together will establish a pattern of mis-selling by the financial institution. It will convince an independent and impartial judge about the mis-selling.
The Monetary Authority of Singapore and FIDREC said that the statutory declaration is not necessary.
Subsequently, we learn that many of the financial institutions have rejected the claims of mis-selling made by the investors.
If your claim has been rejected, I advise you to make a statutory declaration now and lodged your complaint again with the financial institution. If they reject it again, you can use your statutory declaration to lodge your complaint to FIDREC.
You have lost many tens or hundred of thousand dollars in making these investments. It is better for you to send $120 to make the statutory declaration and lodge your complaint again.
If the statutory declaration is still rejected by FIDREC, you can join the collective legal action. The statutory declaration can be used for this third step.
4. Collective legal action
My committee is discussing with a few lawyers on the approach to take on a collective legal action.
Our Government leaders and MAS have advised that this should be avoided, and that other avenues are open for the investors to seek their redress.
Many investors have lost faith in their recommended approach.
My committee will help the investors to prepare for collective legal action, but we still advice that the legal action should be taken only as the last resort.
I hope that the MAS will respond to my requests for a meeting to discuss how the matter can be resolved fairly and that a costly legal action can be avoided.
We are still keen to seek an outcome that is fair to the investors and preserve Singapore’s reputation as a financial hub that can be trusted to take care of the interest of the ordinary people.
Tan Kin Lian
Sunday, November 16, 2008
Pinnacle Notes value as at 14 Nov 2008
Bid Side Valuation (including Accrued Interest) based on Morgan Stanley’s discretion
as 14 Nov 2008:
as 14 Nov 2008:
Pinnacle Series 9 0%
Pinnacle Series 10 0%
USD SGD
Pinnacle Series 1 1.83% 1.47%
Pinnacle Series 2 3.79% 3.26%
Pinnacle Series 3 10.32% 10.03%
Pinnacle Series 5 8.61% 8.35%
Pinnacle Series 6 2.95% 1.26%
Pinnacle Series 7 1.67% 1.48%
The above notes lost more than 89% of value
USD SGD
Pinnacle Series 8 69.50% 66.28%
Pinnacle Series 12 79.97% 80.28%
Pinnacle Series 15 84.87%
Pinnacle Series 16 82.15%
Check the weekly prices of your credit linked notes
Here is a tip.
Ask you distributor to show you the website that you can check the weekly prices of the credit linked notes that you have bought.
If you find that the notes have dropped in value, you should ask for an explanation from the distributor or the product issuer.
You can make your request verbally. If you do not get a satisfactory answer, you can send your request in writing. If it is still not answered, you can lodge a complaint with MAS.
It is the duty of the distributor to advice you on how you can get this important piece of information. As the value of many series of notes are dropping seriously, you should monitor these values regularly.
Ask you distributor to show you the website that you can check the weekly prices of the credit linked notes that you have bought.
If you find that the notes have dropped in value, you should ask for an explanation from the distributor or the product issuer.
You can make your request verbally. If you do not get a satisfactory answer, you can send your request in writing. If it is still not answered, you can lodge a complaint with MAS.
It is the duty of the distributor to advice you on how you can get this important piece of information. As the value of many series of notes are dropping seriously, you should monitor these values regularly.
Ask for your risk analysis form
Here is a tip.
Write to the financial institution to ask for a copy of the risk analysis form that you signed at the time that you bought the credit linked notes.
Check if the answers in the form are based on what you told the sales representative. If the answers are not taken from you, you can write a letter immediately to point out any wrong facts.
A few investors have asked for and received the signed form. They found statements written by the sales representative (of the distributor) without their permission. If the wrong facts are entered with fraudalent intent, you can lodge a police report.
You can consult a knowledgeable fellow investor about the implications of the facts contained in the risk analysis form.
Views posted by an investor
To: All Investors,
Please ask your FI for a copy of ALL documents that you signed, preferabky BEFORE going for the interview. There have been some cases where the FI's copy of the risk profile form contain additions and/or modifications that were not reflected in the investor's copy. This is highly irregular.
During application time, the RM typically asked some random questions which were ticked on the form. The investor then signed the form, and the RM gave investor his copy on the spot. Later on, the RM filled up the balance of the form with info in his favour. This additional info was not made known to investor upon signup.The investor has unknowingly signed a "blank check".
The RM should get the agreement of the investor for any additional notes he plans to add, but he did not.From a legal standpoint, can one argue that the risk analysis form is invalid, and hence the entire purchase agreement in null and void?
Write to the financial institution to ask for a copy of the risk analysis form that you signed at the time that you bought the credit linked notes.
Check if the answers in the form are based on what you told the sales representative. If the answers are not taken from you, you can write a letter immediately to point out any wrong facts.
A few investors have asked for and received the signed form. They found statements written by the sales representative (of the distributor) without their permission. If the wrong facts are entered with fraudalent intent, you can lodge a police report.
You can consult a knowledgeable fellow investor about the implications of the facts contained in the risk analysis form.
Views posted by an investor
To: All Investors,
Please ask your FI for a copy of ALL documents that you signed, preferabky BEFORE going for the interview. There have been some cases where the FI's copy of the risk profile form contain additions and/or modifications that were not reflected in the investor's copy. This is highly irregular.
During application time, the RM typically asked some random questions which were ticked on the form. The investor then signed the form, and the RM gave investor his copy on the spot. Later on, the RM filled up the balance of the form with info in his favour. This additional info was not made known to investor upon signup.The investor has unknowingly signed a "blank check".
The RM should get the agreement of the investor for any additional notes he plans to add, but he did not.From a legal standpoint, can one argue that the risk analysis form is invalid, and hence the entire purchase agreement in null and void?
Barclays AREIT
Hi Mr Tan,
What can you tell me about Barclays AREIT. I bought this product from DBS. The officer told me it is a safe product with little risk and it is gives dividends. Since I joined in 2006, at $1, I have now lost about half of the investment.
Can you advise?
LT
REPLY
You should ask DBS and get them to reply in writing. If you do not understqnd the product, you should ask them to explain in terms that you can understand.
What can you tell me about Barclays AREIT. I bought this product from DBS. The officer told me it is a safe product with little risk and it is gives dividends. Since I joined in 2006, at $1, I have now lost about half of the investment.
Can you advise?
LT
REPLY
You should ask DBS and get them to reply in writing. If you do not understqnd the product, you should ask them to explain in terms that you can understand.
Invitation to investors who bought from UOB Kay Hian
We would like to invite investors who invested structured products (Pinnacle Notes, Minibonds, Jubilee, etc) through UOB Kay Hian to join our contact group. Many of us have a frustrating experience with UOB Kay Hian individually and we believe we can engage UOB Kay Hian more effectively as a group.
Please send us an email at uobkh.group@gmail.com, indicating your full name, email and phone contacts and type of products bought. Thank you.
Regards,
UOB Kay Hian Investors Group
Please send us an email at uobkh.group@gmail.com, indicating your full name, email and phone contacts and type of products bought. Thank you.
Regards,
UOB Kay Hian Investors Group
How I was misled (1)
Dear All,
I have written to H and MAS 3 weeks ago. Until now, I have not got any reply from them yet. I have bought Pinnacle series 6 & 7 from H. I felt that I am misled and I this was what happen to me.
Last year June 2007, I was looking around for banks that offered good fixed deposit rates. Through the website, I found out that H offered one of the highest interest fixed deposit rates.
My wife and I then went to H as it was near to our workplace. When we approached the counter staff on the intention of opening an fixed deposit account, she instead persuaded and recommended us the Pinnacle Notes Series 6 & 7. She told us that this product was as safe as fixed deposit but with a much higher interest paid out. Upon hearing this, we were quite excited and keen of learning more of this product. She then introduced us to the FM J, as she was busy assisting customers who had signed up for the Notes.
J started by showing us the brochures at the side of the counter. She told us that the response was overwhelming the H might stop accepting further applications as they had a lot of back log to process and clear.
The following was what she had told us during that short time :-
* The notes issued are invested in five leading banks, namely DBS, Citibank, UOB, OCBC, BOA and as well as SingTel.
* It pays between 5.2% and 5.0% interest per year for a 5.5 year tenure.
* Series 7 is tied to the share price of the mentioned 5 leading banks and SingTel.
* The risk is low and it operates just like the fixed deposit account.
* She did mention that the principal amount is not guaranteed but she assured us that the 5 leading banks and SingTel will not go bankrupt. She told us that even if you put your money in the fixed deposit account and the bank goes bankrupt, you will also stand to loose your principal amount.
* She further explained that as the money will be invested in the mentioned 5 leading banks and SingTel, even if you are so unlucky that one of the banks goes bankrupt, you will note loose all your principal amount, unless all the 5 banks go bankrupt a the same time.
* During the short time that she explained the product to us, she kept emphasizing the word "secured" credit linked notes. Hence, the product is extremely safe as it is linked to the 5 banks and SingTel.
* We were under a bit of pressure to sign up on the spot as she kept saying that due to the overwhelming response, H would stop accepting further applications these one or two days, before the closing date.
We were definitely being misled into believing that the Notes are used to invest in the 5 banks as well as SingTel. We invested $X Each in both Series 6 & 7 Pinnacle Notes.
Hastily, she filled up the application form for us, with brief explanation. Thereafter, she told us that she needed to do a simple survey of my profile. She said that this was required by her company. She flip through the survey form and randomly asked a few questions. She asked about our particulars, whether do we need the money in the next five years, and also did we purchase any similar products from other banks. The rest of the questions, she said she will tick "average/medium".
Before we left the bank, she handed a copy of the application form and survey form to us. Since then, we did not hear anything from H until 11 July 07. We received from DMG & Partners a confirmation notice that we had bought the Series 6 & 7 Pinnacle Notes. We have also received 2 payouts, on Jan 08 and July 08.
When we learnt of the collapse of the Lehman Brothers Bank and protest from investers of Pinnacle Notes, we decided to check it out from H.
On 9 Oct 08, I went to H to check if the Notes that we have invested are alright. Only then that I came to realise that our money are actually not invested in the 5 mentioned banks and SingTel. It was instead invested in 125 companies and 2 (Lehman Brothers and Washington Mutual) had already bankrupt. I was shocked and asked to see the list of the 125 companies. They were initially not very willing to show me but I insisted. I was even more shock when I received their email, as it is not only invested in the 125 companies but also used to buy credit card bills of Chase Bank.
I asked why we are not shown this list, prior to our purchase of these Notes. His explanation was that the list of companies which they have invested were only released after the offer period closed.
We were angry and fustrated that how can a Relationship Manager from such a reputable financial institution, deceived us into believing that the product is issued and invested in the 5 banks and SingTel, and that it is very safe, just like fixed deposit account.
Did the Financial Insitution do a risk assessment before they undertake to sell the product? Why are we not shown the list on what were invested. No clear and detailed explanation is provided before our purchase. Why H did not update us after the closing date on the list of companies that the notes invested. Why H did not update us when 2 of the 125 companies go bankrupt?
I have written to H and MAS 3 weeks ago. Until now, I have not got any reply from them yet. I have bought Pinnacle series 6 & 7 from H. I felt that I am misled and I this was what happen to me.
Last year June 2007, I was looking around for banks that offered good fixed deposit rates. Through the website, I found out that H offered one of the highest interest fixed deposit rates.
My wife and I then went to H as it was near to our workplace. When we approached the counter staff on the intention of opening an fixed deposit account, she instead persuaded and recommended us the Pinnacle Notes Series 6 & 7. She told us that this product was as safe as fixed deposit but with a much higher interest paid out. Upon hearing this, we were quite excited and keen of learning more of this product. She then introduced us to the FM J, as she was busy assisting customers who had signed up for the Notes.
J started by showing us the brochures at the side of the counter. She told us that the response was overwhelming the H might stop accepting further applications as they had a lot of back log to process and clear.
The following was what she had told us during that short time :-
* The notes issued are invested in five leading banks, namely DBS, Citibank, UOB, OCBC, BOA and as well as SingTel.
* It pays between 5.2% and 5.0% interest per year for a 5.5 year tenure.
* Series 7 is tied to the share price of the mentioned 5 leading banks and SingTel.
* The risk is low and it operates just like the fixed deposit account.
* She did mention that the principal amount is not guaranteed but she assured us that the 5 leading banks and SingTel will not go bankrupt. She told us that even if you put your money in the fixed deposit account and the bank goes bankrupt, you will also stand to loose your principal amount.
* She further explained that as the money will be invested in the mentioned 5 leading banks and SingTel, even if you are so unlucky that one of the banks goes bankrupt, you will note loose all your principal amount, unless all the 5 banks go bankrupt a the same time.
* During the short time that she explained the product to us, she kept emphasizing the word "secured" credit linked notes. Hence, the product is extremely safe as it is linked to the 5 banks and SingTel.
* We were under a bit of pressure to sign up on the spot as she kept saying that due to the overwhelming response, H would stop accepting further applications these one or two days, before the closing date.
We were definitely being misled into believing that the Notes are used to invest in the 5 banks as well as SingTel. We invested $X Each in both Series 6 & 7 Pinnacle Notes.
Hastily, she filled up the application form for us, with brief explanation. Thereafter, she told us that she needed to do a simple survey of my profile. She said that this was required by her company. She flip through the survey form and randomly asked a few questions. She asked about our particulars, whether do we need the money in the next five years, and also did we purchase any similar products from other banks. The rest of the questions, she said she will tick "average/medium".
Before we left the bank, she handed a copy of the application form and survey form to us. Since then, we did not hear anything from H until 11 July 07. We received from DMG & Partners a confirmation notice that we had bought the Series 6 & 7 Pinnacle Notes. We have also received 2 payouts, on Jan 08 and July 08.
When we learnt of the collapse of the Lehman Brothers Bank and protest from investers of Pinnacle Notes, we decided to check it out from H.
On 9 Oct 08, I went to H to check if the Notes that we have invested are alright. Only then that I came to realise that our money are actually not invested in the 5 mentioned banks and SingTel. It was instead invested in 125 companies and 2 (Lehman Brothers and Washington Mutual) had already bankrupt. I was shocked and asked to see the list of the 125 companies. They were initially not very willing to show me but I insisted. I was even more shock when I received their email, as it is not only invested in the 125 companies but also used to buy credit card bills of Chase Bank.
I asked why we are not shown this list, prior to our purchase of these Notes. His explanation was that the list of companies which they have invested were only released after the offer period closed.
We were angry and fustrated that how can a Relationship Manager from such a reputable financial institution, deceived us into believing that the product is issued and invested in the 5 banks and SingTel, and that it is very safe, just like fixed deposit account.
Did the Financial Insitution do a risk assessment before they undertake to sell the product? Why are we not shown the list on what were invested. No clear and detailed explanation is provided before our purchase. Why H did not update us after the closing date on the list of companies that the notes invested. Why H did not update us when 2 of the 125 companies go bankrupt?
KTS
Mibibond has return of 3 (on scale) and risk of 9
This contribution has been edited by TKL
Dear Mr. Tan
If we using the rating scale of 1 to 10 for the return and risk, then if the fixed deposit is rated at return of 1 with the risk of 1 , then minibond should be rated at return of 3 but with the risk of 9. OCBC 5.1% preference share should be rated at return of 3 and with the risk of 3.
Risk analysis for OCBC PS and minibond :
> We can sell the OCBC 5.1% PS anytime if we need cash
> We are locked up for 5 full years for minibond.
> The risk for losing everything for OCBC 5.1% PS is when OCBC bank go bankrupt
> The risk for losing everything for minibond is any one of the followings:
1) any one of the six major banks or Lehman brothers go bankrupt
2) some others credit events(out of 150 CDOs) occurred (very complex)
Under (1), the risk of minibond is already 7 times of OCBC PS. If we include (2), the risk will multiply, say 20 to 30 times. (I have the impression that the 150 CDOs are much more risky than the six banks)
Clearly, no one in the right mind will buy minibond for a return of 3 but with the risk of 9, if they are aware of the full risk.
Pang
Dear Mr. Tan
If we using the rating scale of 1 to 10 for the return and risk, then if the fixed deposit is rated at return of 1 with the risk of 1 , then minibond should be rated at return of 3 but with the risk of 9. OCBC 5.1% preference share should be rated at return of 3 and with the risk of 3.
Risk analysis for OCBC PS and minibond :
> We can sell the OCBC 5.1% PS anytime if we need cash
> We are locked up for 5 full years for minibond.
> The risk for losing everything for OCBC 5.1% PS is when OCBC bank go bankrupt
> The risk for losing everything for minibond is any one of the followings:
1) any one of the six major banks or Lehman brothers go bankrupt
2) some others credit events(out of 150 CDOs) occurred (very complex)
Under (1), the risk of minibond is already 7 times of OCBC PS. If we include (2), the risk will multiply, say 20 to 30 times. (I have the impression that the 150 CDOs are much more risky than the six banks)
Clearly, no one in the right mind will buy minibond for a return of 3 but with the risk of 9, if they are aware of the full risk.
Pang
Wayang Party
I wish to introduce you to another blog that contains information about developments on the credit-linked notes, and also about issues in Singapore.
http://wayangparty.com/
http://wayangparty.com/
Lesson from China: Hu Jintao
Chinese President Hu Jintao said China can help alleviate the impact of the financial crisis and slowing global growth by stoking its own economy.
Steady and relatively fast growth in China is in itself an important contribution to international financial stability and world economic growth.
China announced a $586 billion economic stimulus, focused on building low-rent housing, roads, railways and airports. The package also allows tax deductions for fixed assets such as machinery to stimulate investment. Farmers will also benefit from more subsidies.
China has taken an active part in the international cooperation to deal with the financial crisis and played a positive role in maintaining international financial stability and promoting the development of the world economy. Hu suggested that rich countries must take the lead in addressing the crisis.
Developed nations “should undertake their due responsibilities and obligations” by stabilizing their economies, restoring growth and taking steps to “safeguard investors’ interests”.
Steady and relatively fast growth in China is in itself an important contribution to international financial stability and world economic growth.
China announced a $586 billion economic stimulus, focused on building low-rent housing, roads, railways and airports. The package also allows tax deductions for fixed assets such as machinery to stimulate investment. Farmers will also benefit from more subsidies.
China has taken an active part in the international cooperation to deal with the financial crisis and played a positive role in maintaining international financial stability and promoting the development of the world economy. Hu suggested that rich countries must take the lead in addressing the crisis.
Developed nations “should undertake their due responsibilities and obligations” by stabilizing their economies, restoring growth and taking steps to “safeguard investors’ interests”.
Lesson from President-elect Obama
Extracted from bloomberg.com
Obama said he has assigned someone on his presidential transition team who interacts with Paulson (treasury secretary of Bush administration) daily.
"We are getting the information that's required, and we're making suggestions in some circumstances about how we think they might approach some of these problems,'' Obama said. Obama also said the government must do more to help distressed homeowners.
"We have not focused on foreclosures and what's happening to homeowners as much as I would like,'' Obama said, according to the excerpts. He called for setting up ``a negotiation between banks and borrowers so that people can stay in their homes.''
Translate into Singapore situation
The government and MAS must do more to help distressed investors of the credit linked notes.
They have not focused on helping the investors as much as is possible. There should be a negotiation between banks and investors so that fair compensation can be given to the investors for their losses.
Obama said he has assigned someone on his presidential transition team who interacts with Paulson (treasury secretary of Bush administration) daily.
"We are getting the information that's required, and we're making suggestions in some circumstances about how we think they might approach some of these problems,'' Obama said. Obama also said the government must do more to help distressed homeowners.
"We have not focused on foreclosures and what's happening to homeowners as much as I would like,'' Obama said, according to the excerpts. He called for setting up ``a negotiation between banks and borrowers so that people can stay in their homes.''
Translate into Singapore situation
The government and MAS must do more to help distressed investors of the credit linked notes.
They have not focused on helping the investors as much as is possible. There should be a negotiation between banks and investors so that fair compensation can be given to the investors for their losses.
Write directly to MAS and your MP
Dear Mr. Tan,
I am writing with a great deal of embarrassment. My husband and I are far from being uneducated. In fact, there are two phDs between us but that goes to show that stupidity doesn't discriminate against people with education. We sank $100 000 - half of it was with pinnacles 8.
I have the following questions:
(details deleted)
What we want to say is that there is definitely a history of misrepresentation in this case. However, we are also embarrassed by the fact that we were so gullible and trusting. In the news, much is made of the plight of retirees who couldn't have known better. However, the honest truth is - it is a very complex product and if we (someone like us) could not understand it, I suspect, many people will walk into this blindly.
My point - the law usually wouldn't allow anyone to sell lousy goods in bad faith. However, when it comes to banks - they can legitimately take millions off simple folks like us and walk away. This is what I find incomprehensible. Is MAS an innocent bystander?
Finally, I just want to thank your website for helping me understand the issues even though I feel more of a fool after reading what others are saying. What I want to say is that don't assume education is going to protect you from such blunders. (details deleted)
I hope this reaches your personal email account and not your blog. If for some reason it goes to your blog, I would be grateful if you could remove it.
REPLY
I advise you to write directly to the MAS and to your member of Parliament. I have a few hundred people writing to me on similar experiences. I do not have the power to do anything, except to post into my blog, speak at Hong Lim Park, and organise Petitions (which are ignored by MAS).
I am writing with a great deal of embarrassment. My husband and I are far from being uneducated. In fact, there are two phDs between us but that goes to show that stupidity doesn't discriminate against people with education. We sank $100 000 - half of it was with pinnacles 8.
I have the following questions:
(details deleted)
What we want to say is that there is definitely a history of misrepresentation in this case. However, we are also embarrassed by the fact that we were so gullible and trusting. In the news, much is made of the plight of retirees who couldn't have known better. However, the honest truth is - it is a very complex product and if we (someone like us) could not understand it, I suspect, many people will walk into this blindly.
My point - the law usually wouldn't allow anyone to sell lousy goods in bad faith. However, when it comes to banks - they can legitimately take millions off simple folks like us and walk away. This is what I find incomprehensible. Is MAS an innocent bystander?
Finally, I just want to thank your website for helping me understand the issues even though I feel more of a fool after reading what others are saying. What I want to say is that don't assume education is going to protect you from such blunders. (details deleted)
I hope this reaches your personal email account and not your blog. If for some reason it goes to your blog, I would be grateful if you could remove it.
REPLY
I advise you to write directly to the MAS and to your member of Parliament. I have a few hundred people writing to me on similar experiences. I do not have the power to do anything, except to post into my blog, speak at Hong Lim Park, and organise Petitions (which are ignored by MAS).
G20 and G8
The G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union.
The Netherlands and Spain were also represented, as were the IMF, World Bank, Financial Stability Forum and United Nations.
The G8 are Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States of America, and the President of the European Commission.
The Netherlands and Spain were also represented, as were the IMF, World Bank, Financial Stability Forum and United Nations.
The G8 are Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States of America, and the President of the European Commission.
There are still regulations in Singapore
I brought my small dog to Yio Chu Kang stadium. After two rounds the track, the attendant called to me. He said that "dogs are not allowed". It is posted in the regulation of the stadium. I checked and found "Animals, birds or reptiles are not allowed".
It is an irony. MAS registered more than 50 series of credit linked notes that are approved for sale to the public who are expected to invest "with their eyes open". It seems that dogs are not allowed in the stadium, but credit linked notes, with "first to default" swaps and 100 or more toxic CDOs are approved - even if you can lose a lifetime of savings.
It is an irony. MAS registered more than 50 series of credit linked notes that are approved for sale to the public who are expected to invest "with their eyes open". It seems that dogs are not allowed in the stadium, but credit linked notes, with "first to default" swaps and 100 or more toxic CDOs are approved - even if you can lose a lifetime of savings.
Saturday, November 15, 2008
New swap counter party to replace Lehman Brothers
Many people asked me if a new swap counter party is found to replace Lehman Brothers, will they get their principal back on maturity (i.e. the full sum invested in the minibond)?
The answer is "I don't know". The investor still has to face the following risks during the remaining term:
> default of the 6 reference entity
> default of the underlying assets
> default of the new swap counter-party
For example, Morgan Stanley is the swap counter party for Pinnacle Notes 9 and 10. They are still intact. The reference entities under these notes have not defaulted. However, 5 of the underlying assets of these notes have defaulted. These notes now have zero value.
The fate of these pinnacle notes show that the minibond still have many risks down the road, even if a new swap counterparty is found.
The answer is "I don't know". The investor still has to face the following risks during the remaining term:
> default of the 6 reference entity
> default of the underlying assets
> default of the new swap counter-party
For example, Morgan Stanley is the swap counter party for Pinnacle Notes 9 and 10. They are still intact. The reference entities under these notes have not defaulted. However, 5 of the underlying assets of these notes have defaulted. These notes now have zero value.
The fate of these pinnacle notes show that the minibond still have many risks down the road, even if a new swap counterparty is found.
God help the righteous
Hi Mr Tan Kin Lian
Our family and friends are very appreciative of your good cause and perseverence to fight for justice for the oppressed. We thank God for your righteousness.
A few key things I would like to summarize here after a long episode of struggle since the fateful day of 15 Sep 08 of Lehman collapse for "a just and fair" resolution resulting in nothing but a fatal rejection. This case is "DBS" High Notes 5 mis-selling.
We feel so helpless and victimised because the product was a DBS product sold as a very safe and low risk product like a FD but later turned out to be such a complex product that we do not even understand, and how is it that we became the "insurer" of the bank?
I wrote letters to the CEO and MD of Consumer Banking, copied MAS and FIDReC. There was no reply to specific questions asked, including:
- The 31 Mar 08 letter to investors from Brandon Lam of DBS which "emphasise that none of the DBS High Notes has any direct exposure to US subprime mortgage-backed securities." Why did this contradict the event of Lehman Brothers.
- The 31 Mar 08 letter to investors from Brandon Lam of DBS stated that "it would take several underlying reference entities in the collateral to suffer Credit Events before investors suffer a loss to their principal amount." Why did a single event of Lehman Brothers lead to zero redemption when there are 8 reference entities?
- The 27 Jun 08 letter from Brandon Lam of DBS urging investors to hold "DBS" High Notes as he said "DBS High Notes are designed to be held to maturity". Why DBS did not uphold its due diligence to safeguard the investment of the people but misled us to hold the funds and later turned around and said that it's zero value? This is "DBS" High Notes, carried under its name.
- Why there is no explicit and clear explanation of the risks associated with this product during sales?
- Why pricing statement and prospectus were not given and explained during sales?
- Why did the RM still claim the product is low risk but the MD admitted that it is high risk in the scale of 8 out of 10?
- Why the product is so complex, yet the RM thought that it is a simple FD kind of investment?
MAS remains on the sideline without any comments. They said they cannot be involved in getting the bank to compensate for the loss or mis-representation. They said they can fine and warn the bank for wrong practice, but we lost our hard-earn money for them to correct their processes and practice?
We are not financially nor legally trained. We wish to know why the authority is also so helpless towards such mis-selling of a financial product that impact so many people.
God help us. For the eyes of the Lord are toward the righteous and His ears are open to their cry. When the righteous cry for help, the Lord hears and delivers them
from all their distresses and troubles.
You see, the Lord is close to those who have a broken heart, and saves such who are crushed with sorrow and are humbly penitent. We claim this promise. Amen.
JL
Our family and friends are very appreciative of your good cause and perseverence to fight for justice for the oppressed. We thank God for your righteousness.
A few key things I would like to summarize here after a long episode of struggle since the fateful day of 15 Sep 08 of Lehman collapse for "a just and fair" resolution resulting in nothing but a fatal rejection. This case is "DBS" High Notes 5 mis-selling.
We feel so helpless and victimised because the product was a DBS product sold as a very safe and low risk product like a FD but later turned out to be such a complex product that we do not even understand, and how is it that we became the "insurer" of the bank?
I wrote letters to the CEO and MD of Consumer Banking, copied MAS and FIDReC. There was no reply to specific questions asked, including:
- The 31 Mar 08 letter to investors from Brandon Lam of DBS which "emphasise that none of the DBS High Notes has any direct exposure to US subprime mortgage-backed securities." Why did this contradict the event of Lehman Brothers.
- The 31 Mar 08 letter to investors from Brandon Lam of DBS stated that "it would take several underlying reference entities in the collateral to suffer Credit Events before investors suffer a loss to their principal amount." Why did a single event of Lehman Brothers lead to zero redemption when there are 8 reference entities?
- The 27 Jun 08 letter from Brandon Lam of DBS urging investors to hold "DBS" High Notes as he said "DBS High Notes are designed to be held to maturity". Why DBS did not uphold its due diligence to safeguard the investment of the people but misled us to hold the funds and later turned around and said that it's zero value? This is "DBS" High Notes, carried under its name.
- Why there is no explicit and clear explanation of the risks associated with this product during sales?
- Why pricing statement and prospectus were not given and explained during sales?
- Why did the RM still claim the product is low risk but the MD admitted that it is high risk in the scale of 8 out of 10?
- Why the product is so complex, yet the RM thought that it is a simple FD kind of investment?
MAS remains on the sideline without any comments. They said they cannot be involved in getting the bank to compensate for the loss or mis-representation. They said they can fine and warn the bank for wrong practice, but we lost our hard-earn money for them to correct their processes and practice?
We are not financially nor legally trained. We wish to know why the authority is also so helpless towards such mis-selling of a financial product that impact so many people.
God help us. For the eyes of the Lord are toward the righteous and His ears are open to their cry. When the righteous cry for help, the Lord hears and delivers them
from all their distresses and troubles.
You see, the Lord is close to those who have a broken heart, and saves such who are crushed with sorrow and are humbly penitent. We claim this promise. Amen.
JL
High risk is not disclosed in Prospectus
Dear Mr Tan,
I am one of the Pinncle Note investors. As I am working in a Financial Institution, I can't be considered as a vunerable group. But honestly, I am not aware of the extremely high level of risk associated with such notes. The risk of default is way beyond the basket of blue-chip reference entities.
I received a letter from the bank that I bought the note, together with a letter from Pinncle Performance Limited informing that credit rating assigned by Fitch has been downgraded to "B-" (Rating Watch: Negative) due to the credit events occured in respect of Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf.
When I bought the note, I was told that the note is credit-linked to these reference entities: Standard Chartered bank, HSBC Bank PLC, Bank of China Limited, The Korea Development Bank, Malayan Banking Berhard, DBS Bank, United Overseas Bank Ltd.
I am really surprised to see Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf. appearing on the letter.
I looked through the Base Prospectus of the notes dated 7 Aug 2006 and I can't find the above toxic entities mentioned.
Is this sufficient ground to argue that the arranger or the FI has misold the product or have not fully disclosed the details of this products? Not sure how many other such toxic entities are associated with the notes. I would certainly have thought twice if the risk is beyond the 7 blue-chip banks as mentioned in the brochure.
REPLY
I believe that you have sufficient grounds. I suggest that you prepare a statutory declaration to support your complaint. Read the instructions in my blog:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.htmlhttp://tankinlian.blogspot.com/2008/10/affidavit-statement-made-under-oath.htmlhttp://tankinlian.blogspot.com/2008/10/individual-advice.html
I am one of the Pinncle Note investors. As I am working in a Financial Institution, I can't be considered as a vunerable group. But honestly, I am not aware of the extremely high level of risk associated with such notes. The risk of default is way beyond the basket of blue-chip reference entities.
I received a letter from the bank that I bought the note, together with a letter from Pinncle Performance Limited informing that credit rating assigned by Fitch has been downgraded to "B-" (Rating Watch: Negative) due to the credit events occured in respect of Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf.
When I bought the note, I was told that the note is credit-linked to these reference entities: Standard Chartered bank, HSBC Bank PLC, Bank of China Limited, The Korea Development Bank, Malayan Banking Berhard, DBS Bank, United Overseas Bank Ltd.
I am really surprised to see Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf. appearing on the letter.
I looked through the Base Prospectus of the notes dated 7 Aug 2006 and I can't find the above toxic entities mentioned.
Is this sufficient ground to argue that the arranger or the FI has misold the product or have not fully disclosed the details of this products? Not sure how many other such toxic entities are associated with the notes. I would certainly have thought twice if the risk is beyond the 7 blue-chip banks as mentioned in the brochure.
REPLY
I believe that you have sufficient grounds. I suggest that you prepare a statutory declaration to support your complaint. Read the instructions in my blog:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.htmlhttp://tankinlian.blogspot.com/2008/10/affidavit-statement-made-under-oath.htmlhttp://tankinlian.blogspot.com/2008/10/individual-advice.html
High risk of credit linked notes, inadequate return
Dear Mr. Tan,
Here are a few pointers you may want to use in your talk on Saturday about investors going in with their eyes open.
Any rational person if he is made aware of the risks in the Minibonds will never but it for the simple reason that the interest rate is only 5% compared with dual currency and equity Link investments which offers up to 22% with lower risks. In the worst scenario we just have to be converted to the foriegn currency or pick up the normally blue chips share. The risk is certainly less than that of minbond.
In short, we were hoodwink and MAS who is supposed to safeguard its citizens have allowed this toxic product to be sold through their negligence or ignorance. I have been told by unconfirmed sources that a certain rating agency refuses to rate the credit linked notes, but they received veiled threats.
I am quite sure the town councils who lost money did not understand what they were buying but are too embarassed to say so. After all it not their money but the taxpayers.
Keep up the good work
VK
Here are a few pointers you may want to use in your talk on Saturday about investors going in with their eyes open.
Any rational person if he is made aware of the risks in the Minibonds will never but it for the simple reason that the interest rate is only 5% compared with dual currency and equity Link investments which offers up to 22% with lower risks. In the worst scenario we just have to be converted to the foriegn currency or pick up the normally blue chips share. The risk is certainly less than that of minbond.
In short, we were hoodwink and MAS who is supposed to safeguard its citizens have allowed this toxic product to be sold through their negligence or ignorance. I have been told by unconfirmed sources that a certain rating agency refuses to rate the credit linked notes, but they received veiled threats.
I am quite sure the town councils who lost money did not understand what they were buying but are too embarassed to say so. After all it not their money but the taxpayers.
Keep up the good work
VK
Retrenchment Loan
DBS Bank has announced that it will retrench 900 employees. More than half will come from its operations in Singapore.
Many companies in Singapore are expected to retrench their employees in the months ahead, following the slowdown in the global economy. Analysts expect that the number will exceed the 30,000 people retrenched during the Asian financial crisis in 1998.
Singapore does not have an unemployment insurance scheme. The retrenched employees will find it difficult to find alternative jobs. They are likely to be unemployed for several months or years.
I wish to suggest that the Government set up an Unemployment Loan scheme to provide a monthly payment to the retrenched employees. I propose this scheme to work as follows:
a) The amount of loan will be at 70% of the average earnings, subject to a cap of $2,000 a month
b) Interest will be charged at 2.5% per annum
c) The loan will apply to a worker who has been retrenched from a job that he has worked for more than 12 months.
d) The loan can be drawn for up to 24 months from the date of retrenchment.
e) Any retrenchment benefit received by the worker should be used first, before the worker is allowed to draw down on this retrenchment loan.
This loan will enable to retrenched worker to meet the mortgage repayments and family expenses. It has to be repaid in the future, when the retrenched worker has found a job. Any unpaid balance of the loan will be recovered from the Central Provident Fund savings of the worker.
This is similar to the Unemployment Benefit operated by many countries - with one key difference: the proposed scheme provides the monthly payment as a loan that is repayable at a modest rate of interest. The retrenched employee who needs money does not have to rely on credit cards and loan sharks that charge a high rate of interest.
Many companies in Singapore are expected to retrench their employees in the months ahead, following the slowdown in the global economy. Analysts expect that the number will exceed the 30,000 people retrenched during the Asian financial crisis in 1998.
Singapore does not have an unemployment insurance scheme. The retrenched employees will find it difficult to find alternative jobs. They are likely to be unemployed for several months or years.
I wish to suggest that the Government set up an Unemployment Loan scheme to provide a monthly payment to the retrenched employees. I propose this scheme to work as follows:
a) The amount of loan will be at 70% of the average earnings, subject to a cap of $2,000 a month
b) Interest will be charged at 2.5% per annum
c) The loan will apply to a worker who has been retrenched from a job that he has worked for more than 12 months.
d) The loan can be drawn for up to 24 months from the date of retrenchment.
e) Any retrenchment benefit received by the worker should be used first, before the worker is allowed to draw down on this retrenchment loan.
This loan will enable to retrenched worker to meet the mortgage repayments and family expenses. It has to be repaid in the future, when the retrenched worker has found a job. Any unpaid balance of the loan will be recovered from the Central Provident Fund savings of the worker.
This is similar to the Unemployment Benefit operated by many countries - with one key difference: the proposed scheme provides the monthly payment as a loan that is repayable at a modest rate of interest. The retrenched employee who needs money does not have to rely on credit cards and loan sharks that charge a high rate of interest.
Complexity of Credit Linked Notes
Dear Minister Mentor
An investor asked me to send this letter to you. I hope that you can find the time to read it. Thank you.
Dear Mr. Tan
I do not understand how MM Lee has come to conclusion that Minibond investors invested with their eyes open. Many financial experts have expressed their views that the minibond products are too complex for any ordinary investor to comprehend. The following are quotes from the financial experts:
1. Mr. R. Sivanthy, business times senior correspondent : (Straits Times 20/09/08) If you want a front-row lesson in first-class financial obfuscation for structured products, then look no further than the way the recently collapsed Minibond Series 3 notes were packaged and marketed.
Up to $200 million of these notes were sold to a gullible public who probably thought they were buying a five-year bond issued by six leading banks that paid a 5 per cent coupon per year, but were in reality not only exposed to the United States housing market but also to a complex credit default swap arrangement whose substantive party was the now-bankrupt Lehman Brothers.
Moreover, while it is possible to piece together the actual substance of these notes from the documents available, it is a tedious process and arguably not within the ability of the average retail investor.
Finally, if disclosure was weak, then so was knowledge among distributors. Some brokers did not understand the true nature of the instrument and sold it as a bond. Maybe the name had something to do with it, though as investors have now found out painfully, what they had bought was not a bond but a convoluted swap-based instrument.
2. Mr. Tan Kin Lian, former CEO of NTUC Income (Weekend Today, 04/10/08)
Mr. Tan interest in such credit-linked securities did not come about only now. It began when they first appeared on the market two years ago. With the help of another financial analyst, he had studied such products closely. The complex way in how these products were structured baffled him.
When financial experts who spent many hours to read the prospectus could not figure out what the structure was. How can you expect the general public who were sold these products to understand the risk that they were taking?
Even Mr. Tan was shocked with extent of the risks involved. “I became horrified to learn the true nature of the structure and the extent of the high risk”
3. Professor Ivan Png, National university of Singapore (Sunday times 26/10/08)
The Lehman bankers who designed this products were not only smart in finance, they were also geniuses in marketing. They gave the name “Minibond Limited” to the special purpose vehicle that issue the notes. So the shorthand name for the credit-linked notes issued by Minibond was simply “Minibond”. But of course, the notes were not bond at all. It took me quite a few hours to pieces together an understanding of the structure notes from the pricing statement.
I cannot guarantee that my understanding is complete and you may not rely on it as I am not a financial adviser.
The other condition is more difficult to understand. According to the pricing statement, the synthetic CDO was some how based on a portfolio of 150 securities and the value of the CDO depended on those securities.
The pricing statement did not disclose the identities of the 150 securities referenced by the synthetic CDO.
Complex? Absolutely.
4. Associate Professor Low Buen Sin, Finance at Nanyang Business School. (Sunday times 26/10/08)
Are structure products very complex instruments? Yes, they can be. Some structured products are not easy to comprehend even for very seasoned wealth managers. Let us use credit-linked structured products that are similar to Minibond and Jubilee Series 3 as an illustration of the level of complexity that it can get to.
5. David Gerald. SIAS’ president and CEO (Weekend Today 2/11/08)
While some of the conditions are straightforward, understanding the entire 54-page document requires advice from a professional.
It is clear that having considered the document in it totality, that the structured products in question are not suitable for ordinary small investors especially for the “vulnerable group” unless they have sought professional advice or understood the prospectus and the document.
6. Associate Professor Lan Luh Luh of the National University of Singapore’s Department of business policy. (Clarification from Dr Lan Luh Luh 03/11/08)
I mentioned that I never invest in things I don’t understand, because many of these structured products are really, really very complex.
I also mentioned that there should be more stringent requirements as to the qualifications of these financial managers – from the Lehman episode, it can be seen that quite a number of them did not even understand the products that they were selling (which I found out as well when I talked to some of them on many previous occasions).
Pang
An investor asked me to send this letter to you. I hope that you can find the time to read it. Thank you.
Dear Mr. Tan
I do not understand how MM Lee has come to conclusion that Minibond investors invested with their eyes open. Many financial experts have expressed their views that the minibond products are too complex for any ordinary investor to comprehend. The following are quotes from the financial experts:
1. Mr. R. Sivanthy, business times senior correspondent : (Straits Times 20/09/08) If you want a front-row lesson in first-class financial obfuscation for structured products, then look no further than the way the recently collapsed Minibond Series 3 notes were packaged and marketed.
Up to $200 million of these notes were sold to a gullible public who probably thought they were buying a five-year bond issued by six leading banks that paid a 5 per cent coupon per year, but were in reality not only exposed to the United States housing market but also to a complex credit default swap arrangement whose substantive party was the now-bankrupt Lehman Brothers.
Moreover, while it is possible to piece together the actual substance of these notes from the documents available, it is a tedious process and arguably not within the ability of the average retail investor.
Finally, if disclosure was weak, then so was knowledge among distributors. Some brokers did not understand the true nature of the instrument and sold it as a bond. Maybe the name had something to do with it, though as investors have now found out painfully, what they had bought was not a bond but a convoluted swap-based instrument.
2. Mr. Tan Kin Lian, former CEO of NTUC Income (Weekend Today, 04/10/08)
Mr. Tan interest in such credit-linked securities did not come about only now. It began when they first appeared on the market two years ago. With the help of another financial analyst, he had studied such products closely. The complex way in how these products were structured baffled him.
When financial experts who spent many hours to read the prospectus could not figure out what the structure was. How can you expect the general public who were sold these products to understand the risk that they were taking?
Even Mr. Tan was shocked with extent of the risks involved. “I became horrified to learn the true nature of the structure and the extent of the high risk”
3. Professor Ivan Png, National university of Singapore (Sunday times 26/10/08)
The Lehman bankers who designed this products were not only smart in finance, they were also geniuses in marketing. They gave the name “Minibond Limited” to the special purpose vehicle that issue the notes. So the shorthand name for the credit-linked notes issued by Minibond was simply “Minibond”. But of course, the notes were not bond at all. It took me quite a few hours to pieces together an understanding of the structure notes from the pricing statement.
I cannot guarantee that my understanding is complete and you may not rely on it as I am not a financial adviser.
The other condition is more difficult to understand. According to the pricing statement, the synthetic CDO was some how based on a portfolio of 150 securities and the value of the CDO depended on those securities.
The pricing statement did not disclose the identities of the 150 securities referenced by the synthetic CDO.
Complex? Absolutely.
4. Associate Professor Low Buen Sin, Finance at Nanyang Business School. (Sunday times 26/10/08)
Are structure products very complex instruments? Yes, they can be. Some structured products are not easy to comprehend even for very seasoned wealth managers. Let us use credit-linked structured products that are similar to Minibond and Jubilee Series 3 as an illustration of the level of complexity that it can get to.
5. David Gerald. SIAS’ president and CEO (Weekend Today 2/11/08)
While some of the conditions are straightforward, understanding the entire 54-page document requires advice from a professional.
It is clear that having considered the document in it totality, that the structured products in question are not suitable for ordinary small investors especially for the “vulnerable group” unless they have sought professional advice or understood the prospectus and the document.
6. Associate Professor Lan Luh Luh of the National University of Singapore’s Department of business policy. (Clarification from Dr Lan Luh Luh 03/11/08)
I mentioned that I never invest in things I don’t understand, because many of these structured products are really, really very complex.
I also mentioned that there should be more stringent requirements as to the qualifications of these financial managers – from the Lehman episode, it can be seen that quite a number of them did not even understand the products that they were selling (which I found out as well when I talked to some of them on many previous occasions).
Pang
Be careful if you wish to redeem your credit linked notes
Dear Mr Tan.
I brought $X pinacles note 15. I have complained to F1 for mispresentation , but received a negative reply.
Thinking of putting the all matter behind because I have seen little actions done postively, I decided to cut loss.
I went to direct to the bank. They give me the email price of 84.75% as pricing today at 2pm. Beside I have an sms from business manager with the same pricing. I signed the forms and they do not allow me to put the pricing. They give me the assurance that there will be little changes to it.
In the evening,they called and tell me nicely they have sold it at 76.76 % as a bad news. No explanation are given , they only sympathise with me.
Yes, the only alternative to complain again or sue. I wonder what the banker have become? I getting very tired.
Please be very careful if anyone wish to made redemptions. Dun trust banker 's words anymore. Make sure the pricing are written black and white.
JP
REPLY
A unit trust also adopt the same practice - they given an indicative price and calculate the actual price at the close of the market. The is called "forward pricing"
But tjhere is a big difference. The forward pricing adopted by the unit trust is based on the actual closing price of the underlying shares. It is possible to audit the forward price to be a fair price.
In the case of the forward pricing of the credit-linked notes, there is no such transparent process. We do not know how the bank calculate the forward price to redeem the contract. If there is a drop of 8%, it could be profit of the bank that bought the credit linked note from the investor. If so, this will be grossly unfair.
I suggest that the investor should make a written complaint to the bank and ask to receive a written explanation. You can bring the case to FIDREC.
I brought $X pinacles note 15. I have complained to F1 for mispresentation , but received a negative reply.
Thinking of putting the all matter behind because I have seen little actions done postively, I decided to cut loss.
I went to direct to the bank. They give me the email price of 84.75% as pricing today at 2pm. Beside I have an sms from business manager with the same pricing. I signed the forms and they do not allow me to put the pricing. They give me the assurance that there will be little changes to it.
In the evening,they called and tell me nicely they have sold it at 76.76 % as a bad news. No explanation are given , they only sympathise with me.
Yes, the only alternative to complain again or sue. I wonder what the banker have become? I getting very tired.
Please be very careful if anyone wish to made redemptions. Dun trust banker 's words anymore. Make sure the pricing are written black and white.
JP
REPLY
A unit trust also adopt the same practice - they given an indicative price and calculate the actual price at the close of the market. The is called "forward pricing"
But tjhere is a big difference. The forward pricing adopted by the unit trust is based on the actual closing price of the underlying shares. It is possible to audit the forward price to be a fair price.
In the case of the forward pricing of the credit-linked notes, there is no such transparent process. We do not know how the bank calculate the forward price to redeem the contract. If there is a drop of 8%, it could be profit of the bank that bought the credit linked note from the investor. If so, this will be grossly unfair.
I suggest that the investor should make a written complaint to the bank and ask to receive a written explanation. You can bring the case to FIDREC.
Friday, November 14, 2008
Banker fill up complaint form, but did not disclose the content
Mr. Tan
I submitted a letter of complaint regarding my pinnacle notes and I was told to fill up a feedback form. As usual I ask the banker how to fill up the form the banker just told me to fill up my name and he will fill up the rest.
Honestly I do not know what is written in the form and he told me is just a routine and the bank will get in contact with me soon. He didnt bother to explain the details to me.This is the same scenenio when I signed those risks assessment forms during the sales of the structure products.
I was told that there will be an early redemption (not due to credit event of reference entities) of the pinnacle notes series 10 and the return of my investment will most likely to be zero.
I ask why and I told him I dont believe the basket of notes or secuities worth nothing. The explaination given to me was that when the notes went into liquidation, the money will first be paid to the reference entities and the remainder then to the investors.
I do not understand why should the reference entities get the money instead of the investors.The money come from the investors and the reference entities are getting the money instead.It is not logical and I do not believe anyone even a small kid will invest in this type of product if it was properly explained.
To me this type of product was meant to fail at a start as a failure will benefit the others except the investors. It was designed to cheat investors of their money!
I also had an interview with one of the FI recently and I bluntly told them do not threatened me with the risks disclosure form that I have signed. I told them the risks disclosure forms that I signed was according to the risks that was told to me by the RM and not those hidden risks that was unknown to me.
Saddened Victim.
REPLY
I suggest that you should prepare a statutory declaration to support your complaint. This is explained here:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
I submitted a letter of complaint regarding my pinnacle notes and I was told to fill up a feedback form. As usual I ask the banker how to fill up the form the banker just told me to fill up my name and he will fill up the rest.
Honestly I do not know what is written in the form and he told me is just a routine and the bank will get in contact with me soon. He didnt bother to explain the details to me.This is the same scenenio when I signed those risks assessment forms during the sales of the structure products.
I was told that there will be an early redemption (not due to credit event of reference entities) of the pinnacle notes series 10 and the return of my investment will most likely to be zero.
I ask why and I told him I dont believe the basket of notes or secuities worth nothing. The explaination given to me was that when the notes went into liquidation, the money will first be paid to the reference entities and the remainder then to the investors.
I do not understand why should the reference entities get the money instead of the investors.The money come from the investors and the reference entities are getting the money instead.It is not logical and I do not believe anyone even a small kid will invest in this type of product if it was properly explained.
To me this type of product was meant to fail at a start as a failure will benefit the others except the investors. It was designed to cheat investors of their money!
I also had an interview with one of the FI recently and I bluntly told them do not threatened me with the risks disclosure form that I have signed. I told them the risks disclosure forms that I signed was according to the risks that was told to me by the RM and not those hidden risks that was unknown to me.
Saddened Victim.
REPLY
I suggest that you should prepare a statutory declaration to support your complaint. This is explained here:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
Structured products linked to Lehman Brothers
Contributed by Richard Woo
Let us recap the salient points and the parties involved, and issues/questions of relevance that appear vague and for which we need clarification and further information:
[1] Monetary Authority of Singapore [MAS]
MAS is the party at the top of the rung and it was MAS which gave approval, wittingly or unwittingly, for the sale of these toxic products to the public. And since MAS gave approval for their sale, MAS cannot now accuse the distributors for selling them.
The Prime Minister in an interview he gave to journalists on Oct 26 is reported to have said, inter alia, .. "In this case the Lehman Minibond Notes or DBS High Notes or ML Jubilee Notes were clearly not low-risk products." …
If they were not low-risk products, can they be considered as high-risk products, then, or, more appropriately, products with risks of robbing the investor of his capital, risks that were evidently sky-high and inappropriate, and absolutely incompatible with a meager return of a paltry 5% pa coupled with freezing of principal over a long period of five to six years?
MAS, it seems, can only point the finger at any distributor that has "mis-sold" or committed a legal breach. However, ten thousand investors have lost in total about half a billion dollars – and that's a lot of money; some of this money came from their retirement kitty, and for some it was their life-long savings.
In at least one product, there is clear evidence of mis-selling or making misrepresentations of the risks. If a distributor has misrepresented or lied to the investors, then there can be no justice in saying that investors did not enter with their eyes open; it would be an act of prejudice to blame investors by saying they should have invested with their eyes open; caveat emptor can in no way be introduced as a principle of fair play if one party has lied or misrepresented.
It is indeed strange that MAS has had no qualms telling investors poisoned by these toxic products: You were greedy. MAS is still investigating and exploring and that's laudable, but the comment about investors being greedy has no basis in fact and must be openly refuted or repeatedly refuted if necessary. If concerned MAS officials have a conscience, they would do well to examine it.
[2] "Vulnerable" group of investors – question for MAS/distributors
Would MAS or distributors please define the terms "vulnerable" and "non-vulnerable" and provide details of the criteria for distinguishing vulnerable from non-vulnerable?
Questions for MAS:
[a] Is it fair to leave it to each distributor to make the initial decision to compensate or not to compensate?
[b] Would it be fairer to consider, based on availability of evidence including but not limited to, advertising materials, internal procedures, risk-profiling of individual investors, as to whether any distributor was clearly guilty of mis-selling, or misrepresenting the risks involved?
[c] Would it be rational to think that distributors would admit liability to an investor who in their opinion is not among the group classified as "vulnerable"?
[d] Would it be unreasonable to say that if a distributor had mis-sold to Ms A or B it had in all probability also mis-sold to Mr X or Y?
[e] Would it be fairer to hold any distributor fully accountable to all their investors if they have mis-sold or misrepresented?
[3] Risk-profiling or analysis
Questions for distributors:
[a] What was the point of performing a risk-analysis?
[b] Was the risk-analysis performed in an objective manner?
[c] Would you agree that the risk-analysis was never used to determine whether an investor was suitable for the product concerned?
[d] Would you agree that you were selling a highly toxic product?
[e] Would you agree that any claim that you were merely acting as "order-executioner" cannot be meaningfully supported if you were uttering lies with abandon relative to the product, via print advert or otherwise?
[4] RMs
Can any of the RMs selling these structured products be said to be non-bilingual? To find out we need to see their CVs or ask their friends or family members. To be sure, many people in Singapore, especially the younger set, are bi-lingual.
Can it be rational to argue that an investor conversing in Mandarin, or in a vernacular other than English, with the RM is "vulnerable" but another investor discussing in English is not? But the crucial thing is: Did the RMs explain the risks of the product they were selling to the investor? Did they perform the risk-analysis diligently? Did they ask the questions concerning the risk-profile of the investor upfront, at the commencement of the discussion? Did they point out the risks spelt out in the so-called Pricing Statement?
Was a copy of the Pricing Statement handed out to the investor? Some investors have no hesitation making the claim they were not given a copy and that they did not even know what it was all about. According to some investors I spoke to, the RMs who attended to them spoke mainly about the merits of the product, for example, the interest yield, the quarterly interest payment, the link to highly rated financial institutions, the names of these institutions, and misrepresented by saying the investor would get all his/her money back if the investment were to be held to maturity.
Some investors have reviewed the risk-analysis form completed, in a hasty and careless manner, by their RM and noticed that although they were categorized as a low to mid-range risk investor, the RM did not tell them that the product was not suitable for them. I can see from the "tick-marks" completed for two investors that the information given in some areas was inconsistent or contradictory.
How many of the RMs, if any, really understood the contents of the Pricing Statement? It is obvious that people like MM are looking only at a small area of the picture. A complete analysis needs to take into account all the factors involved. Has any distributor or their RMs contravened a legal enactment, for example, the Financial Advisers Act? Any investigator seeking truth cannot avoid looking into this area. In the context of the scenario before us, would MM or MAS consider the use of the term "minibonds" as something innocuous, coincidental, or as something more than that, as part of a carefully hatched-up scheme, a scam perhaps, to fleece members of the public?
[5] Questions for Fidrec:
[a] What are your standards or criteria for making judgment on cases referred to you?
[b] The number of Fidrec staff involved in reviewing each case?
[6] Plausible entry of new swap counterparty to replace Lehman Brothers [Minibonds].
Distributors who have advertised "invest on solid foundations" and/or "invest with peace of mind" ought to take over as the new owner of the investment, with or without the new swap counterparty arrangement. Since they have misrepresented, through print advert and, plausibly, via verbal input from their RMs, they can be seen as having mis-sold or misrepresented, hence they should not shirk from their mistakes or responsibility; they should act honorably by returning investors their principal minus what the investors have received in terms of interest payment.
[7] Statistics – Request to MAS:
For the benefit of the investing public, please publish in the newspapers statistics covering data [in table form] linking information as follows:
Type or name of structured product, Name of Distributor, Total amount invested, Total number of investors, Number of "vulnerable" investors, Number of vulnerable investors if any who have been compensated and Number of "non-vulnerable" investors if any who have been compensated
[8] Future/present
It's all very well to think about the future by talking about revamping the industry, introducing tighter control measures, overhauling sales tactics etc but there is no future when the present is not taken care of. We all need to be mindful of the present; we need to be aware of the dire situation in front of us: an "explosion" has occurred and injured people are lying everywhere. Let's take care of all the injured before planning our next move.
Richard Woo
Let us recap the salient points and the parties involved, and issues/questions of relevance that appear vague and for which we need clarification and further information:
[1] Monetary Authority of Singapore [MAS]
MAS is the party at the top of the rung and it was MAS which gave approval, wittingly or unwittingly, for the sale of these toxic products to the public. And since MAS gave approval for their sale, MAS cannot now accuse the distributors for selling them.
The Prime Minister in an interview he gave to journalists on Oct 26 is reported to have said, inter alia, .. "In this case the Lehman Minibond Notes or DBS High Notes or ML Jubilee Notes were clearly not low-risk products." …
If they were not low-risk products, can they be considered as high-risk products, then, or, more appropriately, products with risks of robbing the investor of his capital, risks that were evidently sky-high and inappropriate, and absolutely incompatible with a meager return of a paltry 5% pa coupled with freezing of principal over a long period of five to six years?
MAS, it seems, can only point the finger at any distributor that has "mis-sold" or committed a legal breach. However, ten thousand investors have lost in total about half a billion dollars – and that's a lot of money; some of this money came from their retirement kitty, and for some it was their life-long savings.
In at least one product, there is clear evidence of mis-selling or making misrepresentations of the risks. If a distributor has misrepresented or lied to the investors, then there can be no justice in saying that investors did not enter with their eyes open; it would be an act of prejudice to blame investors by saying they should have invested with their eyes open; caveat emptor can in no way be introduced as a principle of fair play if one party has lied or misrepresented.
It is indeed strange that MAS has had no qualms telling investors poisoned by these toxic products: You were greedy. MAS is still investigating and exploring and that's laudable, but the comment about investors being greedy has no basis in fact and must be openly refuted or repeatedly refuted if necessary. If concerned MAS officials have a conscience, they would do well to examine it.
[2] "Vulnerable" group of investors – question for MAS/distributors
Would MAS or distributors please define the terms "vulnerable" and "non-vulnerable" and provide details of the criteria for distinguishing vulnerable from non-vulnerable?
Questions for MAS:
[a] Is it fair to leave it to each distributor to make the initial decision to compensate or not to compensate?
[b] Would it be fairer to consider, based on availability of evidence including but not limited to, advertising materials, internal procedures, risk-profiling of individual investors, as to whether any distributor was clearly guilty of mis-selling, or misrepresenting the risks involved?
[c] Would it be rational to think that distributors would admit liability to an investor who in their opinion is not among the group classified as "vulnerable"?
[d] Would it be unreasonable to say that if a distributor had mis-sold to Ms A or B it had in all probability also mis-sold to Mr X or Y?
[e] Would it be fairer to hold any distributor fully accountable to all their investors if they have mis-sold or misrepresented?
[3] Risk-profiling or analysis
Questions for distributors:
[a] What was the point of performing a risk-analysis?
[b] Was the risk-analysis performed in an objective manner?
[c] Would you agree that the risk-analysis was never used to determine whether an investor was suitable for the product concerned?
[d] Would you agree that you were selling a highly toxic product?
[e] Would you agree that any claim that you were merely acting as "order-executioner" cannot be meaningfully supported if you were uttering lies with abandon relative to the product, via print advert or otherwise?
[4] RMs
Can any of the RMs selling these structured products be said to be non-bilingual? To find out we need to see their CVs or ask their friends or family members. To be sure, many people in Singapore, especially the younger set, are bi-lingual.
Can it be rational to argue that an investor conversing in Mandarin, or in a vernacular other than English, with the RM is "vulnerable" but another investor discussing in English is not? But the crucial thing is: Did the RMs explain the risks of the product they were selling to the investor? Did they perform the risk-analysis diligently? Did they ask the questions concerning the risk-profile of the investor upfront, at the commencement of the discussion? Did they point out the risks spelt out in the so-called Pricing Statement?
Was a copy of the Pricing Statement handed out to the investor? Some investors have no hesitation making the claim they were not given a copy and that they did not even know what it was all about. According to some investors I spoke to, the RMs who attended to them spoke mainly about the merits of the product, for example, the interest yield, the quarterly interest payment, the link to highly rated financial institutions, the names of these institutions, and misrepresented by saying the investor would get all his/her money back if the investment were to be held to maturity.
Some investors have reviewed the risk-analysis form completed, in a hasty and careless manner, by their RM and noticed that although they were categorized as a low to mid-range risk investor, the RM did not tell them that the product was not suitable for them. I can see from the "tick-marks" completed for two investors that the information given in some areas was inconsistent or contradictory.
How many of the RMs, if any, really understood the contents of the Pricing Statement? It is obvious that people like MM are looking only at a small area of the picture. A complete analysis needs to take into account all the factors involved. Has any distributor or their RMs contravened a legal enactment, for example, the Financial Advisers Act? Any investigator seeking truth cannot avoid looking into this area. In the context of the scenario before us, would MM or MAS consider the use of the term "minibonds" as something innocuous, coincidental, or as something more than that, as part of a carefully hatched-up scheme, a scam perhaps, to fleece members of the public?
[5] Questions for Fidrec:
[a] What are your standards or criteria for making judgment on cases referred to you?
[b] The number of Fidrec staff involved in reviewing each case?
[6] Plausible entry of new swap counterparty to replace Lehman Brothers [Minibonds].
Distributors who have advertised "invest on solid foundations" and/or "invest with peace of mind" ought to take over as the new owner of the investment, with or without the new swap counterparty arrangement. Since they have misrepresented, through print advert and, plausibly, via verbal input from their RMs, they can be seen as having mis-sold or misrepresented, hence they should not shirk from their mistakes or responsibility; they should act honorably by returning investors their principal minus what the investors have received in terms of interest payment.
[7] Statistics – Request to MAS:
For the benefit of the investing public, please publish in the newspapers statistics covering data [in table form] linking information as follows:
Type or name of structured product, Name of Distributor, Total amount invested, Total number of investors, Number of "vulnerable" investors, Number of vulnerable investors if any who have been compensated and Number of "non-vulnerable" investors if any who have been compensated
[8] Future/present
It's all very well to think about the future by talking about revamping the industry, introducing tighter control measures, overhauling sales tactics etc but there is no future when the present is not taken care of. We all need to be mindful of the present; we need to be aware of the dire situation in front of us: an "explosion" has occurred and injured people are lying everywhere. Let's take care of all the injured before planning our next move.
Richard Woo
Why You Need to be at Hong Lim Park Tomorrow (15 November)
Message from betsybug
It's coming to five weeks after our first rally at Hong Lim Park. In that time, much has been achieved by us all - we have come together and we are now more organised as a group, and we know better some of the true nature of this perverse product DBS has sold us. Some have gotten a form of redress from DBS; the bank has been forced to make some grudging admissions, and they have relented by holding dialogue sessions with us.
But for the vast majority of us, we are no nearer a resolution. Much has been achieved, but much more needs to be done.
We must see this contest between us and the bank as a marathon race. We must see that it is a not dash of a hundred meters, for we cannot finish a marathon if we try to sustain the speed of a sprint race. So, we must learn to live our everyday lives, do our work, spend time with our families, take care of our minds and bodies, and go on with the framing of our plans even as we tussle with DBS. However painful the loss, despair must not debilitate us, slow our pace, or weaken our resolve.
Some of you will remember the actor Gregory Peck who carried very memorably the role of Atticus Finch in "To Kill a Mockingbird". He quotes Churchill to illustrate the code that Atticus lives by: "Withhold no sacrifice; grudge no toil; seek no sordid gain; fear no foe: all will be well".
We have asked all of you to be truthful in your letters and interviews. We must not claim what has not happened and what was not said. If the bank will not do the right thing, then we must be the ones who will set the example for them. Be truthful, not fearful. Be not afraid for it is not us who have carried out a wrongful deed - it is not us who must fear.
Some of us may weary from the fight when the end is not easily seen. But the end may be around the corner, and we could have stopped just short. Can we later justify our inactions to ourselves or to our families? DBS has said they are responsible to their shareholders for compensations they make, but are our families not our shareholders, and are we not answerable to our own stakeholders?
"All will be well". If each of us just do our little share, pull our small portion of the weight, push back our part of the wall, then together, big as DBS may be, and small as each one of us is, together we can shame even such a behemoth onto a proper and correct path of action. Because, in the end, we know that we are right, and on their side, they will know they have done wrong.
We hope to see you at Hong Lim Park tomorrow.
Betsybug
It's coming to five weeks after our first rally at Hong Lim Park. In that time, much has been achieved by us all - we have come together and we are now more organised as a group, and we know better some of the true nature of this perverse product DBS has sold us. Some have gotten a form of redress from DBS; the bank has been forced to make some grudging admissions, and they have relented by holding dialogue sessions with us.
But for the vast majority of us, we are no nearer a resolution. Much has been achieved, but much more needs to be done.
We must see this contest between us and the bank as a marathon race. We must see that it is a not dash of a hundred meters, for we cannot finish a marathon if we try to sustain the speed of a sprint race. So, we must learn to live our everyday lives, do our work, spend time with our families, take care of our minds and bodies, and go on with the framing of our plans even as we tussle with DBS. However painful the loss, despair must not debilitate us, slow our pace, or weaken our resolve.
Some of you will remember the actor Gregory Peck who carried very memorably the role of Atticus Finch in "To Kill a Mockingbird". He quotes Churchill to illustrate the code that Atticus lives by: "Withhold no sacrifice; grudge no toil; seek no sordid gain; fear no foe: all will be well".
We have asked all of you to be truthful in your letters and interviews. We must not claim what has not happened and what was not said. If the bank will not do the right thing, then we must be the ones who will set the example for them. Be truthful, not fearful. Be not afraid for it is not us who have carried out a wrongful deed - it is not us who must fear.
Some of us may weary from the fight when the end is not easily seen. But the end may be around the corner, and we could have stopped just short. Can we later justify our inactions to ourselves or to our families? DBS has said they are responsible to their shareholders for compensations they make, but are our families not our shareholders, and are we not answerable to our own stakeholders?
"All will be well". If each of us just do our little share, pull our small portion of the weight, push back our part of the wall, then together, big as DBS may be, and small as each one of us is, together we can shame even such a behemoth onto a proper and correct path of action. Because, in the end, we know that we are right, and on their side, they will know they have done wrong.
We hope to see you at Hong Lim Park tomorrow.
Betsybug
Retrenchment and its impact on Singaporeans
In bad times, businesses have to retrench their employers to cut costs and stop losses. This approach is adopted around the world. Singapore also follows this approach.
I hope that our government leaders realise that the impact of retrenchment on Singaporeans is greater, for the following reasons:
1. In the developed countries, there is unemployment benefit for one or two years to help the laid off workers to adjust to the new situation
2. Many Singaporeans have heavy mortgages and debts to pay. After being retrenched, they will be hounded by the lenders.
3. In the less developed countries, they can survive in the countryside with a lower cost of living. This option is not available in Singapore.
Our government leaders have been proud that Singapore does not have an unemployment insurance system, as it stops people from being lazy and living off the work of others. But this is only one side of the coin. The other side said that there are many hardworking people who lost their jobs due to no fault of their own, and now have to suffer the heavy penalty.
If the company is doing well, the retrenched workers are able to get a fairly generous retrenchment benefit that can tide them over for some time. If not, we need some other measures.
In the absence of unemployment benefit, our laid off workers should be allowed to make modest withdrawals from the Central Provident Fund savings, or have access to interest free loan provided by the government. This are just some suggestions.
I hope that our government leaders realise that the impact of retrenchment on Singaporeans is greater, for the following reasons:
1. In the developed countries, there is unemployment benefit for one or two years to help the laid off workers to adjust to the new situation
2. Many Singaporeans have heavy mortgages and debts to pay. After being retrenched, they will be hounded by the lenders.
3. In the less developed countries, they can survive in the countryside with a lower cost of living. This option is not available in Singapore.
Our government leaders have been proud that Singapore does not have an unemployment insurance system, as it stops people from being lazy and living off the work of others. But this is only one side of the coin. The other side said that there are many hardworking people who lost their jobs due to no fault of their own, and now have to suffer the heavy penalty.
If the company is doing well, the retrenched workers are able to get a fairly generous retrenchment benefit that can tide them over for some time. If not, we need some other measures.
In the absence of unemployment benefit, our laid off workers should be allowed to make modest withdrawals from the Central Provident Fund savings, or have access to interest free loan provided by the government. This are just some suggestions.
SCMP:Divine intervention in Legco debate
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=VQ3WMGRX5VB7&linkid=cdcb3fed-5cbb-4790-942f-08df6461fb86&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
13 Nov 2008
The light of heaven was shining in the legislature yesterday when those who opposed a move to empower a Legco subcommittee to probe whether officials and bankers were wrongdoers in the Lehman Brothers minibonds affair turned green on camera in a live broadcast of the meeting.
Immediately after Regina Ip Lau Suk-yee – the only directly elected lawmaker opposing the motion – started her speech, a strong ray of sunshine broke through the top window of the usually gloomy Legco chamber, directly falling on Mrs Ip’s position and engulfing her in an eerie greenish aura. The same happened to David Li Kwok-po, who strongly defended his banking sector’s interest by speaking to oppose the vote.
“Gosh, the light of heaven has revealed their true nature,” one observer said while watching the live broadcast in the Legco corridors of power.
13 Nov 2008
The light of heaven was shining in the legislature yesterday when those who opposed a move to empower a Legco subcommittee to probe whether officials and bankers were wrongdoers in the Lehman Brothers minibonds affair turned green on camera in a live broadcast of the meeting.
Immediately after Regina Ip Lau Suk-yee – the only directly elected lawmaker opposing the motion – started her speech, a strong ray of sunshine broke through the top window of the usually gloomy Legco chamber, directly falling on Mrs Ip’s position and engulfing her in an eerie greenish aura. The same happened to David Li Kwok-po, who strongly defended his banking sector’s interest by speaking to oppose the vote.
“Gosh, the light of heaven has revealed their true nature,” one observer said while watching the live broadcast in the Legco corridors of power.
Thursday, November 13, 2008
Adequate saving for retirement
Are you making adequate saving for your retirement? Are you investing the savings wisely?
Read the following tips:
http://www.tankinlian.com/articles/savings.html
Read the following tips:
http://www.tankinlian.com/articles/savings.html
Financial Advice for Young People
I wish to give some advice for young people, especially those who have just started work.
You should budget your monthly earnings for the following:
> repayment of study or other loan committed previously
> contribute towards the household expenses (if you are staying with your parents)
> your monthly expenses for travel, meals and clothes (be frugal)
> put aside 15% of your earnings as savings
If there is a balance, you can use it for travel, entertainment or other luxury.
Most importantly - set aside 15% for your savings. You may need to draw down on your savings if you lose your job, or you change your job, or you need cash to meet an emergency. Keep the savings in flexible form.
Avoid investing in a life insurance policy, as the savings are locked up and inflexible. If you need protection, buy term insurance.
Avoid borrowing on your credit card. The interest charges is very high. It can cost you a lot of money.
Read this FAQ:
http://www.tankinlian.com/faq/fptips.html
You should budget your monthly earnings for the following:
> repayment of study or other loan committed previously
> contribute towards the household expenses (if you are staying with your parents)
> your monthly expenses for travel, meals and clothes (be frugal)
> put aside 15% of your earnings as savings
If there is a balance, you can use it for travel, entertainment or other luxury.
Most importantly - set aside 15% for your savings. You may need to draw down on your savings if you lose your job, or you change your job, or you need cash to meet an emergency. Keep the savings in flexible form.
Avoid investing in a life insurance policy, as the savings are locked up and inflexible. If you need protection, buy term insurance.
Avoid borrowing on your credit card. The interest charges is very high. It can cost you a lot of money.
Read this FAQ:
http://www.tankinlian.com/faq/fptips.html
Reuters: Financial crisis politically awakens Singapore investors
Fri Nov 7, 2008 6:01am EST
By Melanie Lee
SINGAPORE (Reuters) - Cancer patient Lim Qing Si was one of thousands of hard-working Singaporeans who lost their savings in the financial crisis, especially when Lehman Brothers collapsed and its secured products became virtually worthless.
"All this money is my husband and my retirement savings," said Lim, a 54-year-old retiree, who must now scramble together what's left of her savings to pay for cancer treatment after a malignant tumor was found in her leg.
In all, nearly 10,000 people in Singapore stand to lose over S$500 million ($338 million) due to the collapse of Lehman Brothers Holdings Inc, the central bank says.
The incident left many financially scarred but politically awakened in a city-state where protests are rare and street gatherings of five or more people require a permit.
Lim and others have taken advantage of a recent government move to create a forum for public protest, a "Speakers Corner," modeled on the Hyde Park bastion of free speech.
Since the financial crisis struck, hundreds of ordinary working-class people who have lost money have gathered each Saturday to air their grievances and call on the government to help recoup their losses.
"I hope the authorities, who are supposed to protect ordinary people, should be much more proactive," said Tan Kin Lian, the protest organizer and a former chief executive of a large Singapore insurer.
Following the weekly protests, the central bank said it would investigate alleged mis-selling of Lehman-linked products, such as DBS Group's "High Note 5" and Lehman Brothers mini-bonds sold by banks across the island state.
Singapore's biggest bank, the DBS Group, was among the banks that sold Lehman products to its customers, many of whom were simple, working-class people looking for safe investments for their retirement savings in a country without state pensions.
DBS has said it will pay up to S$80 million to compensate some investors. Maybank also said it has identified mini-bond investors for compensation, while smaller financial institution Hong Leong Finance said it will buy back Lehman-linked mini-bonds from elderly and less-educated customers.
These offers may ease public pressure, but the discontent Singaporeans feel has shaken their faith in a government that espoused a pro-investment culture, analysts said.
Singapore, which has been ruled by one party, the Peoples' Action Party, since its independence in 1965, has always been a promoter of investment, encouraging foreign firms to invest in the country and its compliant citizens to invest in their future by putting their savings in financial products.
Eugene Tan, a law lecturer at Singapore Management University, said the fiasco "puts the government's credibility at risk" and the government had to be seen to do more.
"The Lehman bonds incident affected a very vulnerable segment of Singapore's population," said Tan.
The involvement of the largest bank DBS "made the issue very germane and very alive," Tan added. DBS is partly owned by Temasek Holdings, which is a government linked company.
GOVERNMENT STEPS IN
While the country's marginalized opposition parties hope to take inspiration from neighboring Malaysia, where a resurgent opposition says it can win power after slashing the government's majority in March elections, analysts said the chance this incident will snowball into a larger political rift is slim.
The turnout at the Lehman protests is a far cry from previous protests led by political opposition party leaders, such as a demonstration of about 20 people in March against rising prices, for which 19 people have been charged for illegal assembly.
"There is this very sharp contrast. When you have someone trying to draw Singaporeans attention to the politics of human rights, people are generally apathetic," said Alan Chong, political scientist at the National University of Singapore.
"Singapore's political culture tends toward pragmatism -- this is largely a material pragmatism," Chong said.
The government, which relies on domestic stability to help attract foreign direct investment and to develop high-value sectors such as financial services and biomedical engineering, has told the banks to resolve the matter fairly.
"Where there has been mis-selling, it has to be put right," Singapore's Prime Minister Lee Hsien Loong was quoted as saying in the Straits Times newspaper.
However, not everyone is satisfied by the response and the protests will continue, according to Tan's blog: tankinlian.blogspot.com
"Singaporeans are being treated like sheep," said Jojobeach, the online monikor of someone who posted comments on local discussion forum sgforums.com.
By Melanie Lee
SINGAPORE (Reuters) - Cancer patient Lim Qing Si was one of thousands of hard-working Singaporeans who lost their savings in the financial crisis, especially when Lehman Brothers collapsed and its secured products became virtually worthless.
"All this money is my husband and my retirement savings," said Lim, a 54-year-old retiree, who must now scramble together what's left of her savings to pay for cancer treatment after a malignant tumor was found in her leg.
In all, nearly 10,000 people in Singapore stand to lose over S$500 million ($338 million) due to the collapse of Lehman Brothers Holdings Inc, the central bank says.
The incident left many financially scarred but politically awakened in a city-state where protests are rare and street gatherings of five or more people require a permit.
Lim and others have taken advantage of a recent government move to create a forum for public protest, a "Speakers Corner," modeled on the Hyde Park bastion of free speech.
Since the financial crisis struck, hundreds of ordinary working-class people who have lost money have gathered each Saturday to air their grievances and call on the government to help recoup their losses.
"I hope the authorities, who are supposed to protect ordinary people, should be much more proactive," said Tan Kin Lian, the protest organizer and a former chief executive of a large Singapore insurer.
Following the weekly protests, the central bank said it would investigate alleged mis-selling of Lehman-linked products, such as DBS Group's "High Note 5" and Lehman Brothers mini-bonds sold by banks across the island state.
Singapore's biggest bank, the DBS Group, was among the banks that sold Lehman products to its customers, many of whom were simple, working-class people looking for safe investments for their retirement savings in a country without state pensions.
DBS has said it will pay up to S$80 million to compensate some investors. Maybank also said it has identified mini-bond investors for compensation, while smaller financial institution Hong Leong Finance said it will buy back Lehman-linked mini-bonds from elderly and less-educated customers.
These offers may ease public pressure, but the discontent Singaporeans feel has shaken their faith in a government that espoused a pro-investment culture, analysts said.
Singapore, which has been ruled by one party, the Peoples' Action Party, since its independence in 1965, has always been a promoter of investment, encouraging foreign firms to invest in the country and its compliant citizens to invest in their future by putting their savings in financial products.
Eugene Tan, a law lecturer at Singapore Management University, said the fiasco "puts the government's credibility at risk" and the government had to be seen to do more.
"The Lehman bonds incident affected a very vulnerable segment of Singapore's population," said Tan.
The involvement of the largest bank DBS "made the issue very germane and very alive," Tan added. DBS is partly owned by Temasek Holdings, which is a government linked company.
GOVERNMENT STEPS IN
While the country's marginalized opposition parties hope to take inspiration from neighboring Malaysia, where a resurgent opposition says it can win power after slashing the government's majority in March elections, analysts said the chance this incident will snowball into a larger political rift is slim.
The turnout at the Lehman protests is a far cry from previous protests led by political opposition party leaders, such as a demonstration of about 20 people in March against rising prices, for which 19 people have been charged for illegal assembly.
"There is this very sharp contrast. When you have someone trying to draw Singaporeans attention to the politics of human rights, people are generally apathetic," said Alan Chong, political scientist at the National University of Singapore.
"Singapore's political culture tends toward pragmatism -- this is largely a material pragmatism," Chong said.
The government, which relies on domestic stability to help attract foreign direct investment and to develop high-value sectors such as financial services and biomedical engineering, has told the banks to resolve the matter fairly.
"Where there has been mis-selling, it has to be put right," Singapore's Prime Minister Lee Hsien Loong was quoted as saying in the Straits Times newspaper.
However, not everyone is satisfied by the response and the protests will continue, according to Tan's blog: tankinlian.blogspot.com
"Singaporeans are being treated like sheep," said Jojobeach, the online monikor of someone who posted comments on local discussion forum sgforums.com.
Hear the voices of High Note 2 investors
Posted at request of LK and HNIGHN2WG
After attended the dialogue with DBS, we cannot accept the ‘case by case’ investigation recommended by DBS. A petition consists of 83 investors is on the way.
In order to beef up our case against DBS for Non-Disclosure of Material Fact & Misrepresentation/Mis-Selling, we are conducting a survey/questionnaire to identify trends/selling patterns of different RMs, branches, etc to make it easier for us to argue our case.
More people mean more muscles to engage DBS!
We urge other High Notes 2 investors who are not aware of this petition, please come down to Mr Tan Kin Lian speak at Hong Lim Park (next to Clarke Quay MRT station) this Sat 15th Nov, from 5.00~7.00pm evening to join us in this petition.
We can also meet & discuss on our follow-up action.
LK
On behalf of HNIGHN2WG
After attended the dialogue with DBS, we cannot accept the ‘case by case’ investigation recommended by DBS. A petition consists of 83 investors is on the way.
In order to beef up our case against DBS for Non-Disclosure of Material Fact & Misrepresentation/Mis-Selling, we are conducting a survey/questionnaire to identify trends/selling patterns of different RMs, branches, etc to make it easier for us to argue our case.
More people mean more muscles to engage DBS!
We urge other High Notes 2 investors who are not aware of this petition, please come down to Mr Tan Kin Lian speak at Hong Lim Park (next to Clarke Quay MRT station) this Sat 15th Nov, from 5.00~7.00pm evening to join us in this petition.
We can also meet & discuss on our follow-up action.
LK
On behalf of HNIGHN2WG
Wednesday, November 12, 2008
Unexpected surge - 700,000 visitors to my blog
Two months ago, I projected that my blog will reach 500,000 visitors by the magic date of 11-11-2008. I did not forsee the crisis with the credit linked notes - which caused an unexpected surge in visitors to my blog. This magic date passed yesterday. The visitorships passed 700,000 (40% more than 500,000) today. This is just for historical record.
Trustees act to terminate the swaps
http://www.mas.gov.sg/news_room/press_releases/2008/Actions_Taken_to_Protect_Interests_of_Noteholders_of_the_Lehman_Minibond_Notes_Programme.html
IN A move to protect Lehman Minibond investors, the trustee HSBC Institutional Trust Services has taken action to terminate the swaps for series 1 to 8 notes in the programme, said the Monetary Authority of Singapore (MAS) on Wednesday.
'This removes the risk of credit events in the underlying securities and helps to preserve the value of the underlying collateral,' said MAS in a statement.
'This action is not necessary for series 9 and 10 as the underlying securities for these notes are corporate bonds and have no swaps.'
MAS said it has been informed of the steps taken by HSBC 'in view of the current market conditions'.
The statement said the trustee has appointed three partners from PricewaterhouseCoopers
Singapore (PwC) as receivers for series 5 to 8 which have defaulted since the relevant coupon payments were not made by the due dates.
The other series would also default if the relevant coupon payments are not received by the due dates and the relevant grace periods have lapsed.
The trustee would then appoint the three PwC partners as receivers for these series.
The receivers' role is to take control of the assets of these notes and to work closely with the trustee towards a solution which is in the best interests of noteholders, said MAS.
The trustee and the receivers have assured MAS that they have not ruled out any restructuring proposals received from interested parties and that these will be explored for all series of the notes.
To provide noteholders with an independent opinion on the options that best serve their interests, MAS has appointed Deloitte & Touche Corporate Finance Pte Ltd (DTCF) as an independent financial adviser on the Lehman Minibond notes programme.
MAS cautioned that restructuring the Minibond notes programme is a complex exercise which entails the agreement of several parties and resolution of challenging legal issues.
It would also need noteholders' approval.
'These steps will take time. The receivers would also have to take into account the risks to noteholders, including the continued credit and market risk to the underlying collateral,' said MAS.
'Hence, whether a viable restructuring proposal will materialise depends on several factors which are not within the control of the trustee and the receivers.'
MAS added that it understands that noteholders are anxious to know what they should do and what to expect next.
'At the moment, there is no action required on their part. MAS and the trustee will continue to keep noteholders updated on all developments including any options for them to consider,' it advised.
'MAS has asked the trustee to work towards providing noteholders with an update on whether restructuring is still a viable option by the end of the month at the latest.'
Mr Heng Swee Keat, Managing Director, MAS, said: 'MAS has been in close consultation with the trustee and receivers.'
'We believe that these are reasonable and appropriate steps for the trustee to take to protect the interests of noteholders given current market conditions.'
He added that the appointment of the independent financial adviser is also an important step to ensure that noteholders' interests are served'.
Mr Heng added: 'Our work on other fronts, on the formal inquiries and in seeing to the serious and impartial process of handling investors' complaints, is progressing. We will provide updates at the relevant juncture.'
IN A move to protect Lehman Minibond investors, the trustee HSBC Institutional Trust Services has taken action to terminate the swaps for series 1 to 8 notes in the programme, said the Monetary Authority of Singapore (MAS) on Wednesday.
'This removes the risk of credit events in the underlying securities and helps to preserve the value of the underlying collateral,' said MAS in a statement.
'This action is not necessary for series 9 and 10 as the underlying securities for these notes are corporate bonds and have no swaps.'
MAS said it has been informed of the steps taken by HSBC 'in view of the current market conditions'.
The statement said the trustee has appointed three partners from PricewaterhouseCoopers
Singapore (PwC) as receivers for series 5 to 8 which have defaulted since the relevant coupon payments were not made by the due dates.
The other series would also default if the relevant coupon payments are not received by the due dates and the relevant grace periods have lapsed.
The trustee would then appoint the three PwC partners as receivers for these series.
The receivers' role is to take control of the assets of these notes and to work closely with the trustee towards a solution which is in the best interests of noteholders, said MAS.
The trustee and the receivers have assured MAS that they have not ruled out any restructuring proposals received from interested parties and that these will be explored for all series of the notes.
To provide noteholders with an independent opinion on the options that best serve their interests, MAS has appointed Deloitte & Touche Corporate Finance Pte Ltd (DTCF) as an independent financial adviser on the Lehman Minibond notes programme.
MAS cautioned that restructuring the Minibond notes programme is a complex exercise which entails the agreement of several parties and resolution of challenging legal issues.
It would also need noteholders' approval.
'These steps will take time. The receivers would also have to take into account the risks to noteholders, including the continued credit and market risk to the underlying collateral,' said MAS.
'Hence, whether a viable restructuring proposal will materialise depends on several factors which are not within the control of the trustee and the receivers.'
MAS added that it understands that noteholders are anxious to know what they should do and what to expect next.
'At the moment, there is no action required on their part. MAS and the trustee will continue to keep noteholders updated on all developments including any options for them to consider,' it advised.
'MAS has asked the trustee to work towards providing noteholders with an update on whether restructuring is still a viable option by the end of the month at the latest.'
Mr Heng Swee Keat, Managing Director, MAS, said: 'MAS has been in close consultation with the trustee and receivers.'
'We believe that these are reasonable and appropriate steps for the trustee to take to protect the interests of noteholders given current market conditions.'
He added that the appointment of the independent financial adviser is also an important step to ensure that noteholders' interests are served'.
Mr Heng added: 'Our work on other fronts, on the formal inquiries and in seeing to the serious and impartial process of handling investors' complaints, is progressing. We will provide updates at the relevant juncture.'
SCMP:Approval ratings of finance chiefs drop
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=M9PLL02UTS62&linkid=a2ab012b-27ad-4bc4-8fa5-6dae21f8a038&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
12 Nov 2008
Financial Secretary John Tsang Chun-wah and Secretary for Financial Services and the Treasury Chan Ka-keung, key officials handling policies relating to the financial meltdown and the Lehman Brothers minibonds saga, have both suffered significant falls in their approval ratings. In the latest University of Hong Kong survey on the popularity of top government officials Professor Chan’s approval rate fell by 8 percentage points last week, down from 33 per cent early last month, the most significant drop in approval ratings when compared with the other 11 ministers. Mr Tsang’s approval rating dropped by 5 percentage points, down from 41per cent early last month.
12 Nov 2008
Financial Secretary John Tsang Chun-wah and Secretary for Financial Services and the Treasury Chan Ka-keung, key officials handling policies relating to the financial meltdown and the Lehman Brothers minibonds saga, have both suffered significant falls in their approval ratings. In the latest University of Hong Kong survey on the popularity of top government officials Professor Chan’s approval rate fell by 8 percentage points last week, down from 33 per cent early last month, the most significant drop in approval ratings when compared with the other 11 ministers. Mr Tsang’s approval rating dropped by 5 percentage points, down from 41per cent early last month.
Rebuttal to "invest with your eyes open"
Dear Mr. Tan
Thank you for your invitation and organizing the petition.
In case you are addressing the audience and making rebuttal to the statement by our leader on the remarks “with their eyes open” I would like to point out that if an investor is prepared to take such a risk, i.e. to lose their entire principal sum they would opt for so many other investment that pay much higher then 5%. I myself has been led to believe that my only risk is not getting the coupon if the said companies is in default.
J
REPLY
It will be more effective if you write directly to the government leader who made the remark, or write to the newspaper who reported this remark.
Thank you for your invitation and organizing the petition.
In case you are addressing the audience and making rebuttal to the statement by our leader on the remarks “with their eyes open” I would like to point out that if an investor is prepared to take such a risk, i.e. to lose their entire principal sum they would opt for so many other investment that pay much higher then 5%. I myself has been led to believe that my only risk is not getting the coupon if the said companies is in default.
J
REPLY
It will be more effective if you write directly to the government leader who made the remark, or write to the newspaper who reported this remark.
SCMP:Legco probe best hope for minibond mess
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=F7GHF78RW806&linkid=7d193dd3-7937-410d-8020-6bc03178e4f0&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
12 Nov 2008
Chris Yeung is the Post’s editor-at-large. chris.yeung@scmp.com
Two days ago, before the scheduled Legislative Council vote today on whether to invoke special powers to investigate the Lehman Brothers minibonds saga, local banks mounted a counter-lobbying drive. In full-page newspaper advertisements on Monday, they stressed their commitment to “offering practical, transparent and fair solutions” to address the difficulties faced by more than 40,000 Hong Kong investors affected by Lehman’s demise.
It did not mention the Legco vote, but the writing is on the wall: the last thing they want is to be summoned to the legislature to give evidence on the Lehman case.
Also on Monday, finance functional constituency legislator David Li Kwok-po urged members to vote down the motion. He warned that, if it were passed, it would allow Legco to exercise “unlimited” powers over banks. It would set a bad precedent and might undermine the status of Hong Kong as an international financial centre, he added.
Banks, he said, would also have to stretch their resources for the Legco hearings at the expense of handling the buy-back efforts.
Privately, senior government officials have cautioned that a Legco inquiry would “put banks on public trial”.
If an inquiry goes ahead, banks might put the buy-back process on hold, according to one official. Banks fear they would be under pressure at the public hearings to divulge details of their business strategies and practices, the official said.
In view of the quasi-judicial nature of an independent inquiry and the style of Legco politics, their fears may be justified.
There is no denying that such an inquiry would further complicate matters and raise more uncertainties about the minibonds row. It may create tension that is not conducive to mediation and arbitration.
But, while the arguments against an inquiry carry some weight, the case for an investigation should not be dismissed lightly.
From a broader perspective, a full Legco probe could arguably help the banking industry, whose image has been tarnished by allegations of fraud, at worst, and misselling, at best, over the sale of Lehmanrelated products.
It would also allow the Monetary Authority and the Securities and Futures Commission, as well as the relevant policy bureau, to give detailed accounts of their respective roles and responsibilities.
Doing so would help set out a full picture for the affected investors and the general public so they could judge who, if anyone, should take the blame. More importantly, the investigation process would help identify faults in the regulatory system and make recommendations for improvement.
With their reputations at stake, there is no reason to believe banks would deliberately stall resolving this dispute because of a Legco inquiry.
Now that independent experts are tasked with assessing the value of the products, investors should feel assured that the findings would not be affected.
In view of the demise of Lehman and the plunge in the value of its investment products, a considerable number of the 40,000plus affected investors might not get what they want from the buy- back exercise. A feeling of injustice may prevail. If left unattended, their grievances could turn to anger and feelings of betrayal.
Undoubtedly, an early settlement between banks and investors is important. But, as the row has already damaged the authority and credibility of political and financial institutions, failing to seek a solution through a fair and open inquiry would be unjust.
The media and the public should ensure that Legco’s investigative powers do not go unchecked, to minimise any unintended consequences – such as probing too deeply into the operation of banks, or damaging business confidence.
12 Nov 2008
Chris Yeung is the Post’s editor-at-large. chris.yeung@scmp.com
Two days ago, before the scheduled Legislative Council vote today on whether to invoke special powers to investigate the Lehman Brothers minibonds saga, local banks mounted a counter-lobbying drive. In full-page newspaper advertisements on Monday, they stressed their commitment to “offering practical, transparent and fair solutions” to address the difficulties faced by more than 40,000 Hong Kong investors affected by Lehman’s demise.
It did not mention the Legco vote, but the writing is on the wall: the last thing they want is to be summoned to the legislature to give evidence on the Lehman case.
Also on Monday, finance functional constituency legislator David Li Kwok-po urged members to vote down the motion. He warned that, if it were passed, it would allow Legco to exercise “unlimited” powers over banks. It would set a bad precedent and might undermine the status of Hong Kong as an international financial centre, he added.
Banks, he said, would also have to stretch their resources for the Legco hearings at the expense of handling the buy-back efforts.
Privately, senior government officials have cautioned that a Legco inquiry would “put banks on public trial”.
If an inquiry goes ahead, banks might put the buy-back process on hold, according to one official. Banks fear they would be under pressure at the public hearings to divulge details of their business strategies and practices, the official said.
In view of the quasi-judicial nature of an independent inquiry and the style of Legco politics, their fears may be justified.
There is no denying that such an inquiry would further complicate matters and raise more uncertainties about the minibonds row. It may create tension that is not conducive to mediation and arbitration.
But, while the arguments against an inquiry carry some weight, the case for an investigation should not be dismissed lightly.
From a broader perspective, a full Legco probe could arguably help the banking industry, whose image has been tarnished by allegations of fraud, at worst, and misselling, at best, over the sale of Lehmanrelated products.
It would also allow the Monetary Authority and the Securities and Futures Commission, as well as the relevant policy bureau, to give detailed accounts of their respective roles and responsibilities.
Doing so would help set out a full picture for the affected investors and the general public so they could judge who, if anyone, should take the blame. More importantly, the investigation process would help identify faults in the regulatory system and make recommendations for improvement.
With their reputations at stake, there is no reason to believe banks would deliberately stall resolving this dispute because of a Legco inquiry.
Now that independent experts are tasked with assessing the value of the products, investors should feel assured that the findings would not be affected.
In view of the demise of Lehman and the plunge in the value of its investment products, a considerable number of the 40,000plus affected investors might not get what they want from the buy- back exercise. A feeling of injustice may prevail. If left unattended, their grievances could turn to anger and feelings of betrayal.
Undoubtedly, an early settlement between banks and investors is important. But, as the row has already damaged the authority and credibility of political and financial institutions, failing to seek a solution through a fair and open inquiry would be unjust.
The media and the public should ensure that Legco’s investigative powers do not go unchecked, to minimise any unintended consequences – such as probing too deeply into the operation of banks, or damaging business confidence.
Morgan Stanley hotline for Pinnacle notes
Dear Mr Tan,
I called my distributor OCBC secruities many times to check the reason about Pinnacle Note for the distressful price, but the only thing they can tell me is to wait for the Q& A, and I never get it until now after many weeks chasing.
I have to make many calls and finally I found Morgan Stantly has set up two hot lines for Pinnacle Note holders. I asked MS people why they didn't tell us the hot lines which can address our concerns. They should understand how flucstrated their holders are facing now, but they just to say they are waiting for us to find these hotlines. Is it make sense? If they did not publish it or inform their distributors the hot lines but wait the investors to find it by ourselves. What kind of service it is?
The hotlines for Pinnacle Note holders are : 68346510/68346512, and it only open from 9:00am to 12:00am.
A desperated investor
I called my distributor OCBC secruities many times to check the reason about Pinnacle Note for the distressful price, but the only thing they can tell me is to wait for the Q& A, and I never get it until now after many weeks chasing.
I have to make many calls and finally I found Morgan Stantly has set up two hot lines for Pinnacle Note holders. I asked MS people why they didn't tell us the hot lines which can address our concerns. They should understand how flucstrated their holders are facing now, but they just to say they are waiting for us to find these hotlines. Is it make sense? If they did not publish it or inform their distributors the hot lines but wait the investors to find it by ourselves. What kind of service it is?
The hotlines for Pinnacle Note holders are : 68346510/68346512, and it only open from 9:00am to 12:00am.
A desperated investor
Accountabiliy, transparency and social justice
Mr. Goh Chok Tong gave the keynote address at the Asia Society Hong Kong Center's annual dinner. He listed four main attributes of a political system to enable a country to flourish:
1. accountability and transparency
2. long term planning and execution
3. social justice and harmony
4. a culture of identifying and glooming talent for public service.
Accountability and transparency
I wish to reflect on whether MAS has acted with accountability and transparency in the handling of the credit linked notes. I submitted three petitions to MAS signed by 2,300 people. I request for a meeting to discuss these petitions. They were declined.
MAS said that they cannot meet with representative groups. But I suspect that they must have met with the representatives of the financial institutions.
I do not know how MAS can find a solution without listening to the views of the many thousand of people who have lost their hard earned savings.
Social justice
10,000 people have lost their hard earned or lifetime savings. A small percentage of people identified as "vulnerable" are being compensated. The remainder are left to deal on their own, on a case by case basis, against the large financial institutions. These institutions have the moral support of our leaders who labelled the investors as "greedy" and invested "with their eyes open".
I wonder if this can be called social justice?
Your views
What are your views?
1. accountability and transparency
2. long term planning and execution
3. social justice and harmony
4. a culture of identifying and glooming talent for public service.
Accountability and transparency
I wish to reflect on whether MAS has acted with accountability and transparency in the handling of the credit linked notes. I submitted three petitions to MAS signed by 2,300 people. I request for a meeting to discuss these petitions. They were declined.
MAS said that they cannot meet with representative groups. But I suspect that they must have met with the representatives of the financial institutions.
I do not know how MAS can find a solution without listening to the views of the many thousand of people who have lost their hard earned savings.
Social justice
10,000 people have lost their hard earned or lifetime savings. A small percentage of people identified as "vulnerable" are being compensated. The remainder are left to deal on their own, on a case by case basis, against the large financial institutions. These institutions have the moral support of our leaders who labelled the investors as "greedy" and invested "with their eyes open".
I wonder if this can be called social justice?
Your views
What are your views?
Reply from MAS on the 3 petitions
Dear Mr Tan,
I refer to your emails dated 7 November and 10 November to MAS, and your email to the Prime Minister dated 10 November.
MAS understands the anxiety that investors in structured notes are feeling. We have devoted substantial resources to looking into the issues, with teams of officers working on formal inquiries as well as on ensuring that there is a fair, serious and impartial resolution process for affected investors. Independent persons have also been appointed.
MAS takes feedback seriously, and reviews all feedback received. In deciding on the courses of action, we are guided by our regulatory approach and assessment of the situation. As MAS has to be fair and transparent to everyone, MAS has to communicate to all investors at the same time through public press statements. You would appreciate that MAS therefore cannot reply to particular groups of individuals or individuals writing to MAS on our intended course of action.
Our approach and our advice to investors are set out clearly in the various public comments and press statements. You may wish to refer to our earlier press statements dated 22 September, 10 October, 17 October and 20 October. We will continue to communicate with investors through public press statements when appropriate.
Dr. Andrew Khoo
REPLY
Dear Dr. Andrew Khoo
Can you indicate where your press statements can be located, and if they have addressed the points contained in the three petitions that were signed by a total of more than 2,300 people. If there are outstanding points that have not been addressed, can you reply if they will be specifically covered in future press releases?
The mode of communication adopted by MAS has added to the concern and anxiety of several thousand people. I suggest that MAS review its approach and be ready to engage in a dialogue with representative groups of the investors.
I refer to your emails dated 7 November and 10 November to MAS, and your email to the Prime Minister dated 10 November.
MAS understands the anxiety that investors in structured notes are feeling. We have devoted substantial resources to looking into the issues, with teams of officers working on formal inquiries as well as on ensuring that there is a fair, serious and impartial resolution process for affected investors. Independent persons have also been appointed.
MAS takes feedback seriously, and reviews all feedback received. In deciding on the courses of action, we are guided by our regulatory approach and assessment of the situation. As MAS has to be fair and transparent to everyone, MAS has to communicate to all investors at the same time through public press statements. You would appreciate that MAS therefore cannot reply to particular groups of individuals or individuals writing to MAS on our intended course of action.
Our approach and our advice to investors are set out clearly in the various public comments and press statements. You may wish to refer to our earlier press statements dated 22 September, 10 October, 17 October and 20 October. We will continue to communicate with investors through public press statements when appropriate.
Dr. Andrew Khoo
REPLY
Dear Dr. Andrew Khoo
Can you indicate where your press statements can be located, and if they have addressed the points contained in the three petitions that were signed by a total of more than 2,300 people. If there are outstanding points that have not been addressed, can you reply if they will be specifically covered in future press releases?
The mode of communication adopted by MAS has added to the concern and anxiety of several thousand people. I suggest that MAS review its approach and be ready to engage in a dialogue with representative groups of the investors.
Letter to Prime Minister on Credit Linked Notes
10 November 2008
Mr. Lee Hsien Loong
Prime Minister
Republic of Singapore
Dear Prime Minister
1. I appeal to you to look into the plight and financial losses suffered by about 10,000 investors from the Mini-bonds, High notes, Pinnacle Notes, Jubilee Notes and other credit-linked notes that have been sold to them by the financial institutions.
2. This appeal is made in accordance with the following statements made by you as chairman of the Monetary Authority of Singapore at a staff seminar held on 29 October 2002 on the topic of “Market Discipline and Caveat Emptor”:
QUOTE
22. Our efforts to promote market discipline and a caveat emptor regime have focussed on enhancing the amount, quality and timeliness of information disclosed by institutions. We have shifted from a merit-based supervisory approach to a disclosure-based approach that emphasises market discipline to incentivise financial institutions to conduct their business in a sound, efficient, and professional manner. The local banks in particular have significantly improved their disclosure practices.
23. We must continue to update our disclosure standards in line with industry developments and international best practice. Furthermore, the mindset change is not yet complete. The public still expects to be protected from downside risks, for example when playing the stock market, but more so when depositing their money in banks. Hence one major motivation for introducing deposit insurance is to change this mindset, and get people to understand that only a limited first tranche of their deposits with a bank is protected should the bank run into trouble.
24. But disclosure by itself is not enough. It must be accompanied by investor education. Investors have to understand and use the information provided to them. They must learn to make sense of this information and use it to look after their own interests. We also need a pool of knowledgeable analysts and journalists who will shine the spotlight on any obscure fine print that the lay investor fails to notice. A more informed and sophisticated investor base will reinforce market discipline and form the basis for a more vibrant and mature financial sector. In all these respects, we have a long way to go.
25. Market discipline also requires an effective enforcement regime. To preserve investor confidence, penalties for transgressions must be swift and appropriate. MAS now has the power to investigate and bring a court action for market misconduct under the new civil penalty regime. This will complement the existing criminal penalty regime administered by CAD.”
UNQUOTE
3. On 10 October 2008, I submitted a Petition signed by 983 people addressed to the Singapore Government. It was handed over to Dr. Andrew Khoo, Executive Director of the Monetary Authority of Singapore, who received it on behalf of the chairman, Mr. Goh Chok Tong. This Petition said:
QUOTE
We, the undersigned, write to petition the Singapore Government, particularly the
Commercial Affairs Department (Singapore Police Force) and/or the Monetary
Authority of Singapore, to conduct a full and independent inquiry in relation to the
credit linked securities sold by various financial institutions in Singapore. These
structured products include the Lehman Minibonds, DBS High Notes, Morgan
Stanley Pinnacle Notes and Merrill Lynch Jubilee Notes.
Singaporeans, including the persons who have signed this petition, lost their hard-
earned savings by investing in these financial products. Such products clearly did not suit the risk profiles of these consumers. The consumers were not made aware of the high risks involved in the financial product when buying the product. They became innocent victims of misrepresentation by the financial institutions that distributed the structured products.
We now wish to be assured that those who invested in such financial products have
not been victims of negligent and/or dishonest conduct and/or fraud by these financial institutions.
The Government has a duty to ensure that investment products are marketed and sold
appropriately in our jurisdiction. Such products must be sold in a manner compliant
with the laws of Singapore. Financial institutions, including their respective key
management, that do not follow the laws or regulations applicable to them must be
held accountable for such breaches.
Please commence a full and independent inquiry into the sale of structured products
by various financial institutions in Singapore. If the inquiry deems necessary, the
Attorney-General of Singapore should act against these financial institutions.
We also ask the Government to help these investors to claim fair and adequate
compensation from these financial institutions for their losses which are caused by the misconduct of these financial institutions.
We ask the Government to act now and restore the peoples' faith in our financial
System.
UNQUOTE
4. In a supporting letter to the Monetary Authority of Singapore, I have mentioned some of the possible areas where the laws of Singapore might have been breached. They are set out in annex 1.
5. I have received an acknowledgement from MAS of the Petition. Nearly one month has passed. I have not heard from MAS if they intend to act on the requests contained in the Petition, namely to commence a full and independent inquiry into the sale of structured products by various financial institutions in Singapore and, if the inquiry deems necessary, to act against these financial institutions.
6. I appeal to you, Prime Minister, to ask the MAS to act more swiftly and appropriately, in line with this vision:
QUOTE
Market discipline also requires an effective enforcement regime. To preserve investor confidence, penalties for transgressions must be swift and appropriate. MAS now has the power to investigate and bring a court action for market misconduct under the new civil penalty regime. This will complement the existing criminal penalty regime administered by CAD.”
UNQUOTE
7. Annex 2 contains an article written from the perspective of an investor.
8. Thank you.
Tan Kin Lian
RESPONSE FROM MAS
MAS has replied to my letter to the Prime Minister. They said that MAS will give its reply in press statements. They are not able to talk to any individual investor or group of investors.
Mr. Lee Hsien Loong
Prime Minister
Republic of Singapore
Dear Prime Minister
1. I appeal to you to look into the plight and financial losses suffered by about 10,000 investors from the Mini-bonds, High notes, Pinnacle Notes, Jubilee Notes and other credit-linked notes that have been sold to them by the financial institutions.
2. This appeal is made in accordance with the following statements made by you as chairman of the Monetary Authority of Singapore at a staff seminar held on 29 October 2002 on the topic of “Market Discipline and Caveat Emptor”:
QUOTE
22. Our efforts to promote market discipline and a caveat emptor regime have focussed on enhancing the amount, quality and timeliness of information disclosed by institutions. We have shifted from a merit-based supervisory approach to a disclosure-based approach that emphasises market discipline to incentivise financial institutions to conduct their business in a sound, efficient, and professional manner. The local banks in particular have significantly improved their disclosure practices.
23. We must continue to update our disclosure standards in line with industry developments and international best practice. Furthermore, the mindset change is not yet complete. The public still expects to be protected from downside risks, for example when playing the stock market, but more so when depositing their money in banks. Hence one major motivation for introducing deposit insurance is to change this mindset, and get people to understand that only a limited first tranche of their deposits with a bank is protected should the bank run into trouble.
24. But disclosure by itself is not enough. It must be accompanied by investor education. Investors have to understand and use the information provided to them. They must learn to make sense of this information and use it to look after their own interests. We also need a pool of knowledgeable analysts and journalists who will shine the spotlight on any obscure fine print that the lay investor fails to notice. A more informed and sophisticated investor base will reinforce market discipline and form the basis for a more vibrant and mature financial sector. In all these respects, we have a long way to go.
25. Market discipline also requires an effective enforcement regime. To preserve investor confidence, penalties for transgressions must be swift and appropriate. MAS now has the power to investigate and bring a court action for market misconduct under the new civil penalty regime. This will complement the existing criminal penalty regime administered by CAD.”
UNQUOTE
3. On 10 October 2008, I submitted a Petition signed by 983 people addressed to the Singapore Government. It was handed over to Dr. Andrew Khoo, Executive Director of the Monetary Authority of Singapore, who received it on behalf of the chairman, Mr. Goh Chok Tong. This Petition said:
QUOTE
We, the undersigned, write to petition the Singapore Government, particularly the
Commercial Affairs Department (Singapore Police Force) and/or the Monetary
Authority of Singapore, to conduct a full and independent inquiry in relation to the
credit linked securities sold by various financial institutions in Singapore. These
structured products include the Lehman Minibonds, DBS High Notes, Morgan
Stanley Pinnacle Notes and Merrill Lynch Jubilee Notes.
Singaporeans, including the persons who have signed this petition, lost their hard-
earned savings by investing in these financial products. Such products clearly did not suit the risk profiles of these consumers. The consumers were not made aware of the high risks involved in the financial product when buying the product. They became innocent victims of misrepresentation by the financial institutions that distributed the structured products.
We now wish to be assured that those who invested in such financial products have
not been victims of negligent and/or dishonest conduct and/or fraud by these financial institutions.
The Government has a duty to ensure that investment products are marketed and sold
appropriately in our jurisdiction. Such products must be sold in a manner compliant
with the laws of Singapore. Financial institutions, including their respective key
management, that do not follow the laws or regulations applicable to them must be
held accountable for such breaches.
Please commence a full and independent inquiry into the sale of structured products
by various financial institutions in Singapore. If the inquiry deems necessary, the
Attorney-General of Singapore should act against these financial institutions.
We also ask the Government to help these investors to claim fair and adequate
compensation from these financial institutions for their losses which are caused by the misconduct of these financial institutions.
We ask the Government to act now and restore the peoples' faith in our financial
System.
UNQUOTE
4. In a supporting letter to the Monetary Authority of Singapore, I have mentioned some of the possible areas where the laws of Singapore might have been breached. They are set out in annex 1.
5. I have received an acknowledgement from MAS of the Petition. Nearly one month has passed. I have not heard from MAS if they intend to act on the requests contained in the Petition, namely to commence a full and independent inquiry into the sale of structured products by various financial institutions in Singapore and, if the inquiry deems necessary, to act against these financial institutions.
6. I appeal to you, Prime Minister, to ask the MAS to act more swiftly and appropriately, in line with this vision:
QUOTE
Market discipline also requires an effective enforcement regime. To preserve investor confidence, penalties for transgressions must be swift and appropriate. MAS now has the power to investigate and bring a court action for market misconduct under the new civil penalty regime. This will complement the existing criminal penalty regime administered by CAD.”
UNQUOTE
7. Annex 2 contains an article written from the perspective of an investor.
8. Thank you.
Tan Kin Lian
RESPONSE FROM MAS
MAS has replied to my letter to the Prime Minister. They said that MAS will give its reply in press statements. They are not able to talk to any individual investor or group of investors.
Speaker's Corner - 15 November 2008
I will be speaking at Speaker's Corner on Saturday 15 November at 5 p.m. I will give an update about the three petitions that have been lodged with the Monetary Authority of Singapore and also give a response to the remark by a Government leader that the investors went in with their "eyes open". Mr. Goh Meng Seng will translate my speech into Chinese.
I like to ask the investors to bring your family and friends to attend this meeting, so that we can have a larger crowd than before.
I like to ask the investors to bring your family and friends to attend this meeting, so that we can have a larger crowd than before.
Sunday Times article on Petitions
Tan Dawn Wei of the Sunday Times asked the following questions about the use of petitions in Singapore. My reply to the journalist is set out below. She only used some replies that are more suitable for her purpose.
1. Why did you choose to use petitions to call for action?
Reply: I used the online petition as a convenient way to gather the signatures of the people who are affected by the credit linked notes to ask the Government to take the appropriate actions. I hope that a large number of signatures will make a difference in getting the Government to be aware about the strong support for the proposed actions. This is in contrast to writing a letter to be newspaper, as the letter reflects the view of one person, and is likely to be ignored. The letter may not be printed by the newspaper due to lack of space.
Another way to express the strong views is to organise a protest rally or demonstration. However, it is illegal in Singapore to organise such an activity without a police permit. It takes a lot of trouble to get a police permit and the applicaiton is likely to be rejected. It take a lot of effort to organise a rally anyway.
2. Did you think it would be the most effective method to push for action and that the authorities would take heed, given petitions have not typically figured in the Government's decision-making process?
Reply: It is disappointing that the Government ignore petitions that have been signed by a large number of people. I think that it is not proper for the recipient of a petition to behave in this manner, as this reflects arrogance. At the very least, the recipient should meet with the represenatives of the signatories to have a dialogue and discussion.
I am not deterred by the negative response. I will continue to gather signatures for future petitions to ask the Government to do "the right thing". The Government should realise that people in Singapore are generally afraid to sign a petition as they do not wish to be seen to be disagreeing with the Government on its decision. For the signatories to muster the courage to sign the petition and provide their name and other particulars (such as NRIC, address or contact number), it must reflect a strong grievance that should be addressed.
3. Do you think the petitions you initiated had any bearing on the decisions made by MAS?
Reply: I have not received any communication from the MAS on the three petitions that have been lodged with them. They also do not wish to meet with me to discuss the petitions or to seek clarification. I suspect that these petitions have also been ignored.
4. What do you think the seemingly increasing number of petitions (eg. Serangoon Gardens, repeal 377A) we're seeing says about the Singapore psyche?
Reply: It reflects that people feel strongly on several issues and the existing channels to express these views are not effective. The internet allows them to communicate and reach out to other people who feel strongly about these issues, so that they can get together to express their collective views. It reflects the power of the internet as a new medium for the affected people to come together to express their grievances and to seek solutions.
1. Why did you choose to use petitions to call for action?
Reply: I used the online petition as a convenient way to gather the signatures of the people who are affected by the credit linked notes to ask the Government to take the appropriate actions. I hope that a large number of signatures will make a difference in getting the Government to be aware about the strong support for the proposed actions. This is in contrast to writing a letter to be newspaper, as the letter reflects the view of one person, and is likely to be ignored. The letter may not be printed by the newspaper due to lack of space.
Another way to express the strong views is to organise a protest rally or demonstration. However, it is illegal in Singapore to organise such an activity without a police permit. It takes a lot of trouble to get a police permit and the applicaiton is likely to be rejected. It take a lot of effort to organise a rally anyway.
2. Did you think it would be the most effective method to push for action and that the authorities would take heed, given petitions have not typically figured in the Government's decision-making process?
Reply: It is disappointing that the Government ignore petitions that have been signed by a large number of people. I think that it is not proper for the recipient of a petition to behave in this manner, as this reflects arrogance. At the very least, the recipient should meet with the represenatives of the signatories to have a dialogue and discussion.
I am not deterred by the negative response. I will continue to gather signatures for future petitions to ask the Government to do "the right thing". The Government should realise that people in Singapore are generally afraid to sign a petition as they do not wish to be seen to be disagreeing with the Government on its decision. For the signatories to muster the courage to sign the petition and provide their name and other particulars (such as NRIC, address or contact number), it must reflect a strong grievance that should be addressed.
3. Do you think the petitions you initiated had any bearing on the decisions made by MAS?
Reply: I have not received any communication from the MAS on the three petitions that have been lodged with them. They also do not wish to meet with me to discuss the petitions or to seek clarification. I suspect that these petitions have also been ignored.
4. What do you think the seemingly increasing number of petitions (eg. Serangoon Gardens, repeal 377A) we're seeing says about the Singapore psyche?
Reply: It reflects that people feel strongly on several issues and the existing channels to express these views are not effective. The internet allows them to communicate and reach out to other people who feel strongly about these issues, so that they can get together to express their collective views. It reflects the power of the internet as a new medium for the affected people to come together to express their grievances and to seek solutions.