Tan Kin Lian's Blog: Does land banking come under Collective Investment Scheme?

Friday, September 04, 2009

Does land banking come under Collective Investment Scheme?

I met with four people who were sold to invest in a land banking scheme. The promoter gave them a guarantee (in the form of an option) to buy back their investment at the end of 12 months for a full refund of their principal plus a guaranteed return.

These investors have now submitted their redemption request, but the promoter refused to honor the agreement and gave some unsatisfactory and unclear explanations.

One investor made a complaint with MAS and were told by the MAS official that land banking did not come under MAS. In my view, unless I am mistaken, land banking should fall under the scope of a collective investment scheme, which is administered by MAS. There are controls under the law on collective investment scheme to prevent the misappropriate of the funds collected from investors. This risk applies to land banking as well.

I will appreciate if a practising lawyer can clarify if land banking comes under the collective investment scheme?

Tan Kin Lian

11 comments:

Anonymous said...: I too facing the same problem. Is there a way to combine effort of all "Victims" to rise the issue with MAS again ?; September 04, 2009 5:53 PM
Anonymous said...: Land banking is classified as collective investment scheme in the UK but MAS refused to classify that. See

http://www.wilfredling.com/content/view/834/9/

http://www.fsa.gov.uk/pages/Library/Communication/Statements/2007/land_banking.shtml

http://fsahandbook.info/FSA/html/handbook/PERG/11/3; September 04, 2009 6:38 PM
Anonymous said...: Land banking is not regulated.; September 04, 2009 7:38 PM
Tan Kin Lian said...: These investors made the mistake of believing in the "guarantee" of 100% payback at the end of 1 year. They thought that the risk is small, as the promoter will be able to pay back the money. They did not check on the assets that provide the financial backing for the guarantee.

The land banking promoter took a gamble. If they were able to develop the land, they would make a big profit and they only had to give back the "high" interest rate to the investors. If things turn out bad, they could find ways to get out of their guarantee.

The legal document was written by the lawyers for the land banking promoter. The investors were totally unprotected on the legal wordings. It seems that the land banking promoters were given a free hand to do what they want.

Under this environment, where the regulators were passive, the promoters had a free hand to take advantage of the gullible investors.; September 04, 2009 9:21 PM
Anonymous said...: I think everybody needs to be more responsible for their own affairs, instead of always looking towards the "authorities". In every country if there is a way, crooks will try to con people out of their money. Crooks are always one step ahead. If you dont try your very best to protect yourself, nobody is going to do it for you. Better to be safe than sorry.; September 04, 2009 9:58 PM
Anonymous said...: Land banking is NOT regulated by FSA; September 04, 2009 10:10 PM
Anonymous said...: Pity those people who invested their hard-earned money in land banking, the money is as good as gone. Another ponzi scheme & scam out to cheat people. MAS, CAD, CASE don't even want to handle their complains, only way is go for court case to get back their money. At least for MB, HN5, PN, etc. these vulnerable 65 yrs old people get back their full sum of money while those below 65 years old still get some percentage money back subject to case by case basis. Be careful of many ponzi scheme & scam such as investment in wine, ostrich, time-sharing, pyramid scheme, internet marketing, health product, etc out there to con people's money.; September 05, 2009 12:04 AM
Anonymous said...: I have always been warning people about such ponzi schemes. But until it became irrefutedly clear that it is a ponzi scheme, those who invest in it will also scold those who warn them. The latest one is that Gold with high percentage returns every month. Those whom I try to warn even taunt me by saying that I do not have enough money to invest so sour grapes. I think these people do not deserve any pity because they belong to the group of people who recognise the thief as father and ridicule those who are trying to help them. These rich investors sure have money but seems to be lacking somthing up there.; September 05, 2009 12:56 AM
Anonymous said...: Brains. These naive investors lack foresight and brains. It has often been said that a fool and his money are soon parted.; September 05, 2009 5:19 AM
Anonymous said...: I've gotten back my money from land banking, after tax and all by the local government in Canada, and I'm happy to see that the land I invested recently seen their first batch of residents moving in. I was open to see what these land banking firms have to offer and so I approach some of them, and finally decided on one such company after I did my own research. The land that I invested in years ago is called Sky View Ranch now. Too bad I won't be migrating, if not I guess I will get a place there!; September 05, 2009 1:59 PM
Anonymous said...: I had received an e-mail to invest in Gold for a monthly return of 2% .... I just deleted it... I had made a mistake I should had forwarded it to Straits Times!

Another clear cut ponzi...; September 06, 2009 5:44 PM