Since the start of the Minibond crisis, I have suggested that a fair settlement is for the distributor and the investor to share the loss equally. I believe that both parties should share the blame equally for this unfortunate event.
The difficulty is that some of the notes have residual values that may change during the period prior to maturity. They may be worth more than 50% at the time of settlement or at maturity. Other notes may be worth less. How are these different notes to be dealt with?
I have since found a possible solution. The distributor should buy back the note at 50% of the invested sum now (less any interest that have been paid), take over the notes and refund back 50% of the future proceeds. The distributor is in a better position to decide on future actions, e.g. to hold or dispose of the notes prior to maturity.
I hope that some of the distributors will consider this proposal, in the interest of fair treatment of their customers.
Tan Kin Lian
Tan Kin Lian
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Credit Linked Notes
11 comments:
Yes, your suggestion is a fairer compensation to everybody involved in the saga.
starlight
Dear Mr. Tan
Your suggestion is reasonable and fair.
Yes, this is a more equitable solution, from a "commercial settlement" point of view.
(1) The FIs had under-estimated the risks of the structured products they had mis-sold themselves. Hence, the ultimate risk should be reverted back to them by buy-back method. And if aggrieved investors bear 50%, it is equitable, if not overly generous.
(2) In view of current findings and ban imposed by MAS, it seems FIs are cupable for misrepresentation. The benefit of letting them decide which investors should bear what percentage of compensation or zero compensation should be an "onus" otherwsie left to the Courts or Authorities to decide.
Why should FIs be given this benefit of the doubt when the MAS took about 9 months to deliberate and take action while giving liberty to FIs to decide on percentage of compensation.
Unwary aggrieved investors might have been forced into hasty acceptance and accept low compensation fearing they would get nothing back.
Aggrieved investors could also have been pressured by the legally trained in-house lawyers or staffs of banks to miserably accept a lower than fair compensation.
If FI wanted to compensate, they would have done it long time ago. If breaking some rules and got investors to loose money and the only punishment is ban on selling, why bother to compensate?
I fully agree also. For OSPL, the 5.3% in total amount invested is their compensation amount, just equal to the commision they earned. They lost nothing but we were punished by their mistake. 100% lost.
You have my support, Kin Lian.
We always mentioned that Hongkong investor been compensated 60%. Do Hongkong investors care what happenening in Singapore? If they know our result. Will they laugh? Smart Signapore goverment, coward Singaporean. Coward Hongkong goverment, smart Hongkong investors.
The other possible solution might be to buy it back at current price and split the losses on 50/50 basis.
As I had said before... the FI offer 25% compensation less interest and take back 100% rights of the notes!!!
I have no choice but to take the compensation as the Class Action is too slow to take Action.
Thus there will be lesser people to join the Class Action, that will make the matter worse as there won't be enough people to build the nest of cash neccessary for the Class Action.
Thus, the only thing I can do is the gahman will loss my family vote forever!!! as I see the gahman protecting the FI (or themselves) rather than protecting the people. Plus will shift all my saving out of this country when the timing is right!!!
I suggest the percentage of compensation be based on the following criteria:
1.Take the residual value of the
note as a base.If the RV of the
note stand at 50% to 60%, then
the FIs should buy back the
note at 50% to 60% as the RV.
2.The FIs cannot simply white wash
their liability in the mis-
selling. There should be held
responsible to compensate at
least half of the rest, i.e 40%
to 50%.
3.Any clear cases of mis-selling
and mis-representation of
products, should be responsible
for full compensation.
4.If FIs are not liable for the
mis-selling, MAS should be the
culprit who allows the toxic
products to be sold to retail
investors.It seems that MAS and
FIs are blood brothers so to tie
together and solidly protect the
interest of each other.
5.If FIDREC also bias against the
retail investors, then the only
hope is the class action.
Eventually, we are the sacrifice
of these syndicate robbers.
I like your suggestion Mr. Tan. It is a fairer proposal. Both parties bear the pain and is a closure to this painful ordeal.
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