Singapore has built a strong reputation for observing the rule of law and having a fair and efficient administration of justice. It has won high international recognition for a transparency, consistency and justice in handling of commercial affairs.
Under the rule of law, all parties can look towards the law to be applied in a consistent and fair manner, as it is written, and that the law can be interpreted in the right spirit, to serve justice and fairness to all parties.
In the saga involving the Lehman Minibonds and other credit linked notes, the letter of the law are clearly spelled in the Securities and Futures Act and the Financial Advisers Act. These law requires the financial institutions to make proper disclosure about the financial product and imposes a duty on financial advisers to give appropriate advice to consumers.
I could not find any part of these law that define that people should be treated differently according to their "vulnerability", standard of education or age or other factors.
I do not quarrel with the generous decision of the financial institutions to give full compensation to the "vulnerable" investors. I also accept that it is within their prerogative to take the commercial approach to reject the complaints from the "non-vulnerable" investors.
However, I believe that the aggrieved investors, being ordinary people, have the right to expect justice to be administered according to the rule of law, especially from the following parties:
a) The regulator, who has the duty to investigate and prosecute any party that is found to have breached the law
b) The judges, who have the duty to decide in accordance to the letter and spirit of the law. This duty also falls on the Financial Industry Dispute Resolution Center (FIDReC).
I hope that FIDReC will adjudicate according to the law, and not principles of “vulnerability” as this is not stated in the law.
I believe that the investors and the distributors have to share the blame equally for the disastrous mistake. It would be most unfair, if FIDReC were to rule that the investors are fully responsible and that the distributors are not culpable (as they have failed in their duty to give proper advice to the investors).
Although the distributors have asked the investors to sign a disclaimer, this does not absolve the distributors from their legal duty under the Financial Advisers Act. I hope that FIDREC will take a similar view, in the interest of justice.
Tan Kin Lian
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