Ho Cheow Seng wishes to help me to educate people about values and character. He has written this article about democracy.
Here are the
Saturday, January 31, 2009
Give your views on budget 2009
How do you feel about the budget 2009?
Read the survey results.
The average rating from 95 respondents are:
a) The budget is good for business (rating 3.78)
b) The general election will be called in 2009 (rating 2.97)
c) The average rating for the other questions are lower than 2.66.
A rating of 3.0 is neutral. A rating below 3 indicates that more people disagree with the statement, compared to those who agree.
On the whole, the respondents are less confident about the benefit of the budget for the people, in saving jobs, in spurring economic recovery or helping the unemployed. There is also a negative level of confidence in the leaders.
The ratings are similar across age groups. The employed have a slightyly higher level of confidence, compared to business and the unemployed/retired.
From Financial Times
Sometimes dubbed the world’s most socialist country, Japan never went in for the CEO cult. On average, big company executives earn about three times as much as the rank-and-file – comfortably within the four-fold ideal espoused by Plato two and a half millennia ago.
That is also a far more modest gap than the 39 times differential prevailing among FTSE 350 board members and employees, as measured by research house IDS. It is not even in the same universe as the US, where the left-leaning Institute for Policy Studies reckons CEOs take home 344 times more than the average worker.
Sometimes dubbed the world’s most socialist country, Japan never went in for the CEO cult. On average, big company executives earn about three times as much as the rank-and-file – comfortably within the four-fold ideal espoused by Plato two and a half millennia ago.
That is also a far more modest gap than the 39 times differential prevailing among FTSE 350 board members and employees, as measured by research house IDS. It is not even in the same universe as the US, where the left-leaning Institute for Policy Studies reckons CEOs take home 344 times more than the average worker.
Friday, January 30, 2009
Budget 2009 is not pro-people
Comment by SB on the survey results for Budget 2009
Lim Swee Say as head of the workers movement must robustly champion the workers' interest within the tripartite. In what is supposed to be a rescue package ultimately for the benefit of workers and the people of Singapore, it turns out that companies turn out to be the main direct beneficiary getting the lion's share of the $20.5 billion help package. As sure as the sun rises, companies will still fold, workers will still lose jobs or suffer pay cuts. To these workers, the money which will go to the companies will have no benefit to them.
Not by any measure is he, as supposedly the workers' champion, justified to declare full satisfaction with the direct allocation to workers and to those who will be retrenched. Why didn't he tell the public that he had fought for a bigger direct share for the workers, even if he failed to get his bosses, oops I mean the other members of the tripartite, to change their minds.
Do you notice that with all the distractions of the recession and the help budget, the govt. has opportunistically sneaked in an increase of almost $1000 million to the security (defence and home affairs) budgets, bringing the Defence and Home Affairs Budgets to historical highs of over $11.4 billion and $3 billion respectively. This is one of the real reasons (quietly though) why our past reserves have to be used for this year's budget.
The Defence spendings tower above every other budgetary spendings. This, despite the gloomy outlook for the next 24 months or more. Money should be conserved (and channeled to fund more direct people-help programs, say, for retrenchment benefits). Some military spendings could surely be postponed or paced out until better days come back. It is not as though we are under-invested in defence. After years and decades of heavy military spendings, we have as of now already the most invested and equipped armed forces than the rest of ASEAN combined. That betrays the under-emphasis on real care and focus this govt has on people-related needs vs. growth and power.
The rating of “best” for this Budget is I think mainly based on the huge total amount of help programs. But if you look at the measurable benefits that will land in the hands of Singaporeans, then “best” is somewhat an overstatement. Let me say why:
1. The direct help for individuals & households amount to less than 13% ($2.6 billion) of the total. 66% ($13.5 billion) is given directly to companies. Past reserves are accumulated savings and wealth of the nation and hence of its citizens. If the reserve vault is to be opened, the direct benefits should be skewed for more to go to them instead of to companies. The $2.6 billion allocated represent only a modest increase over similar (such as GST refund, Workfare) 2008’s pre-recession and pre-hyperinflation help-budget. The stated justification for the huge allocation to companies is that individuals will be the beneficiaries of the help programs through jobs saved. The problem is the extent of leakages in this flow-down effect to individuals as huge number of jobs in aggregate is still projected to be lost despite these help programs.
2. Citizens are subject to various forms of means testing for programs such as the hospitalisation subsidies and share of workfare payouts. On the other hand the Job Credit program gives money from our reserves to all employers, regardless of whether they are financially strong or weak, big or small, earning big profits or suffering losses. If we citizens are subject to means testing, why is the govt. so generous without setting criteria to pre-qualify companies to be entitled to this particular. Banks, large property developers, large GLCs, most MNCs and govt ministries do not deserve nor need this financial subsidy to continue to be viable. Public reserves should not be used to enrich private enterprises, particularly the healthy ones. Mind you, these companies have logged in bonaza profits in the past years, and even if they will performance not as well in the near future, they will still make reasonable profits without Job Credit program.
Companies drawing on wage subsidies are not obligated to refrain from cutting jobs, cut pay or put employees on no-pay leave, if down-sizing is needed to ensure survival. So reserve money will drawn down and many workers will still get fired as the recession spreads and intensifies. If there is some form of means testing on companies, money saved can be used instead for another program to help individuals directly, say, for the retrenched whose jobs are not saved or the retired/aged with little income or have fixed income and are weighed down by the increased cost of living from last year’s inflation.
3. Even without the benefit of the Job Credit program for these healthy companies, the other numerous programs, taxes cuts/rebates and training subsidies/allowances, are still available to them and all other companies.
4. The bottom line is that although the help programs are declared to be ultimately to help the citizens by saving jobs, individuals will actually be getting the much shorter end of the $20.5 billion. More could also be done to help ease their cash-flow tightness, for example waiving or reducing GST on essential goods and services at least during these hard times or allow a small portion of a retrenched worker’s CPF savings to be withdrawn to tide him over while he seeks for new employment (by the way CPF is the worker’s own money and not even a subsidy).
That’s why I think this pro-company help-budget falls short of being BEST because it under-performs for the individuals.
Lim Swee Say as head of the workers movement must robustly champion the workers' interest within the tripartite. In what is supposed to be a rescue package ultimately for the benefit of workers and the people of Singapore, it turns out that companies turn out to be the main direct beneficiary getting the lion's share of the $20.5 billion help package. As sure as the sun rises, companies will still fold, workers will still lose jobs or suffer pay cuts. To these workers, the money which will go to the companies will have no benefit to them.
Not by any measure is he, as supposedly the workers' champion, justified to declare full satisfaction with the direct allocation to workers and to those who will be retrenched. Why didn't he tell the public that he had fought for a bigger direct share for the workers, even if he failed to get his bosses, oops I mean the other members of the tripartite, to change their minds.
Do you notice that with all the distractions of the recession and the help budget, the govt. has opportunistically sneaked in an increase of almost $1000 million to the security (defence and home affairs) budgets, bringing the Defence and Home Affairs Budgets to historical highs of over $11.4 billion and $3 billion respectively. This is one of the real reasons (quietly though) why our past reserves have to be used for this year's budget.
The Defence spendings tower above every other budgetary spendings. This, despite the gloomy outlook for the next 24 months or more. Money should be conserved (and channeled to fund more direct people-help programs, say, for retrenchment benefits). Some military spendings could surely be postponed or paced out until better days come back. It is not as though we are under-invested in defence. After years and decades of heavy military spendings, we have as of now already the most invested and equipped armed forces than the rest of ASEAN combined. That betrays the under-emphasis on real care and focus this govt has on people-related needs vs. growth and power.
The rating of “best” for this Budget is I think mainly based on the huge total amount of help programs. But if you look at the measurable benefits that will land in the hands of Singaporeans, then “best” is somewhat an overstatement. Let me say why:
1. The direct help for individuals & households amount to less than 13% ($2.6 billion) of the total. 66% ($13.5 billion) is given directly to companies. Past reserves are accumulated savings and wealth of the nation and hence of its citizens. If the reserve vault is to be opened, the direct benefits should be skewed for more to go to them instead of to companies. The $2.6 billion allocated represent only a modest increase over similar (such as GST refund, Workfare) 2008’s pre-recession and pre-hyperinflation help-budget. The stated justification for the huge allocation to companies is that individuals will be the beneficiaries of the help programs through jobs saved. The problem is the extent of leakages in this flow-down effect to individuals as huge number of jobs in aggregate is still projected to be lost despite these help programs.
2. Citizens are subject to various forms of means testing for programs such as the hospitalisation subsidies and share of workfare payouts. On the other hand the Job Credit program gives money from our reserves to all employers, regardless of whether they are financially strong or weak, big or small, earning big profits or suffering losses. If we citizens are subject to means testing, why is the govt. so generous without setting criteria to pre-qualify companies to be entitled to this particular. Banks, large property developers, large GLCs, most MNCs and govt ministries do not deserve nor need this financial subsidy to continue to be viable. Public reserves should not be used to enrich private enterprises, particularly the healthy ones. Mind you, these companies have logged in bonaza profits in the past years, and even if they will performance not as well in the near future, they will still make reasonable profits without Job Credit program.
Companies drawing on wage subsidies are not obligated to refrain from cutting jobs, cut pay or put employees on no-pay leave, if down-sizing is needed to ensure survival. So reserve money will drawn down and many workers will still get fired as the recession spreads and intensifies. If there is some form of means testing on companies, money saved can be used instead for another program to help individuals directly, say, for the retrenched whose jobs are not saved or the retired/aged with little income or have fixed income and are weighed down by the increased cost of living from last year’s inflation.
3. Even without the benefit of the Job Credit program for these healthy companies, the other numerous programs, taxes cuts/rebates and training subsidies/allowances, are still available to them and all other companies.
4. The bottom line is that although the help programs are declared to be ultimately to help the citizens by saving jobs, individuals will actually be getting the much shorter end of the $20.5 billion. More could also be done to help ease their cash-flow tightness, for example waiving or reducing GST on essential goods and services at least during these hard times or allow a small portion of a retrenched worker’s CPF savings to be withdrawn to tide him over while he seeks for new employment (by the way CPF is the worker’s own money and not even a subsidy).
That’s why I think this pro-company help-budget falls short of being BEST because it under-performs for the individuals.
Thursday, January 29, 2009
Letter from the grave
Read this letter from an assassinated journalist
People often ask me why I take such risks and tell me it is a matter of time before I am bumped off. Of course I know that: it is inevitable. But if we do not speak out now, there will be no one left to speak for those who cannot, whether they be ethnic minorities, the disadvantaged or the persecuted.
An example that has inspired me throughout my career in journalism has been that of the German theologian, Martin Niemoller. In his youth he was an anti-Semite and an admirer of Hitler. As Nazism took hold in Germany, however, he saw Nazism for what it was: it was not just the Jews Hitler sought to extirpate, it was just about anyone with an alternate point of view.
Niemoller spoke out, and for his trouble was incarcerated in the Sachsenhausen and Dachau concentration camps from 1937 to 1945, and very nearly executed. While incarcerated, Niemoller wrote a poem that, from the first time I read it in my teenage years, stuck hauntingly in my mind:
First they came for the Jews
and I did not speak out because I was not a Jew.
Then they came for the Communists
and I did not speak out because I was not a Communist.
Then they came for the trade unionists
and I did not speak out because I was not a trade unionist.
Then they came for me
and there was no one left to speak out for me.
First they came for the Jews
and I did not speak out because I was not a Jew.
Then they came for the Communists
and I did not speak out because I was not a Communist.
Then they came for the trade unionists
and I did not speak out because I was not a trade unionist.
Then they came for me
and there was no one left to speak out for me.
DBS CEO has cancer
Jan 29, 2009
SINGAPORE'S DBS Group , Southeast Asia's biggest bank, said on Thursday that Chief Executive Richard Stanley, who was hired in May last year, is suffering from leukemia. Koh Boon Hwee, the bank's chairman, will take charge of the bank during Stanley's three to six months' absence for medical treatment, the bank said in a statement.
DBS shares were suspended from trading on Thursday morning before the announcement and resumed trade around 11.30am. By 11.35am, DBS shares were down 0.8 per cent at $5.17, underperforming a decline of 0.3 per cent in the benchmark Straits Times Index .
Mr Stanley, 48, was hired last year from Citigroup with an aim to expand the bank's reach beyond its two core markets, Singapore and Hong Kong.
The bank said Mr Stanley has been diagnosed with 'acute myelogenous leukemia' and has started undergoing medical treatment in Singapore.
A surgeon at a Singapore hospital, who declined to be named because he is not authorised to speak to the media, told Reuters that acute myelogenous leukemia is a fast-spreading cancer of the blood that requires immediate chemotherapy and a bone marrow transplant at a later date.
Analysts said the bank's strategy would not change during Stanley's absence because DBS was in defensive posture amid a global economic downturn.
'If he is out of action, then the critical decisions will be delayed until his situation stabilises or DBS finds an alternative,' said David Lum, an analyst at Daiwa Institute of Research.
The bank said Mr Stanley sought treatment for what appeared to be ordinary flu-like symptoms on Monday after experiencing a cough and high fever during the Lunar New Year weekend.
He was hospitalised the following day and his medical condition was confirmed this morning, the bank said, adding that Mr Stanley's illness is treatable.
DBS reports its fourth-quarter results on Feb 13. -- THOMSON REUTERS
SINGAPORE'S DBS Group , Southeast Asia's biggest bank, said on Thursday that Chief Executive Richard Stanley, who was hired in May last year, is suffering from leukemia. Koh Boon Hwee, the bank's chairman, will take charge of the bank during Stanley's three to six months' absence for medical treatment, the bank said in a statement.
DBS shares were suspended from trading on Thursday morning before the announcement and resumed trade around 11.30am. By 11.35am, DBS shares were down 0.8 per cent at $5.17, underperforming a decline of 0.3 per cent in the benchmark Straits Times Index .
Mr Stanley, 48, was hired last year from Citigroup with an aim to expand the bank's reach beyond its two core markets, Singapore and Hong Kong.
The bank said Mr Stanley has been diagnosed with 'acute myelogenous leukemia' and has started undergoing medical treatment in Singapore.
A surgeon at a Singapore hospital, who declined to be named because he is not authorised to speak to the media, told Reuters that acute myelogenous leukemia is a fast-spreading cancer of the blood that requires immediate chemotherapy and a bone marrow transplant at a later date.
Analysts said the bank's strategy would not change during Stanley's absence because DBS was in defensive posture amid a global economic downturn.
'If he is out of action, then the critical decisions will be delayed until his situation stabilises or DBS finds an alternative,' said David Lum, an analyst at Daiwa Institute of Research.
The bank said Mr Stanley sought treatment for what appeared to be ordinary flu-like symptoms on Monday after experiencing a cough and high fever during the Lunar New Year weekend.
He was hospitalised the following day and his medical condition was confirmed this morning, the bank said, adding that Mr Stanley's illness is treatable.
DBS reports its fourth-quarter results on Feb 13. -- THOMSON REUTERS
A voice from the generation of the 40s/50s
Dear Kin Lian,
I am inspired by your exemplary mission to help redress injustice and rectify wrong public policies that are detrimental to nation building and also oppressive to the poor and average Singaporeans.
I appeal to you to raise awareness of the pride of aged Singaporeans who have toiled thick and thin with the PAP to build Singapore over the last 50 years. Now these senior citizens are left with little welfare from the state which they had sacrificed so much to help build Singapore to a first world economy. Instead they were told to work as long as they can, not because they like to, but because they have to bring in extra income to support a decent "golden" lifestyle. They are so afraid to fall sick because hospitalization and wipe out their hard earned savings and put extra burden on their struggling children.
I am living in Australia and I am a retiree at 62. I observe how seniors are being looked after by the government here. They enjoyed adequate basic welfare and excellent aged care support, especially for those who are disabled and sick.
Citizens who served in the Australian military received special treatment when they retired. They enjoyed pension, medical care and recreational facilities.
The argument that we are not a welfare state is an excuse. This is NOT about lavish welfare spending to make people laid back. This is about a nation and a society that values GRATITUDE, paying back to the senior citizens and NS personnel who have sacrificed so much to help build the nation so that Ministers can afford to be paid million dollar salaries.
What do NS personnel receive when they grow old after giving their best 20-25 years after enlistment? Struggling to raise a humble family, they have to worry when they grow old and if they are unfortunate to be struck down by illness. Where is the motivation for National Service when the State does not look after them when they become old, sick and frail?
I hope you can devote a little of your time to raise awareness of the political elite to come to term with the type of society we really want to nurture. Where would our younger generation learn the value of GRATITUDE when the government's role model is just meritocracy, survival for the fittest and the ruthless pursuit of economic success. Can we not be 1st in everything and be first in a gracious and caring society?
TS (Teck Suan) Low
NSW
Australia
I am inspired by your exemplary mission to help redress injustice and rectify wrong public policies that are detrimental to nation building and also oppressive to the poor and average Singaporeans.
I appeal to you to raise awareness of the pride of aged Singaporeans who have toiled thick and thin with the PAP to build Singapore over the last 50 years. Now these senior citizens are left with little welfare from the state which they had sacrificed so much to help build Singapore to a first world economy. Instead they were told to work as long as they can, not because they like to, but because they have to bring in extra income to support a decent "golden" lifestyle. They are so afraid to fall sick because hospitalization and wipe out their hard earned savings and put extra burden on their struggling children.
I am living in Australia and I am a retiree at 62. I observe how seniors are being looked after by the government here. They enjoyed adequate basic welfare and excellent aged care support, especially for those who are disabled and sick.
Citizens who served in the Australian military received special treatment when they retired. They enjoyed pension, medical care and recreational facilities.
The argument that we are not a welfare state is an excuse. This is NOT about lavish welfare spending to make people laid back. This is about a nation and a society that values GRATITUDE, paying back to the senior citizens and NS personnel who have sacrificed so much to help build the nation so that Ministers can afford to be paid million dollar salaries.
What do NS personnel receive when they grow old after giving their best 20-25 years after enlistment? Struggling to raise a humble family, they have to worry when they grow old and if they are unfortunate to be struck down by illness. Where is the motivation for National Service when the State does not look after them when they become old, sick and frail?
I hope you can devote a little of your time to raise awareness of the political elite to come to term with the type of society we really want to nurture. Where would our younger generation learn the value of GRATITUDE when the government's role model is just meritocracy, survival for the fittest and the ruthless pursuit of economic success. Can we not be 1st in everything and be first in a gracious and caring society?
TS (Teck Suan) Low
NSW
Australia
Spanish bank offers full compensation to its clients
Perhaps our financial institutions should consider this Spanish Bank's gesture to their valued clients?
"Wednesday, 28 January 2009 12:03
Spain's largest bank, Santander, is to offer full compensation worth more than US$1.8 billion (€1.4 billion) to clients who lost money in an investment fraud allegedly run by the US financier Bernard Madoff. The compensation scheme covers only private individual clients.
'The group has taken this decision given the exceptional circumstances surrounding this case and based exclusively on commercial reasons, given the interest it has in maintaining its business relationship with these clients,' the bank said in a statement.' "
A BBC financial commentator said he was not surprised since the bank's reputation and relationship with client should be worth more than the US$1.8 billion. He expected other banks to follow suit or they will lose their valued clients to Santander.
"Wednesday, 28 January 2009 12:03
Spain's largest bank, Santander, is to offer full compensation worth more than US$1.8 billion (€1.4 billion) to clients who lost money in an investment fraud allegedly run by the US financier Bernard Madoff. The compensation scheme covers only private individual clients.
'The group has taken this decision given the exceptional circumstances surrounding this case and based exclusively on commercial reasons, given the interest it has in maintaining its business relationship with these clients,' the bank said in a statement.' "
A BBC financial commentator said he was not surprised since the bank's reputation and relationship with client should be worth more than the US$1.8 billion. He expected other banks to follow suit or they will lose their valued clients to Santander.
Wednesday, January 28, 2009
Intelligence Quiz
Download
The famous scientist, Albert Einstein, was reported to have created a puzzle involving 5 houses in different colours, occupied by five different nationalities, drinking different beverages, keeping different pets and smoking different brands of tobacco.
Easy (4 houses, 9 clues)
Moderate (5 houses, 15 clues)
Difficult (6 houses, 20 clues)
The answers are shown in the last page. You can learn the technique to solve the quiz in my book. It is also available here: http://www.tankinlian.com/quiz/index.html
If you wish to order 5 copies of more of the book at a special price of $5 per book, you can send your order to kinlian@gmail.com. Postage is free for delivery within
I am able to print a customised version of the puzzles for corporations wishing to provide this book of puzzles to their clients. It can feature the products of the corporation.
Tan Kin Lian
Unjustified Jump in Food Prices during Chinese New Year Season
Dear Mr Tan,
I hope you can post the below link on your blog.
I tried surfing CASE website but then it seems quite troublesome for an individual to lodge a complaint.
I perhaps need some guidance or education on the process.
Loh Hon Chun
I hope you can post the below link on your blog.
I tried surfing CASE website but then it seems quite troublesome for an individual to lodge a complaint.
I perhaps need some guidance or education on the process.
Loh Hon Chun
Sunday, January 25, 2009
2009 - the year of the Bull
In 1985, when Singapore was in a recession, I presented a bull sculpture to Mr. Lee Hsien Loong, who was then the Minister of State for Trade & Industry. I said "I hope that the bull will revive the stockmarket and the economy. " It did!
2009 is the year of the Bull. I hope that someone will send another bull sculpture to the Prime Minister.
Saturday, January 24, 2009
SCMP:Sun Hung Kai Financial may lose 'caring' award over minibond saga
24 Jan 2009
Ambrose Leung
Sun Hung Kai Financial may be the first of several financial institutions to lose an award that honours their corporate social responsibility as a result of their involvement in the minibonds saga.
The Council of Social Service, which confers the annual Caring Company awards, is reviewing its decision to give the award to Sun Hung Kai, after its subsidiary Sun Hung Kai Investment Services was reprimanded by the Securities and Futures Commission for the way it sold the high-risk derivatives to customers.
Sun Hung Kai and more than a dozen banks accused of misleading vulnerable investors are understood to be among the winners who will be unveiled and honoured next month.
Cliff Choi Kim-wah, business director of the council, said the vetting committee would meet soon.
“Those being awarded know well that we reserve the right to strip them of their titles,” he said. A spokesman for Sun Hung Kai Financial declined to comment.
Christine Fang Meng-sang, chief executive of the council, said it was prepared to withdraw the honours if the banks were officially censured by relevant authorities, or if they were found to have committed criminal offences.
“We have received e-mails from some minibonds victims who were unhappy with the banks getting the award,” she said.
Any wrongdoing by the banks, however, could not wipe out the charitable work that they had done, she noted.
“ We can’t strike them off the award list just because people are protesting outside their branches. But we are prepared to review their awards if any of them is found by the authorities to have done wrong,” Ms Fang said.
The council will give out more than 1,700 awards this year to businesses and public organisations for demonstrating good corporate citizenship and their contributions in community work.
Among the 60-plus banks that were honoured last year, more than a dozen – including the Bank of China, DBS Bank and the Bank of East Asia – now face thousands of angry investors who are seeking compensation for their losses after the collapse of Lehman Brothers, which had issued or guaranteed the minibonds they bought.
Investors, some of them elderly, claimed the banks had lied about the investment risks when persuading them to buy the highly complex products. Many of them have filed complaints with the Monetary Authority, made police reports or resorted to the courts to seek redress.
Since the scheme was launched seven years ago, only one company has had its award withdrawn. No company with a criminal record or which has been officially censured by astatutory body in the previous three years can receive an award.
Lawmakers who are helping the minibond investors seek redress were outraged. Democrat Kam Naiwai said the council should rethink its awards plan.
“ How can these banks be so shameless and still have the guts to brandish the ‘caring company’ tag after conning old people into buying their poisoned minibonds?”
Audrey Eu Yuet-mee, leader of the Civic Party, said: “It is so ironic that the basics of a caring company, which is to care for the customers, are not reflected in the awards, while it recognises contributions to the environment and donations to charities.”
The Bank of China, Bank of East Asia and DBS all said their awards this year had nothing to do with the minibonds saga.
Ambrose Leung
Sun Hung Kai Financial may be the first of several financial institutions to lose an award that honours their corporate social responsibility as a result of their involvement in the minibonds saga.
The Council of Social Service, which confers the annual Caring Company awards, is reviewing its decision to give the award to Sun Hung Kai, after its subsidiary Sun Hung Kai Investment Services was reprimanded by the Securities and Futures Commission for the way it sold the high-risk derivatives to customers.
Sun Hung Kai and more than a dozen banks accused of misleading vulnerable investors are understood to be among the winners who will be unveiled and honoured next month.
Cliff Choi Kim-wah, business director of the council, said the vetting committee would meet soon.
“Those being awarded know well that we reserve the right to strip them of their titles,” he said. A spokesman for Sun Hung Kai Financial declined to comment.
Christine Fang Meng-sang, chief executive of the council, said it was prepared to withdraw the honours if the banks were officially censured by relevant authorities, or if they were found to have committed criminal offences.
“We have received e-mails from some minibonds victims who were unhappy with the banks getting the award,” she said.
Any wrongdoing by the banks, however, could not wipe out the charitable work that they had done, she noted.
“ We can’t strike them off the award list just because people are protesting outside their branches. But we are prepared to review their awards if any of them is found by the authorities to have done wrong,” Ms Fang said.
The council will give out more than 1,700 awards this year to businesses and public organisations for demonstrating good corporate citizenship and their contributions in community work.
Among the 60-plus banks that were honoured last year, more than a dozen – including the Bank of China, DBS Bank and the Bank of East Asia – now face thousands of angry investors who are seeking compensation for their losses after the collapse of Lehman Brothers, which had issued or guaranteed the minibonds they bought.
Investors, some of them elderly, claimed the banks had lied about the investment risks when persuading them to buy the highly complex products. Many of them have filed complaints with the Monetary Authority, made police reports or resorted to the courts to seek redress.
Since the scheme was launched seven years ago, only one company has had its award withdrawn. No company with a criminal record or which has been officially censured by astatutory body in the previous three years can receive an award.
Lawmakers who are helping the minibond investors seek redress were outraged. Democrat Kam Naiwai said the council should rethink its awards plan.
“ How can these banks be so shameless and still have the guts to brandish the ‘caring company’ tag after conning old people into buying their poisoned minibonds?”
Audrey Eu Yuet-mee, leader of the Civic Party, said: “It is so ironic that the basics of a caring company, which is to care for the customers, are not reflected in the awards, while it recognises contributions to the environment and donations to charities.”
The Bank of China, Bank of East Asia and DBS all said their awards this year had nothing to do with the minibonds saga.
SCMP:Boost investor security without stifling market
24 Jan 2009
It may be premature for most people who face losses on investments in Lehman Brothers minibonds to celebrate a victory for the small handful who have got all their money back. But any breakthrough in the saga over alleged mis-selling of the products as low-risk is welcome news for them. Aggrieved investors could not ask for more than full compensation. The HK$85 million voluntary settlement agreed by Sun Hung Kai
Investment Services for some 300 investors puts pressure on the 21 banks and two other brokerages involved in the sale of the minibonds in Hong Kong. The outcome in this case appears to vindicate the Securities and Futures Commission’s top-down approach of investigating the way institutions sold the minibonds, rather than a protracted case-by-case examination of complaints. Any adverse conclusions about an institution’s conduct can then cover all its affected clients.
Sources said the investment company apparently came forward with the settlement offer, although it has denied any liability or wrongdoing. The company obviously believes it is better to put the matter behind it quickly by settling with its clients than face the prospect of drawn out legal proceedings and the possible loss of its trading licence. In any case, its decision is commendable, as it saves its clients from further anguish and, above all, financial losses. But the real significance of the settlement is to be found in the reasons for a reprimand issued by the SFC over concerns about the way the broker sold the minibonds.
Despite their name, they were not corporate bonds but complex credit-linked instruments. The SFC was concerned about the adequacy of the company’s due diligence, training of sales staff, risk assessment, and record-keeping in relation to the minibonds. The company agreed the concerns were serious.
One question now is whether such shortcomings were prevalent at other institutions that sold the minibonds, mostly banks. It seems unlikely that the SFC’s investigations will find that this is an isolated case.
Another question is whether institutions whose clients make up a higher proportion of the 47,000 investors in HK$15.7 billion of minibonds will be as willing to settle their losses in full.
The SFC does not have the power to impose a settlement. But by publishing the results of its investigations, it does have the power to exercise some moral persuasion. If other institutions find that the concerns in this case have some application to them, they may conclude that the example of Sun Hung Kai is a better way to conclude the affair than dragging it out. It is significant that in announcing the settlement, the SFC dodged the issue of whether claims of mis-selling of the minibonds as low-risk investment products have been substantiated, and Sun Hung Kai admitted no liability or wrongdoing. The terms of the settlement sets a rather appealing precedent for other institutions that are eager to put the matter behind them quickly. Every situation is different, however, so the terms of any settlement could depend on the extent and seriousness of any misconduct. Whatever the terms for each case may be, it is important, and only fair, that even where banks reach settlements with their clients, the SFC will still insist on disclosure of any concerns arising from its investigations.
The financial secretary has called for a review of regulations after receiving reports on the minibond affair from the SFC and the Hong Kong Monetary Authority, which regulates banks. For the sake of confidence in our financial system, the government must move swiftly to enhance investor protection without stifling a free market.
It may be premature for most people who face losses on investments in Lehman Brothers minibonds to celebrate a victory for the small handful who have got all their money back. But any breakthrough in the saga over alleged mis-selling of the products as low-risk is welcome news for them. Aggrieved investors could not ask for more than full compensation. The HK$85 million voluntary settlement agreed by Sun Hung Kai
Investment Services for some 300 investors puts pressure on the 21 banks and two other brokerages involved in the sale of the minibonds in Hong Kong. The outcome in this case appears to vindicate the Securities and Futures Commission’s top-down approach of investigating the way institutions sold the minibonds, rather than a protracted case-by-case examination of complaints. Any adverse conclusions about an institution’s conduct can then cover all its affected clients.
Sources said the investment company apparently came forward with the settlement offer, although it has denied any liability or wrongdoing. The company obviously believes it is better to put the matter behind it quickly by settling with its clients than face the prospect of drawn out legal proceedings and the possible loss of its trading licence. In any case, its decision is commendable, as it saves its clients from further anguish and, above all, financial losses. But the real significance of the settlement is to be found in the reasons for a reprimand issued by the SFC over concerns about the way the broker sold the minibonds.
Despite their name, they were not corporate bonds but complex credit-linked instruments. The SFC was concerned about the adequacy of the company’s due diligence, training of sales staff, risk assessment, and record-keeping in relation to the minibonds. The company agreed the concerns were serious.
One question now is whether such shortcomings were prevalent at other institutions that sold the minibonds, mostly banks. It seems unlikely that the SFC’s investigations will find that this is an isolated case.
Another question is whether institutions whose clients make up a higher proportion of the 47,000 investors in HK$15.7 billion of minibonds will be as willing to settle their losses in full.
The SFC does not have the power to impose a settlement. But by publishing the results of its investigations, it does have the power to exercise some moral persuasion. If other institutions find that the concerns in this case have some application to them, they may conclude that the example of Sun Hung Kai is a better way to conclude the affair than dragging it out. It is significant that in announcing the settlement, the SFC dodged the issue of whether claims of mis-selling of the minibonds as low-risk investment products have been substantiated, and Sun Hung Kai admitted no liability or wrongdoing. The terms of the settlement sets a rather appealing precedent for other institutions that are eager to put the matter behind them quickly. Every situation is different, however, so the terms of any settlement could depend on the extent and seriousness of any misconduct. Whatever the terms for each case may be, it is important, and only fair, that even where banks reach settlements with their clients, the SFC will still insist on disclosure of any concerns arising from its investigations.
The financial secretary has called for a review of regulations after receiving reports on the minibond affair from the SFC and the Hong Kong Monetary Authority, which regulates banks. For the sake of confidence in our financial system, the government must move swiftly to enhance investor protection without stifling a free market.
SCMP:Minibond deal raises pressure for more refunds
24 Jan 2009
Joyce Man Additional reporting by Maria Chan, Enoch Yiu and Albert Wong. Source.
More institutions and banks were likely to consider compensating minibond investors after Sun Hung Kai Financial announced it would offer full refunds, a knowledgeable source said yesterday. But the source said they would each propose a deal on their own terms.
“ I think they will see what has happened with Sun Hung Kai and realise it’s a quick, better way to put this behind them,” said the source, who did not want to be named.
Sun Hung Kai Financial, parent company of Sun Hung Kai Investment Services – which sold minibonds linked to Lehman Brothers, the US investment bank that collapsed in September – announced on Thursday it would buy back minibonds from 310 customers for about HK$85 million.
At the same time, the Securities and Futures Commission raised concerns about Sun Hung Kai Investment Services’ due diligence, salesstaff training, risk assessment and record-keeping on minibonds. Minibonds are not corporate bonds but consist of high-risk credit-linked derivatives, marketed as a proxy investment in well-known firms.
Asked whether other banks might respond with compensation of 70, 80 or 90 per cent of original investments, the source said that would “depend on how serious [the commission’s] concerns are about the conduct”.
But the commission had no authority to force this on them, the source said. A spokeswoman for the Monetary Authority, which regulates banks, also said it could not do so.
The source said the deal on Thursday proved the efficacy of a top-down approach, under which the commission investigated whole institutions, not individual complaints.
Secretary for Financial Services and the Treasury Chan Ka-keung said Sung Hung Kai Financial’s repurchase offer proved the commission’s investigation was effective in protecting investors’ interests. He would not say if he thought other banks would be pressured into following suit, only that he believed the commission and the Monetary Authority would be fair in their investigations.
A banker who asked not to be named said the settlement would put pressure on banks as investors would have high expectations. However, the banker said the top-down approach the SFC used had its drawback as banks would have to compensate all customers if the SFC found they had systematic problems in selling investment products.
“It’s unfair if we have to pay for all customers unless the systematic problem is very big,” the banker said, adding that it was hard to judge how big the problem would need to be to warrant compensating all customers.
Another banker expected there would be more pressure for banks to reach a similar agreement with the SFC. But he believed few would strike deals.
“It is not because the amounts of minibonds sold by banks are bigger; the major reason is that it’s unreasonable. We only compensate customers if we are wrong.”
Investors poured HK$15.7 billion into Lehman Brothers derivatives.
However, Kenny Lee Yiu-sun, chairman of the Hong Kong Stockbrokers Association, said the buyback offer had set a very good example. “Banks should also refund investors in full if they are found to have made similar mistakes.”
Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, said the number of clients who bought minibonds from Sun Hung Kai Investment Services and the sum they invested were relatively small, so the repurchase deal was not totally suitable for larger banks.
Democratic Party lawmaker Kam Nai-wai said the refund would set a good precedent. “ I can’t see how other banks and institutions … with similar structural deficiencies will be able to evade responsibility.”
Those eligible for the repurchase deal will receive details in the post in the first week of February.
KPMG, provisional liquidators of eight Lehman Brothers firms in Hong Kong, will begin meeting creditors on February 11.
Financials fall after buy-back offer.
Joyce Man Additional reporting by Maria Chan, Enoch Yiu and Albert Wong. Source.
More institutions and banks were likely to consider compensating minibond investors after Sun Hung Kai Financial announced it would offer full refunds, a knowledgeable source said yesterday. But the source said they would each propose a deal on their own terms.
“ I think they will see what has happened with Sun Hung Kai and realise it’s a quick, better way to put this behind them,” said the source, who did not want to be named.
Sun Hung Kai Financial, parent company of Sun Hung Kai Investment Services – which sold minibonds linked to Lehman Brothers, the US investment bank that collapsed in September – announced on Thursday it would buy back minibonds from 310 customers for about HK$85 million.
At the same time, the Securities and Futures Commission raised concerns about Sun Hung Kai Investment Services’ due diligence, salesstaff training, risk assessment and record-keeping on minibonds. Minibonds are not corporate bonds but consist of high-risk credit-linked derivatives, marketed as a proxy investment in well-known firms.
Asked whether other banks might respond with compensation of 70, 80 or 90 per cent of original investments, the source said that would “depend on how serious [the commission’s] concerns are about the conduct”.
But the commission had no authority to force this on them, the source said. A spokeswoman for the Monetary Authority, which regulates banks, also said it could not do so.
The source said the deal on Thursday proved the efficacy of a top-down approach, under which the commission investigated whole institutions, not individual complaints.
Secretary for Financial Services and the Treasury Chan Ka-keung said Sung Hung Kai Financial’s repurchase offer proved the commission’s investigation was effective in protecting investors’ interests. He would not say if he thought other banks would be pressured into following suit, only that he believed the commission and the Monetary Authority would be fair in their investigations.
A banker who asked not to be named said the settlement would put pressure on banks as investors would have high expectations. However, the banker said the top-down approach the SFC used had its drawback as banks would have to compensate all customers if the SFC found they had systematic problems in selling investment products.
“It’s unfair if we have to pay for all customers unless the systematic problem is very big,” the banker said, adding that it was hard to judge how big the problem would need to be to warrant compensating all customers.
Another banker expected there would be more pressure for banks to reach a similar agreement with the SFC. But he believed few would strike deals.
“It is not because the amounts of minibonds sold by banks are bigger; the major reason is that it’s unreasonable. We only compensate customers if we are wrong.”
Investors poured HK$15.7 billion into Lehman Brothers derivatives.
However, Kenny Lee Yiu-sun, chairman of the Hong Kong Stockbrokers Association, said the buyback offer had set a very good example. “Banks should also refund investors in full if they are found to have made similar mistakes.”
Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, said the number of clients who bought minibonds from Sun Hung Kai Investment Services and the sum they invested were relatively small, so the repurchase deal was not totally suitable for larger banks.
Democratic Party lawmaker Kam Nai-wai said the refund would set a good precedent. “ I can’t see how other banks and institutions … with similar structural deficiencies will be able to evade responsibility.”
Those eligible for the repurchase deal will receive details in the post in the first week of February.
KPMG, provisional liquidators of eight Lehman Brothers firms in Hong Kong, will begin meeting creditors on February 11.
Financials fall after buy-back offer.
HK brokerage agrees to refund minibond buyers
By Tom Mitchell in Hong Kong
Published: January 23 2009 04:22 | Last updated: January 23 2009 04:22
A Hong Kong brokerage has agreed to refund retail investors in full for their losses on so-called “Lehman Brothers Minibonds”, in a settlement that will set a worrying precedent for other financial institutions in the territory that have sold about $2bn worth of the controversial investment products.
In a deal reached with Hong Kong’s market regulator, the Securities and Futures Commission, Sun Hung Kai Investment Services agreed to refund $11m to more than 300 buyers of the minibonds, which are in fact complex derivative instruments linked to the now defunct US investment bank.
The agreement goes beyond calls by the Hong Kong government last year for banks to repurchase the instruments at their “market value”. Instead, Sun Hung Kai will repay investors their entire principal. Twenty-four banks and brokerages, led by Bank of China’s Hong Kong branch, sold Lehman Brothers minibonds with an estimated face value of $2bn to more than 40,000 investors.
“We are very pleased with the outcome that has been achieved and we believe the approach adopted has produced a result which is in the best interests of the investors,” Martin Wheatley, SFC chief executive, said in a statement.
The controversy surrounding the mini-bonds has sparked a political firestorm in Hong Kong, with burned investors descending regularly on bank offices, SFC headquarters and the territory’s legislature. Many have lost their life savings and claim that the risky minibonds were mis-sold by bank and brokerage staff.
While Sun Hung Kai did not admit to any wrongdoing in its settlement with the SFC, the brokerage acknowledged concerns raised by the regulator including inadequate due diligence, training of sales staff and record keeping.
“We achieved an outcome which we believe represents the best possible solution for our minibond customers,” Lee Seng-huang, Sun Hung Kai executive chairman, said. “We understand it has not been an easy time for all concerned, but we believe that this voluntary initiative will bring closure to our affected customers, particularly in light of this challenging economic environment.”
The Hong Kong Monetary Authority, the territory’s bank regulator, has received about 20,000 complaints related to the sale of minibonds. As of January 15 the authority had formally opened more than 4,500 investigations and referred 251 cases to the SFC for possible enforcement action.
Hong Kong’s politicians have also leapt into the fray, working with the protesters and forming a special legislative subcommittee to look into the controversy.
Published: January 23 2009 04:22 | Last updated: January 23 2009 04:22
A Hong Kong brokerage has agreed to refund retail investors in full for their losses on so-called “Lehman Brothers Minibonds”, in a settlement that will set a worrying precedent for other financial institutions in the territory that have sold about $2bn worth of the controversial investment products.
In a deal reached with Hong Kong’s market regulator, the Securities and Futures Commission, Sun Hung Kai Investment Services agreed to refund $11m to more than 300 buyers of the minibonds, which are in fact complex derivative instruments linked to the now defunct US investment bank.
The agreement goes beyond calls by the Hong Kong government last year for banks to repurchase the instruments at their “market value”. Instead, Sun Hung Kai will repay investors their entire principal. Twenty-four banks and brokerages, led by Bank of China’s Hong Kong branch, sold Lehman Brothers minibonds with an estimated face value of $2bn to more than 40,000 investors.
“We are very pleased with the outcome that has been achieved and we believe the approach adopted has produced a result which is in the best interests of the investors,” Martin Wheatley, SFC chief executive, said in a statement.
The controversy surrounding the mini-bonds has sparked a political firestorm in Hong Kong, with burned investors descending regularly on bank offices, SFC headquarters and the territory’s legislature. Many have lost their life savings and claim that the risky minibonds were mis-sold by bank and brokerage staff.
While Sun Hung Kai did not admit to any wrongdoing in its settlement with the SFC, the brokerage acknowledged concerns raised by the regulator including inadequate due diligence, training of sales staff and record keeping.
“We achieved an outcome which we believe represents the best possible solution for our minibond customers,” Lee Seng-huang, Sun Hung Kai executive chairman, said. “We understand it has not been an easy time for all concerned, but we believe that this voluntary initiative will bring closure to our affected customers, particularly in light of this challenging economic environment.”
The Hong Kong Monetary Authority, the territory’s bank regulator, has received about 20,000 complaints related to the sale of minibonds. As of January 15 the authority had formally opened more than 4,500 investigations and referred 251 cases to the SFC for possible enforcement action.
Hong Kong’s politicians have also leapt into the fray, working with the protesters and forming a special legislative subcommittee to look into the controversy.
Friday, January 23, 2009
Comparing US Departments with Singapore Ministries
Here is a comparison of the US departments with the Singapore ministries.
The US has a Department of Justice which is similar to our Ministry of Law. Perhaps, there is a difference in emphasis?
Obama Whistle Stop Tour
Watch this short video.
It is truly inspirational ... what a Government should be.
Thursday, January 22, 2009
Make a donation from your 100% compensation
In America, some lawyers are willing to take a case on a contingency fee. If they win the case, they receive 10% to 30% of the amount recovered. If they lose the case, the client only pay the expenses.
Some noteholders are interested to engage lawyers on a contingency fee to recover their money. But contingency fee is not allowed in Singapore.
Think again. Many volunteers have spent several hundred hours of time and their expertise to help the noteholders to recover their money, without any promise of payment. As a result of their work, 1,280 of the noteholders will be getting back 100% compensation.
I like to ask these noteholders to consider giving a donation, if you have directly benefit from the work of any specific volunteer. This is just a small donation (far smaller than the contingency fee expected by the lawyer). It is for the volunteer to decide if they wish to accept it. Some of the volunteers are able to spend the time because they are not working. They do need an income.
If you wish to make a general donation of say 5%, I will put the money in the legal fund to engage a senior counsel or queens counsel to give a legal opinion to help the other noteholders. If there is any balance in the legal fund, I will contribute it to the financial services consumer association (FISCA) that will be establised to provide financial education to the public.
If you wish to make a contribution to the legal fund or any volunteer, you can contact me at kinlian@gmail.com. I will appoint someone to manage the accounts. Be generous. Remember - you could be one of the noteholders who has been rejected or have been offered inadequate compensation.
Honesty and fair play
My friend told me this story. A businessmen and a Government official were very happy. They have found a way to make a few million dollars for the businessman to import of rice into the country through a licence given by the official and to share the illegal profit in an overseas bank account.
My friend said that the illegal profit will have to be borne by the poor people who have to pay a higher price for the rice. He is sad that people can be so happy to make profit from the suffering of the poor people.
My friend said that the illegal profit will have to be borne by the poor people who have to pay a higher price for the rice. He is sad that people can be so happy to make profit from the suffering of the poor people.
This does not refer to Singapore.
Obama: the price and promise of citizenship
For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies. It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours. It is the firefighter's courage to storm a stairway filled with smoke, but also a parent's willingness to nurture a child, that finally decides our fate.
Our challenges may be new. The instruments with which we meet them may be new. But those values upon which our success depends - hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism - these things are old. These things are true. They have been the quiet force of progress throughout our history. What is demanded then is a return to these truths. What is required of us now is a new era of responsibility - a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.
This is the price and the promise of citizenship.
Our challenges may be new. The instruments with which we meet them may be new. But those values upon which our success depends - hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism - these things are old. These things are true. They have been the quiet force of progress throughout our history. What is demanded then is a return to these truths. What is required of us now is a new era of responsibility - a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.
This is the price and the promise of citizenship.
Wednesday, January 21, 2009
Focus on the complaint case
Dear Mr. Tan,
There is something that disturbs me tremendously. I read your blog post that talked about some of the factors that affect the final decision of the FIs on the investors complaints. I empathize with many of the investors whom I believe have been most sadly given inadequate and inaccurate information and advice by the relevant FIs and their staff, which led to them buying the structured products, in particular Minibond and Pinnacle Notes and suffering loss and distress in the process.
I have received news that there are endless delays and repeated changes in the timeline given to clients who have lodged complaints with the FIs. All too often, investors have received a letter in the mail, hoping that it communicates the FIs compensation decision, only to be notified that the FI is still reviewing their case and will reply soon. 'Soon' can mean a couple of months.
In the questionnaires that the FIs are asking investors during the complaint interview, many investors have been quizzed on their education level, past investment experience, source of funds and the amount of savings they have. Many of such questions have no actual connection to their complaint on mis-selling and make no sense at all.
In the questionnaires that the FIs are asking investors during the complaint interview, many investors have been quizzed on their education level, past investment experience, source of funds and the amount of savings they have. Many of such questions have no actual connection to their complaint on mis-selling and make no sense at all.
I have also heard news that some FIs are investigating into the wealth and property held by the investors, which once again is totally senseless and only serves to terribly delay the reviewing process.
I hope that the FIs can focus on the facts of the investors' complaint case and offer a swift and fair reply to investors, cutting short their torment over their failed investment products, rather than dig into the investors private information on their finances and assets.
Anonymous
I hope that the FIs can focus on the facts of the investors' complaint case and offer a swift and fair reply to investors, cutting short their torment over their failed investment products, rather than dig into the investors private information on their finances and assets.
Anonymous
SCMP:Watchdog to select minibonds case soon
Article
21 Jan 2009
Joyce Man
The Consumer Council will soon choose a representative complainant to support in legal action over banks’ sale of financial derivatives issued or guaranteed by Lehman Brothers.
The products lost much or all of their value with the US bank’s collapse in September.
Democratic Party legislator Kam Nai-wai held talks with council chief executive Connie Lau Yin-hing yesterday on when the watchdog would select a case, and its progress on dealing with the 7,000 complaints the party had referred to it about the sale of Lehman Brothers derivatives.
Some 43,700 Hong Kong investors bought Lehman Brothers derivatives, mostly minibonds, worth HK$15.7 billion. Despite their name, minibonds are not corporate bonds but complex, credit-linked derivatives.
Investors claim the products were mis-sold as low-risk.
The council has been sorting through complaints to single out cases suitable for help from its legal action fund, and has identified 45.
Mr Kam urged the council to consider not only cases that involved elderly or novice investors, but also less winnable cases. Banks were more willing to settle out of court with elderly and less experienced complainants, who had a higher chance of winning in court, he said. The council should choose some younger and well-educated complainants to send to court.
The Democratic Party said Ms Lau told it that taking a representative case to court would not have any impact on a class-action lawsuit investors may bring in a US court.
21 Jan 2009
Joyce Man
The Consumer Council will soon choose a representative complainant to support in legal action over banks’ sale of financial derivatives issued or guaranteed by Lehman Brothers.
The products lost much or all of their value with the US bank’s collapse in September.
Democratic Party legislator Kam Nai-wai held talks with council chief executive Connie Lau Yin-hing yesterday on when the watchdog would select a case, and its progress on dealing with the 7,000 complaints the party had referred to it about the sale of Lehman Brothers derivatives.
Some 43,700 Hong Kong investors bought Lehman Brothers derivatives, mostly minibonds, worth HK$15.7 billion. Despite their name, minibonds are not corporate bonds but complex, credit-linked derivatives.
Investors claim the products were mis-sold as low-risk.
The council has been sorting through complaints to single out cases suitable for help from its legal action fund, and has identified 45.
Mr Kam urged the council to consider not only cases that involved elderly or novice investors, but also less winnable cases. Banks were more willing to settle out of court with elderly and less experienced complainants, who had a higher chance of winning in court, he said. The council should choose some younger and well-educated complainants to send to court.
The Democratic Party said Ms Lau told it that taking a representative case to court would not have any impact on a class-action lawsuit investors may bring in a US court.
What will Obama do?
Barack’s plans and approach: http://www.barackobama.com/index.php
Transition team’s website: http://www.change.gov
Portal to the citizenry: http://www.whitehouse.gov
Tuesday, January 20, 2009
Great value in voluntary help
I was shocked to learn that a senior lawyer charges $2,000 an hour to look into the credit linked notes.
Adrian Tan, who help me in the credit linked notes, must have spent 100 or 200 hours in helping many noteholders. He earns nothing. Adrian was a lawyer and also a financial expert. The value of his advice and help must be worth more than the senior lawyer.
Adrian was able to spend so much time, as he is not working at this time. He spends his time managing his investments. But, if given the opportunity, he would be happy to be earn an income.
I hope that the noteholders who managed to receive 100% compensation should reflect on what Adrian Tan, and other volunteers, have done for them. I am not suggesting that they should pay the volunteers, but I want the noteholders to know that if they have used a lawyer for the same help, they would have to fork out $10,000 or more, just to get the same result.
Complaining to sellers of credit linked notes
Message from Adrian Tan
Mr Tan Kin Lian has urged that the many people who have yet to lodge a complaint to do so.
If you are one of them, you should because the results of the MAS/FIs Complaints Resolution process are more favourable than many have expected. Read this.
Mr Tan Kin Lian has urged that the many people who have yet to lodge a complaint to do so.
If you are one of them, you should because the results of the MAS/FIs Complaints Resolution process are more favourable than many have expected. Read this.
In particular, minibond investors who have not complained, should do so because "For the Lehman Minibond Programme Notes which were sold by banks and one finance company, 34% will receive offers of full settlement and 41% will receive offers of partial settlement; for those sold by stockbroking firms, 1% will receive offers of full settlement and 12% % will receive offers of partial settlement."
The following form, was drafted for the use of the layperson complainant. It is self-explanatory. Many investors have used the format.
(Note to users -- You can just type the questions down in an email message, and answer them according. You need not, print out a hard copy and answer on it. Just use the format in an email message.) After completion, you can send the form here.
As said earlier, the form is self-explanatory, and anyone who has a secondary school education in English should have no problem filling it in for himself, a relative or friend. But for anyone who doesn't want to fill it in person, and is willing to pay me S$120, I will prepare a draft based on the information provided. I can be contacted at atans1@hotmail.com.
No point asking me to do it for free. If you can send me an email in English, you can fill it in yourself at no monetary cost to yourself or to complainant.
A Tan
Talk to Singapore Government
Give your votes on 18 suggestions for the Singapore Government. You can add your own suggestions for other people to vote. President-elect Obama has a similar website that attracted many vistiors. The most popular suggestion collected over 40,000 votes of support.
Thought for the day - Power
"In order to get power and retain it, it is necessary to love power; but love of power is not connected with goodness but with qualities that are the opposite of goodness, such as pride, cunning and cruelty.": Leo Nikolaevich Tolstoi - (1828-1910) Russian writer
Contributed by Ho Cheow Seng
Monday, January 19, 2009
Factors affecting the quantum of compensation
An investor who helped an elderly relative to get 100% refund of a large investment in mini-bond wishes to share the following information:
Factors affecting the quantum of compensation:
1. Vulnerable
It seems like the definition of vulnerable is a combinition of following:
- age > 62 yrs old
- uneducated
- non-english speaking
2. Tranche of your minibond.
Factors affecting the quantum of compensation:
1. Vulnerable
It seems like the definition of vulnerable is a combinition of following:
- age > 62 yrs old
- uneducated
- non-english speaking
2. Tranche of your minibond.
Different minibond series are invested in different combination of assets. Some tranches invest more in corporate bonds such as those issed by GE Capital, hence their underlying value are worth more and likely to worth more if held longer, when conditions of the captial market improves. In return for compensation, you need to transfer your rights of the minibond to the FIs, hence FIs are more willing to compensate more for those series with higher underlying value, especially the ealier tranches of minibond, as they will be able to benefit in future, if any.
3. Written Evidence.
As minibond is considered to have high risk profile, if you have written evidence that your risk profile is on the contrary (most if not all FIs need to do some form of needs analysis for you and there is a section on risk profile), then the chances of mis-selling is very high. On this basis alone, you have a high chance of winning under Common Law (i.e. sue the FI in court).
4. Customer-centric
Some FIs with progressive leadership team are more customer-centric and more willing to compensate on the basis of good will.
IN SUMMARY
Whether you get compensation and how much depends mainly on the interplay of the above four factors (although some other factors may also be relevant).
Happy noteholders who received 100% compensation
I wish to pass this message to the 1,200 happy noteholders who received 100% compensation.
You have spent a few months of agony and worry. You were uncertain about whether your money would be gone forever.
You were deilighted to receive the recent letter or telephone call that you would be getting 100% compensation. Some of you wrote an e-mail to thank me for helping to achieve this happy outcome.
I wish to ask you to consider this possible situation. Suppose you had received a offer of partial compensation (which you consider to be insufficient) or a rejection. How would you have felt? There are 10,000 noteholders who are in this unhappy situation.
What can you do to help the other noteholders? I ask you to consider to express your support and solidarity for them.
Perhaps, if you are generous, you can consider donating 5% of the amount that you received towards a fund to help them to get legal opinion and assistance? This is just a thought. If there are sufficient people interested to make this donation, I will get someone to organise it.
Role of private capital
Private capital thrives well in a booming economy. They make easy money. They even contribute towards creating bubbles in asset prices. As the prices keep going up, they make more money.
When the bubble burst, private capital is unwilling to take risk. This caused the collapse of the credit market.
Read this article.
The Governments have to step in to provide funds to re-capitalise the banks, to guarantee bank deposits, to guarantee the credits of borrowers (i.e. homeowners, small businesses). In this case, what is the purpose of private capital?
This has happened in USA, UK, Singapore and many other countries.
What is the solution in the future? I believe that the capital has to be provided by the state (it is already happened) or by state-sponsored mutual funds. Ir should not be provided by private capital that are driven by short term gains.
Sue the relationship manager
A noteholder wanted to sue the relationship manager for giving bad advice. Other people said that there is no point to sue the relationship manager, as he will not be able to compensate the noteholder for the financial loss.
Someone told me that this is a good strategy. The relationship manager is likely to confess and tell the truth. In that case, the wrong-doings of the financial institutin will be brought to light. They might be more willing to give a fair settlement.
Google documents
I am now using Google documents to publish my survey findings. I wish to thank the reader that give me this wonderful tip.
Tips - what to avoid
1. Never invest with borrowed money
2. Never invest from a marketing company (e.g. time share, land banking, etc)
3. Never invest to get a free gift (it comes from your own money)
4, Nver invest in something that is too good to be true (it is!)
Read this article about Storm Financial.
Sunday, January 18, 2009
Current market values of the credit linked notes
I wish to ask visitors to share what you know to be the current market values of the various series of credit linked notes (i.e. minibonds, high notes, pinnacle notes, jubilee notes, etc).
Please post the current values here, with the dates. Also, indicate the source of the information, e.g. website.
The note-holders will be receiving the offer of compensation from the financial institution soon. They will need to compare the offer with the market values, to make sure that the offer is at least higher.
If I have sufficient information, I shall organise them in an easy to read format. Please share your information for the benefit of all.
My view: decision on 5,000 complaints
Here are my views about the decisions made by the banks on the complaints of mis-selling of the credit linked notes.
1. About 1,280 (25%) noteholders will receive full compensation. This is good news and is higher than I had expected. I like to know the amount of compensation to see if the full compensation is given mainly to the small investors or is well distributed among the small and large investors.
2. About 1,670 noteholders (33%) will be offered partial compensation. To help them decide on whether to accept the compensation, they should be informed the current value of their notes, so that they can make an informed decision.
3. Another 6,000 noteholders have not lodged their complaints yet. They should step forward to lodge their complaint now, if they have been mis-sold.
Contact persons (distributor, products)
Click here for the email address of the contact persons based on the distributor and type of credit linked notes:
Rating of political leaders
How do Singaporeans rate our political leaders?
Here are the survey results.
Survey: Looking for a job in 2009?
Are you likely to look for a job in 2009? In view of the recession, are you prepared to consider non-standard job options? Do you need help?
Take part in this survey.
Here are the survey results.
Book a taxi by SMS
Are you willing to pay $1 for a taxi to pick you from your home, office or outside?
Visit this website:
http://projects.easyapps.sg/tabs/about.aspx
http://projects.easyapps.sg/tabs/about.aspx
Here are the results:
Current prices of Credit Linked Notes
Click here to check the latest prices of the following:
I do not have the source for Minibonds. Anyone knows where to find the prices?
A generous financial institution
I observe that many of the 100% refund came from a certain financial institution. I am not able to name this institution now, due to insufficient evidence. But I wish to congratulate this institution for its generous approach.
I am sure that their customers will appreciate their gesture and will tell other people about it. I hope that this financial institution will prosper in the future, with the renewed trust of its customers and new customers.
Saturday, January 17, 2009
SCMP:Singapore ruling on minibonds bring HK hope
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=6JL18RPAA6Z4&linkid=14290ab4-c54b-4fb9-9f70-3acd10b0c6b0&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
Fox Yi Hu
Holders of Lehman Brothers minibonds in Hong Kong have been cheered by news that one in four Singaporean complainants will receive a full refund from banks which fraudulently sold them the products.
They hope the Hong Kong government will be pressured to speed up the handling of their complaints about sales of similar investment products backed by bankrupt US bank Lehman Brothers.
The Monetary Authority of Singapore yesterday said financial institutions would make full or partial settlement to 58 per cent of complainants. It said in a statement that 25 per cent of complainants would get all their money back and 33 per cent some of their money.
“Almost all elderly investors with little income, little formal education and little investment experience have been offered full or partial settlement,” the statement said.
By Wednesday, 10 financial institutions that sold DBS High Notes 5, Lehman Minibond programme notes and Merrill Lynch Jubilee Series 3 LinkEarner notes had received 5,381 complaints, according to the Singaporean central bank.
It said Lehman minibond programme notes worth S$508 million (HK$2.63 billion) had been issued. Of the total issue, S$375 million was sold to about 8,000 retail investors through nine distributors.
Hong Kong resident Chan Hongyuk, 63, who spent about HK$1.2 million buying minibonds through Bank of China (Hong Kong), said he hoped the local government would follow suit. “It seems the Singaporean government is willing to help the victims but our government ignored us,” Mr Chan said. “ Now I feel a bit more encouraged. I thought I might lose all the investment.”
Housewife Ms Yan, who bought minibonds through Citic Ka Wah Bank, said she hoped the Hong Kong government would act more decisively after Singapore had set an example.
“We took to the streets a few times but the government seemed to be dragging its feet,” said Ms Yan, who is in her 40s. “ If the Singaporean government has assumed its responsibility and looked into problematic sales, the Hong Kong government should do something.”
Ng Siu-shin, who bought minibonds through four banks, said Singapore’s quicker pace had set Hong Kong an example. “ It shows Hong Kong how another government is working,” he said.
Minibonds are not corporate bonds, but consist of high-risk creditlinked derivatives. They are marketed as a proxy investment in well-known companies.
Fox Yi Hu
Holders of Lehman Brothers minibonds in Hong Kong have been cheered by news that one in four Singaporean complainants will receive a full refund from banks which fraudulently sold them the products.
They hope the Hong Kong government will be pressured to speed up the handling of their complaints about sales of similar investment products backed by bankrupt US bank Lehman Brothers.
The Monetary Authority of Singapore yesterday said financial institutions would make full or partial settlement to 58 per cent of complainants. It said in a statement that 25 per cent of complainants would get all their money back and 33 per cent some of their money.
“Almost all elderly investors with little income, little formal education and little investment experience have been offered full or partial settlement,” the statement said.
By Wednesday, 10 financial institutions that sold DBS High Notes 5, Lehman Minibond programme notes and Merrill Lynch Jubilee Series 3 LinkEarner notes had received 5,381 complaints, according to the Singaporean central bank.
It said Lehman minibond programme notes worth S$508 million (HK$2.63 billion) had been issued. Of the total issue, S$375 million was sold to about 8,000 retail investors through nine distributors.
Hong Kong resident Chan Hongyuk, 63, who spent about HK$1.2 million buying minibonds through Bank of China (Hong Kong), said he hoped the local government would follow suit. “It seems the Singaporean government is willing to help the victims but our government ignored us,” Mr Chan said. “ Now I feel a bit more encouraged. I thought I might lose all the investment.”
Housewife Ms Yan, who bought minibonds through Citic Ka Wah Bank, said she hoped the Hong Kong government would act more decisively after Singapore had set an example.
“We took to the streets a few times but the government seemed to be dragging its feet,” said Ms Yan, who is in her 40s. “ If the Singaporean government has assumed its responsibility and looked into problematic sales, the Hong Kong government should do something.”
Ng Siu-shin, who bought minibonds through four banks, said Singapore’s quicker pace had set Hong Kong an example. “ It shows Hong Kong how another government is working,” he said.
Minibonds are not corporate bonds, but consist of high-risk creditlinked derivatives. They are marketed as a proxy investment in well-known companies.
Difficulties faced by migrant workers
The Online Citizen has many stories of migrant workers who faced a difficult time in Singapore. There is a racket where the migrant workers were misled into paying a lot of money to come to work in Singapore for jobs that did not exist.
While Singaporeans complain about losing jobs to migrant workers, we should also spare a thought for these workers who borrowed a lot of money to come to work in Singapore. In some cases, they were cheated by people who made money from them through scams.
I hope that the Government will put a stop to the exploitation of the migrant workers.
Cast your vote here:
Blog will hit 1 million visitors by 23 Feb 2009
Earlier, this blog was expected to hit 500,000 visitors by 11 Nov 2008. This was hit much earlier, due to the minibond crisis.
Based on the current trends, this blog is expected to hit 1 million visitors by 23 Feb 2009 (i.e 3 months after the earlier target date).
Complaint on mis-selling of CLN
MAS has announced the decision made by the financial institutions on the 5,000 complaints received from the holders of the credit-linked notes (i.e. minibond, high note, jubilee note).
The other holders who have not lodged their complaints can still lodge them now. If you do not know how to lodge this complaint, I suggest that you see a lawyer to prepare a statutory declaration containing the truthful answers to the following questions:
1. Your name, NRIC, address, telephone
2. How did you get involved in the investment?
3. Which financial institution, branch, amount invested, date
4. What happened when you purchased the investment?
5. Were you alone or accompanied by another person? Who?
6. What did the representative (who sold the investment to you) tell you about investment?
7. Did the representative tell you about any guarantee on your investment?
8. Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
9. Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
10. Do you have any other statements to make regarding this matter?
This declaration can be used to support your complaint to the financial institution that sold the credit linked note to you. It can also be used for your complaint to the Financial Industry Dispute Resolution Center (if you have to take it to the second stage). As this statement is made under oath, it is likely to have a stronger impact.
However, you should take note that it is not compulsory for you to have a statutory declaration).
You can contact the following lawyer:
Fee $150 plus GST plus disbursement (total $201.55)
Assomull & Partners
111 North Bridge Road
#22-04/05/06 Peninsula Plaza
Singapore 179098
Contact Person: Ms. Lauereth Loh, Tel: 63394466
You can also contact any of the lawyers listed here:
http://www.tankinlian.com/forms/ListofLawyersFinancialCrisisAssist(081101).pdf
Here is the guide for lodging a complaint to FIDREC:
http://www.mas.gov.sg/consumer/structured_products/fidrec_faqs.html
The other holders who have not lodged their complaints can still lodge them now. If you do not know how to lodge this complaint, I suggest that you see a lawyer to prepare a statutory declaration containing the truthful answers to the following questions:
1. Your name, NRIC, address, telephone
2. How did you get involved in the investment?
3. Which financial institution, branch, amount invested, date
4. What happened when you purchased the investment?
5. Were you alone or accompanied by another person? Who?
6. What did the representative (who sold the investment to you) tell you about investment?
7. Did the representative tell you about any guarantee on your investment?
8. Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
9. Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
10. Do you have any other statements to make regarding this matter?
This declaration can be used to support your complaint to the financial institution that sold the credit linked note to you. It can also be used for your complaint to the Financial Industry Dispute Resolution Center (if you have to take it to the second stage). As this statement is made under oath, it is likely to have a stronger impact.
However, you should take note that it is not compulsory for you to have a statutory declaration).
You can contact the following lawyer:
Fee $150 plus GST plus disbursement (total $201.55)
Assomull & Partners
111 North Bridge Road
#22-04/05/06 Peninsula Plaza
Singapore 179098
Contact Person: Ms. Lauereth Loh, Tel: 63394466
You can also contact any of the lawyers listed here:
http://www.tankinlian.com/forms/ListofLawyersFinancialCrisisAssist(081101).pdf
Here is the guide for lodging a complaint to FIDREC:
http://www.mas.gov.sg/consumer/structured_products/fidrec_faqs.html
Queen's Counsel opinion
My lawyer contact has sent a request to the Queen's Counsel a week ago. We have still not received a reply from the Queen's Counsel on the cost of the opinion. Hence, the QC opinion will not be ready this month. I hope that it can be ready next month - provided that the cost is within budget.
Full refund of $100,000
Dear Mr. Tan,
My mother-in-law obtained a full refund of $100,000 from the financial institution on the minibond that she bought. We positioned our complaint based on the advice given in your blog. (Specific details have been removed, due to non-disclosre requirements). I wish to thank you for your help.
Thought for the day - who will speak the words that need to be heard?
" If reporters don't report and universities don't debate; if the "open society" is really just a hushed conversation within a gated community; if information is ground under by right-wing think tanks - in short, if power is admired and truth despised - then who will speak the words clearly that need to be heard"
Roger Langen
Contributed by Ho Cheow Seng
Friday, January 16, 2009
MAS statement: Compensation for credit linked notes
Further details of the compensation are shown in MAS website:
According to the MAS statement, the investors would be informed about the compensation offer in stages over the next few weeks. This could explain why so few investors have received their offer of compensation so far.
Mis-selling of structured products
Almost all elderly investors with little income, formal education or investment experience were compensated.
By Francis Chan
MORE than half of the reviewed complaints of structured products of Lehman Minibonds, DBS High Notes 5 and Merril Lynch Jubilee Series 3 Linkearner Notes have received some compensation, said the Monetary Authority of Singapore on Friday. In the latest update, MAS says 58 per cent of investors who have lodged complaints of mis-selling to the financial institutions that sold them the products have received a full or partial settlement.
About 25 per cent of those received full settlements, while 33 per cent got partial settlements.
According to the MAS, almost all elderly investors with little income, formal education or investment experience have been fully or partially compensated.
MAS deputy managing director for market conduct, Shane Tregillis said: 'MAS is satisfied that FIs have carefully reviewed the complaints based on principals of fairness without taking strict legal positions. This is reflected in the settlements offers that the FIs are making to the investors.'
http://www.straitstimes.com/Breaking+News/Singapore/Story/STIStory_326983.html
By Francis Chan
MORE than half of the reviewed complaints of structured products of Lehman Minibonds, DBS High Notes 5 and Merril Lynch Jubilee Series 3 Linkearner Notes have received some compensation, said the Monetary Authority of Singapore on Friday. In the latest update, MAS says 58 per cent of investors who have lodged complaints of mis-selling to the financial institutions that sold them the products have received a full or partial settlement.
About 25 per cent of those received full settlements, while 33 per cent got partial settlements.
According to the MAS, almost all elderly investors with little income, formal education or investment experience have been fully or partially compensated.
MAS deputy managing director for market conduct, Shane Tregillis said: 'MAS is satisfied that FIs have carefully reviewed the complaints based on principals of fairness without taking strict legal positions. This is reflected in the settlements offers that the FIs are making to the investors.'
http://www.straitstimes.com/Breaking+News/Singapore/Story/STIStory_326983.html
Thursday, January 15, 2009
Investor wants to sue the relationship manager
Dear Mr. Tan
Seek your views on the following:
Q1 Can sue the RM personally for mis-selling and mis-representation, if I am not happy with FI investigation.
Q2 If I sue the RM, do you think the FI will defend her or the RM has to defend herself.
Q3 Do you think Leonard Loo is a possible choice, or get another lawyer?
Actually, money loss can be earned back. It saddened me that many uncles and aunties may not even know they are intoxicated OR those who are intoxicated may not know how to fight on ground of mis-selling and mis-rep which is a legal concept.
I think MAS is making it worst for investors. Imagine, we are cheated, now we have to prove that we are “idiot” ie “vulnerable or mis-selling or mis-rep” to get back our money?
Seek your views on the following:
Q1 Can sue the RM personally for mis-selling and mis-representation, if I am not happy with FI investigation.
Q2 If I sue the RM, do you think the FI will defend her or the RM has to defend herself.
Q3 Do you think Leonard Loo is a possible choice, or get another lawyer?
Actually, money loss can be earned back. It saddened me that many uncles and aunties may not even know they are intoxicated OR those who are intoxicated may not know how to fight on ground of mis-selling and mis-rep which is a legal concept.
I think MAS is making it worst for investors. Imagine, we are cheated, now we have to prove that we are “idiot” ie “vulnerable or mis-selling or mis-rep” to get back our money?
"Pinnacle Action Group" formed to work on a possible Class Action
(1) A working committee of 6 investors (informally called "Pinnacle Action Group") have come together to work on a possible class action for Series 1,2,3,5,6,7,9 & 10 of the Pinnacle Notes. Series 9 & 10 have been declared worthless and the other Series were notified in December 2008 that they are close to but not yet declared worthless. The fate of these other series now hang in the balance. The group feels that we cannot allow this tragic event to go unchallenged
(2) We have briefed several Senior Counsel (SC)and the proposed class action will,unlike the case of Minibonds, be against the arranger of the Notes, viz Morgan Stanley Singapore. An official website to facilitate the organizing of the proposed class action will be launched as soon as one of the SC briefed has been appointed to take on the case.
(3)The proposed class action will target 1000 or more affected investors in the various series to join in .The legal fee structure proposed will be simple and affordable - perhaps as low as only about $1000/- per head - on an all-inclusive basis right up to appeal stage , win or lose. To do this , we need 1000 or more to join in. The process will also be kept simple and the issues raised will be easy to understand for all who wish to join in the proposed class action and try and recoup their losses.
To be kept informed, before the launch the official "Pinnacle Class Action" website, Pinnacle investors are urged to contact us at the email address given below. Please provide us with your:
(a) name; (b) Series bought; (c) email address, and (d) contact tel
Thank you.
Sincerely,
"Pinnacle Action Group"
(J C Chan, S Tan, C S Lim, P Loh, B T Tee and C Y Boey)
Email: pinnacle.action.group@gmail.com
Wednesday, January 14, 2009
Value and character
I teach a course in Singapore Management University.
Apart from the syllabus of the course, I like the students to learn some values and tips that will be useful for them to cope with the challenges of life.
I will share some of the values that guide my character. I hope that these values will be useful as a guide to the students.
How to identity a bubble
Someone asked, "How to identify a bubble?"
The answer: "Nobody knows". Alan Greenspan, the former chairman of the US Federal Reserve Board said that one knows a bubble after it has burst. This is not helpful. It turned out to be disastrous, as the bursting of the US housing bubble has led to the global financial crisis.
Is there a rule of thumb to identify a bubble? Nobody has dared to stick out his thumb. But I shall try.
You get a bubble when the current price is 50% or 100% higher than the average price for the past 5 years. Maybe, we should look at the actual statistics and see if 50% or 100% is a better indicator.
For example, the average oil price during the past 5 years prior to 2008 must be around US$40. When it exceeded US$80, it was a bubble. After it burst, it returned to US$40.
When the high end property prices in Singapore doubled in value in 2008 compared to the past years, it was a bubble. It burst soon after.
The answer: "Nobody knows". Alan Greenspan, the former chairman of the US Federal Reserve Board said that one knows a bubble after it has burst. This is not helpful. It turned out to be disastrous, as the bursting of the US housing bubble has led to the global financial crisis.
Is there a rule of thumb to identify a bubble? Nobody has dared to stick out his thumb. But I shall try.
You get a bubble when the current price is 50% or 100% higher than the average price for the past 5 years. Maybe, we should look at the actual statistics and see if 50% or 100% is a better indicator.
For example, the average oil price during the past 5 years prior to 2008 must be around US$40. When it exceeded US$80, it was a bubble. After it burst, it returned to US$40.
When the high end property prices in Singapore doubled in value in 2008 compared to the past years, it was a bubble. It burst soon after.
A new way to do business - by conference call
I have to discuss a business proposal with a Telco. Their marketing managers were busy and could not find a convenient time for a meeting. We decided to have a conference call. It went smoothly. There was no need for a face to face meeting. This is a new way to do business. It is more efficient.
Thought for the day - Injustice
If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality:[ Bishop Desmond Tutu]
Contributed by Ho Cheow Seng
Contributed by Ho Cheow Seng
Tuesday, January 13, 2009
Invest in assets at deflated prices
In normal times, investment in shares give a dividend yield of around 3%. In a crisis, when the share price dropped by 50%, the dividend yield increase to 6%. It is likely that the company will suffer lower profits, so the dividend will be reduced. After reduction, the yield is likely to be still quite attractive.
If business conditions are bad, the company has the choice to reduce their cost by downsizing their operations. When their profit stabilizes, their share price will also stop dropping. When the profit increases with the return of economic growth, the share price will show a good gain.
It may take a few years or longer, but it will eventually happen. In the meantime, the dividend yield will continue to be quite attractive. To avoid the risk of selecting the wrong shares (i.e. of a company that may go bust), it is important th diversify the investment into a fund (e.g. an exchange traded fund).
My view: Invest when the share price is deflated, due to the pessimistic situation. Invest for the long term.
If business conditions are bad, the company has the choice to reduce their cost by downsizing their operations. When their profit stabilizes, their share price will also stop dropping. When the profit increases with the return of economic growth, the share price will show a good gain.
It may take a few years or longer, but it will eventually happen. In the meantime, the dividend yield will continue to be quite attractive. To avoid the risk of selecting the wrong shares (i.e. of a company that may go bust), it is important th diversify the investment into a fund (e.g. an exchange traded fund).
My view: Invest when the share price is deflated, due to the pessimistic situation. Invest for the long term.
Beware of bubbles
A bubble occurs when market prices are inflated beyond their real values. This has happened with the property market, stock market and more recently, with the commodity market, oil market, China stockmarket and India stockmarket.
All bubbles will lead to a collapse. All the markets mentioned above have collapsed.
Many people may not realise that there is another safe market that is in a bubble. It is the Government bond market. Due to risk aversion, many people put their money in long term Government bonds. The excess demand has pushed up the price and reduce the yield.
If the long term yield for safe Government bonds should be 4% (to cover inflation and cost of money) and excess demand causes the yield to drop to 2%, the price has gone up by about 25% in the case of a 15 year bond. If the yield returns back to the real value of 4%, the price will drop by 20% to get back to the normal level. It is possible to have a bubble in safe investments as well.
If you are caught with long term bonds yielding 2% (and the market price has dropped by 20%, you still have the option of keeping your money at the low yield of 2% for the 15 years).
Lesson: Avoid bubbles. Avoid paying a high price for your investment. Take a long term view.
All bubbles will lead to a collapse. All the markets mentioned above have collapsed.
Many people may not realise that there is another safe market that is in a bubble. It is the Government bond market. Due to risk aversion, many people put their money in long term Government bonds. The excess demand has pushed up the price and reduce the yield.
If the long term yield for safe Government bonds should be 4% (to cover inflation and cost of money) and excess demand causes the yield to drop to 2%, the price has gone up by about 25% in the case of a 15 year bond. If the yield returns back to the real value of 4%, the price will drop by 20% to get back to the normal level. It is possible to have a bubble in safe investments as well.
If you are caught with long term bonds yielding 2% (and the market price has dropped by 20%, you still have the option of keeping your money at the low yield of 2% for the 15 years).
Lesson: Avoid bubbles. Avoid paying a high price for your investment. Take a long term view.
Insurance that worsen crunch
Read this article. It explains the challenges faced by the economy during the global credit crisis.
Insurance that worsen crunch
The solution? Credit insurance should be operated by the government as a non-profit business.
Insurance that worsen crunch
The solution? Credit insurance should be operated by the government as a non-profit business.
SCMP:Regulators' reports raise more questions than answers
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=3B7XNUZV4CY7&linkid=9cd18f02-f626-4a17-a5f9-1bda0d2b7346&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
13 Jan 2009
Enoch Yiu
The two regulators' reports on the Lehman Brothers minibond fiasco have raised many questions but failed to find a solution to prevent a recurrence of the problem.
The 83-page report by the Hong Kong Monetary Authority and the 76-page report by the Securities and Futures Commission have been dissected and analysed since they were published last Thursday.
The stakes were high - the government ordered the two to report on the issue after 43,000 investors suffered losses from minibond products issued or guaranteed by Lehman, which collapsed in September.
But White Collar is disappointed the reports offer too few effective solutions to prevent such events from happening again. In fact, they only raise the prospect of a power struggle between the HKMA and the SFC on how to regulate banks' selling of similar types of products in future.
For one thing, the reports show that the regulators have no intention of banning complicated products such as the Lehman minibonds being sold to retail investors, which White Collar believes is the core of the problem.
A key complaint about the Lehman minibonds was why such a product, which are derivatives of credit-linked notes, could be sold to a 90-year-old housewife or 88-year-old retirees through bank branches as an alternative to time deposits.
Under the current regulatory system they did not need any regulatory approval, just the SFC green light on the marketing material.
Both the HKMA and the SFC say such an approach is good enough as they claim it should be the intermediaries who should see to the suitability of the products for investors. The two regulators also argue that investors may mistakenly believe that products approved by the regulators are safe.
The regulators said this was in line with international practices but White Collar urges our regulatory friends to rethink.
Unlike markets in Australia, Britain or the United States, where retail investors invest through fund products, Hong Kong retail investors are trading all types of investment products. This makes Hong Kong different from other markets.
If the regulators relied on intermediaries to recommend suitable products for clients, it is tantamount to downward delegation and this paves the way for mis-selling.
Such a disclosure approach is only adopted in the stock market - all listed companies in Hong Kong must first get SFC and stock exchange approval for them to go public and sell shares to investors.
Why do other investment products such as Lehman minibonds or derivatives such as accumulators not need regulatory approval before being sold to investors?
Britain is consistent with the disclosure base regulatory philosophy adopted by the Alternative Investment Market (AIM) which allows companies to list without regulatory approval. They only need to disclose information and to have a sponsor support their listing. In Hong Kong, the stock exchange has rejected the AIM model during discussions to reform the Growth Enterprise Market, saying that many retail investors are not ready to move to such a model.
If they are not ready for a Hong Kong version of AIM, they are also not ready for minibonds or accumulators.
What the two reports will surely lead to is a power struggle between the HKMA and the SFC on how to regulate banks' securities departments.
The HKMA said it should be the sole regulator and should take over the SFC's power to investigate and punish bank staff involved in securities dealing.
But the SFC said banks should set up subsidiaries to handle investment sales and let the commission regulate it. Neither proposals are perfect.
If the HKMA proposal is adopted, then it is bound to be opposed by stockbrokers as the HKMA would no longer use the same standards that the SFC applies to brokers. What is more, how can the authority punish banks?
While the SFC can publicly reprimand, revoke or suspend operations of brokers and their staff, such actions would be difficult to impose on a lender as that would affect the public's confidence in the lender, which may well lead to a bank run.
If the government adopts the SFC model, then the HKMA would not have the full picture on all operations of the bank and there may be a danger that losses incurred in the securities subsidiaries may affect its parent banking group.
The two reports have raised more questions than answers.
13 Jan 2009
Enoch Yiu
The two regulators' reports on the Lehman Brothers minibond fiasco have raised many questions but failed to find a solution to prevent a recurrence of the problem.
The 83-page report by the Hong Kong Monetary Authority and the 76-page report by the Securities and Futures Commission have been dissected and analysed since they were published last Thursday.
The stakes were high - the government ordered the two to report on the issue after 43,000 investors suffered losses from minibond products issued or guaranteed by Lehman, which collapsed in September.
But White Collar is disappointed the reports offer too few effective solutions to prevent such events from happening again. In fact, they only raise the prospect of a power struggle between the HKMA and the SFC on how to regulate banks' selling of similar types of products in future.
For one thing, the reports show that the regulators have no intention of banning complicated products such as the Lehman minibonds being sold to retail investors, which White Collar believes is the core of the problem.
A key complaint about the Lehman minibonds was why such a product, which are derivatives of credit-linked notes, could be sold to a 90-year-old housewife or 88-year-old retirees through bank branches as an alternative to time deposits.
Under the current regulatory system they did not need any regulatory approval, just the SFC green light on the marketing material.
Both the HKMA and the SFC say such an approach is good enough as they claim it should be the intermediaries who should see to the suitability of the products for investors. The two regulators also argue that investors may mistakenly believe that products approved by the regulators are safe.
The regulators said this was in line with international practices but White Collar urges our regulatory friends to rethink.
Unlike markets in Australia, Britain or the United States, where retail investors invest through fund products, Hong Kong retail investors are trading all types of investment products. This makes Hong Kong different from other markets.
If the regulators relied on intermediaries to recommend suitable products for clients, it is tantamount to downward delegation and this paves the way for mis-selling.
Such a disclosure approach is only adopted in the stock market - all listed companies in Hong Kong must first get SFC and stock exchange approval for them to go public and sell shares to investors.
Why do other investment products such as Lehman minibonds or derivatives such as accumulators not need regulatory approval before being sold to investors?
Britain is consistent with the disclosure base regulatory philosophy adopted by the Alternative Investment Market (AIM) which allows companies to list without regulatory approval. They only need to disclose information and to have a sponsor support their listing. In Hong Kong, the stock exchange has rejected the AIM model during discussions to reform the Growth Enterprise Market, saying that many retail investors are not ready to move to such a model.
If they are not ready for a Hong Kong version of AIM, they are also not ready for minibonds or accumulators.
What the two reports will surely lead to is a power struggle between the HKMA and the SFC on how to regulate banks' securities departments.
The HKMA said it should be the sole regulator and should take over the SFC's power to investigate and punish bank staff involved in securities dealing.
But the SFC said banks should set up subsidiaries to handle investment sales and let the commission regulate it. Neither proposals are perfect.
If the HKMA proposal is adopted, then it is bound to be opposed by stockbrokers as the HKMA would no longer use the same standards that the SFC applies to brokers. What is more, how can the authority punish banks?
While the SFC can publicly reprimand, revoke or suspend operations of brokers and their staff, such actions would be difficult to impose on a lender as that would affect the public's confidence in the lender, which may well lead to a bank run.
If the government adopts the SFC model, then the HKMA would not have the full picture on all operations of the bank and there may be a danger that losses incurred in the securities subsidiaries may affect its parent banking group.
The two reports have raised more questions than answers.
Monday, January 12, 2009
Part Time Work
There is strong interest in looking for part time work $6 to $10 an hour, preferably near the home. I will approach someone to create a portal to allow the matching of part time workers and employers.
I hope that this will create a new type of employment. The employer can engage a part time worker initially, and offer full time work if the worker is found to be suitable.
I hope that this will create a new type of employment. The employer can engage a part time worker initially, and offer full time work if the worker is found to be suitable.
Sunday, January 11, 2009
TABS - Taxi Automated Booking Service (8202 8866)
You can test TABS now by sending a zone code (from 01 to 82) to TABS 82028866. If a taxi is available, you will get a SMS stating that a taxi will call you on your mobile phone. Actually, you will get a dummy taxi (during this testing period). You will get the SMS, but there is no actual taxi at this time.
If no taxi is available, you will be placed on the queue for the next "dummy" taxi to be available. You should get a SMS within 5 minutes.
Give it a try. The zone should be the first two digit of the postal code of your home, office or wherever you happen to be.
Send ZZ (01 to 82) to 82028866. Test the system now. It is FREE.
If no taxi is available, you will be placed on the queue for the next "dummy" taxi to be available. You should get a SMS within 5 minutes.
Give it a try. The zone should be the first two digit of the postal code of your home, office or wherever you happen to be.
Send ZZ (01 to 82) to 82028866. Test the system now. It is FREE.
Hilarious sayings of George W Bush
And they have no disregard for human life."—Describing the brutality of Afghan fighters, Washington, D.C., July 15, 2008
I remember meeting a mother of a child who was abducted by the North Koreans right here in the Oval Office."—Washington, D.C., June 26, 2008
"We want people owning their home—we want people owning a businesses."—Washington, D.C., April 18, 2008
"How can you possibly have an international agreement that's effective unless countries like China and India are not full participants?"—Camp David, April 19, 2008
More here
http://www.tankinlian.com/articles/wisdom.html
I remember meeting a mother of a child who was abducted by the North Koreans right here in the Oval Office."—Washington, D.C., June 26, 2008
"We want people owning their home—we want people owning a businesses."—Washington, D.C., April 18, 2008
"How can you possibly have an international agreement that's effective unless countries like China and India are not full participants?"—Camp David, April 19, 2008
More here
http://www.tankinlian.com/articles/wisdom.html
SCMP:Two women sue bank over minibond losses
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=F1QJNO2RI9J2&linkid=d00bf96d-c7e9-49c5-935e-470eb087254e&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
11 Jan 2009
Yvonne Tsui
A 69-year-old woman and her daughter-in-law are seeking a full refund and damages from the Bank of China (Hong Kong) over their losses in Lehman Brothers minibonds.
Chin Yee-ching, a retired woman living in Malaysia, and her daughterin-law Chan Lai-mei, who lives in Po Shan Road, filed a writ in the High Court against Bank of China (Hong Kong) on Friday.
The bank is accused of being negligent in failing to “ correctly and accurately disclose and explain the real nature and structure of the product” and the true risk involved in their minibond investments.
Minibonds are not corporate bonds, but consist of high-risk creditlinked derivatives. They are marketed as a proxy investment in well-known companies.
In the writ, the pair also allege the bank failed to provide sufficient information and time for them to consider and make investment decisions about the products.
It said that Ms Chin and Ms Chan were approached by Cheng Kit-yee, a bank officer at a branch in Connaught Road Central, and Ms Cheng persuaded them to buy a series 35 minibond.
The claim said Ms Cheng told Ms Chan that the minibond was very low risk and the interest yield was good. Ms Cheng allegedly told her that the product was just like a time deposit and was very safe, while the interest was a little bit higher.
Ms Chan then agreed to early uplift of her US dollar fixed time deposit of US$ 80,000 so she could buy the minibonds, and Ms Cheng helped her apply for a waiver of the early uplift penalty. The writ said Ms Chan further agreed to use HK$ 400,000 savings to purchase the minibonds.
Having allegedly suggested the product was low risk and a conservative investment, Ms Cheng advised Ms Chin to invest her HK$1.48 million savings in minibonds.
However, another bank officer, Kenneth Lam, informed the pair in late September that the collapse of the American bank on September 15 affected their minibond investments.
11 Jan 2009
Yvonne Tsui
A 69-year-old woman and her daughter-in-law are seeking a full refund and damages from the Bank of China (Hong Kong) over their losses in Lehman Brothers minibonds.
Chin Yee-ching, a retired woman living in Malaysia, and her daughterin-law Chan Lai-mei, who lives in Po Shan Road, filed a writ in the High Court against Bank of China (Hong Kong) on Friday.
The bank is accused of being negligent in failing to “ correctly and accurately disclose and explain the real nature and structure of the product” and the true risk involved in their minibond investments.
Minibonds are not corporate bonds, but consist of high-risk creditlinked derivatives. They are marketed as a proxy investment in well-known companies.
In the writ, the pair also allege the bank failed to provide sufficient information and time for them to consider and make investment decisions about the products.
It said that Ms Chin and Ms Chan were approached by Cheng Kit-yee, a bank officer at a branch in Connaught Road Central, and Ms Cheng persuaded them to buy a series 35 minibond.
The claim said Ms Cheng told Ms Chan that the minibond was very low risk and the interest yield was good. Ms Cheng allegedly told her that the product was just like a time deposit and was very safe, while the interest was a little bit higher.
Ms Chan then agreed to early uplift of her US dollar fixed time deposit of US$ 80,000 so she could buy the minibonds, and Ms Cheng helped her apply for a waiver of the early uplift penalty. The writ said Ms Chan further agreed to use HK$ 400,000 savings to purchase the minibonds.
Having allegedly suggested the product was low risk and a conservative investment, Ms Cheng advised Ms Chin to invest her HK$1.48 million savings in minibonds.
However, another bank officer, Kenneth Lam, informed the pair in late September that the collapse of the American bank on September 15 affected their minibond investments.
Yield during the Great Depression of the 1930s
Dr. Money wrote in The New Paper:
For example, if you bought US shares in 1929, it would have taken 28 years – until 1957 – before you got back all your investment. Other markets have taken even longer.
It is true that stocks earn 10 per cent against 3 per cent for bonds – in the long-run. But that can be very long.
Here is my perspective.
For example, if you bought US shares in 1929, it would have taken 28 years – until 1957 – before you got back all your investment. Other markets have taken even longer.
It is true that stocks earn 10 per cent against 3 per cent for bonds – in the long-run. But that can be very long.
Here is my perspective.
If you buy shares now, when it has dropped 50% and it takes 28 years to reach its previous peak (i.e. 100% gain from the current price), the effective yield is 2.5% per annum. If it takes a shorter time to reach the previous peak, the yield will be higher than 2.5% per annum.
Saturday, January 10, 2009
SCMP:Deadline issued for investmen
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=I3SLL39DTVA5&linkid=4f97714b-ad98-4e5a-8667-07964f5d0135&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
10 Jan 2009
Enoch Yiu and Maria Chan
The Hong Kong Monetary Authority told banks yesterday to implement seven consumer protection measures concerning the sale of investment products, and to formulate plans to separate their deposit-taking and retail securities business before the end of March.
The measures are part of a range of proposals suggested in separate reports disclosed on Thursday by the authority and the Securities and Futures Commission on last year’s Lehman Brothers minibond fiasco. On the same day, Financial Secretary John Tsang Chun-wah ordered “an immediate review” of Hong Kong’s financial regulatory structure.
The authority sent a circular to all banks yesterday requiring them to immediately add “health-warning” statements to their sales material on retail derivative products to warn of their risks. It told them to immediately introduce adequate controls to ensure sales staff were not solely rewarded for sales performance.
By the end of March, banks must instal audio systems to record client conversations on investment products sales, as well as introduce a “mystery shopper” programme – in which undercover staff monitor the behaviour of those selling investment products.
In addition, the authority told banks to formulate plans to separate their deposit-taking and investment products sales functions. Both reports said it was a conflict for bank tellers to handle deposits and sales. But the regulators have different ideas on how to solve the problem.
The authority report said banks should use separate counters and staff in a branch to sell investment products. But the SFC suggested banks be banned from using their branch networks at all for these financial instruments. Rather, they should set up a separate subsidiary, using different offices and staff.
The proposed reforms come in the wake of the collapse of the US bank Lehman Brothers in September, a crisis that left 43,700 Hong Kong investors holding derivatives it issued or guaranteed, but which had lost much or all of their value.
Many claimed they were misled by bank tellers, who sold the products as alternatives to time deposits or low-risk bonds when, in fact, they were risky credit-linked derivatives.
Raymond So Wai-man, an associate professor of finance at Chinese University, supported the idea that banks should separate deposit-taking and investment products sales.
“When bank tellers make use of depositors’ financial information and cross-sell them investment products, customers may be confused between investment and deposit taking,” he said. Peter Wong Tung-shun, chairman of the Hong Kong Association of Banks
But Peter Wong Tung-shun, chairman of the Hong Kong Association of Banks, said some banks were very small and it might not be easy to have separate counters.
Mr Wong said banks might face higher operating costs after adopting the suggested proposals. “It’s hard to say whether banks have to pass on the cost to consumers,” he said.
The authority and the SFC reports both noted that Britain, Singapore and Australia had “cooling off” periods of 14 to 30 days on some investment products in which customers can change their minds.
In Hong Kong, there is no such cooling off period. However, the Hong Kong Federation of Insurers does have a cancellation period in which customers can cancel their policies up to 21days after applying.
Chan Kin-por, lawmaker for the insurance sector, said this had helped to reduce complaints. He said 10 to 15 per cent of policies sold were cancelled in the cooling off period.
10 Jan 2009
Enoch Yiu and Maria Chan
The Hong Kong Monetary Authority told banks yesterday to implement seven consumer protection measures concerning the sale of investment products, and to formulate plans to separate their deposit-taking and retail securities business before the end of March.
The measures are part of a range of proposals suggested in separate reports disclosed on Thursday by the authority and the Securities and Futures Commission on last year’s Lehman Brothers minibond fiasco. On the same day, Financial Secretary John Tsang Chun-wah ordered “an immediate review” of Hong Kong’s financial regulatory structure.
The authority sent a circular to all banks yesterday requiring them to immediately add “health-warning” statements to their sales material on retail derivative products to warn of their risks. It told them to immediately introduce adequate controls to ensure sales staff were not solely rewarded for sales performance.
By the end of March, banks must instal audio systems to record client conversations on investment products sales, as well as introduce a “mystery shopper” programme – in which undercover staff monitor the behaviour of those selling investment products.
In addition, the authority told banks to formulate plans to separate their deposit-taking and investment products sales functions. Both reports said it was a conflict for bank tellers to handle deposits and sales. But the regulators have different ideas on how to solve the problem.
The authority report said banks should use separate counters and staff in a branch to sell investment products. But the SFC suggested banks be banned from using their branch networks at all for these financial instruments. Rather, they should set up a separate subsidiary, using different offices and staff.
The proposed reforms come in the wake of the collapse of the US bank Lehman Brothers in September, a crisis that left 43,700 Hong Kong investors holding derivatives it issued or guaranteed, but which had lost much or all of their value.
Many claimed they were misled by bank tellers, who sold the products as alternatives to time deposits or low-risk bonds when, in fact, they were risky credit-linked derivatives.
Raymond So Wai-man, an associate professor of finance at Chinese University, supported the idea that banks should separate deposit-taking and investment products sales.
“When bank tellers make use of depositors’ financial information and cross-sell them investment products, customers may be confused between investment and deposit taking,” he said. Peter Wong Tung-shun, chairman of the Hong Kong Association of Banks
But Peter Wong Tung-shun, chairman of the Hong Kong Association of Banks, said some banks were very small and it might not be easy to have separate counters.
Mr Wong said banks might face higher operating costs after adopting the suggested proposals. “It’s hard to say whether banks have to pass on the cost to consumers,” he said.
The authority and the SFC reports both noted that Britain, Singapore and Australia had “cooling off” periods of 14 to 30 days on some investment products in which customers can change their minds.
In Hong Kong, there is no such cooling off period. However, the Hong Kong Federation of Insurers does have a cancellation period in which customers can cancel their policies up to 21days after applying.
Chan Kin-por, lawmaker for the insurance sector, said this had helped to reduce complaints. He said 10 to 15 per cent of policies sold were cancelled in the cooling off period.
Life in Singapore (3)
Here is the average rating based on 25 and 100 responses.
Rating 1=very unhappy, 3=neutral, 5 = very happy
| 25 resp | 100 resp | |
|---|---|---|
| Safety | 4.12 | 4.07 |
| Law and order | 4.08 | 3.95 |
| Multi-racial culture | 3.52 | 3.47 |
| Neighbours | 3.36 | 3.34 |
| Work colleagues | 3.32 | 3.32 |
| Environment | 3.32 | 3.28 |
| Quality of life | 3.30 | 3.04 |
| Time with family | 3.08 | 2.98 |
| Climate | 3.24 | 2.88 |
| Singaporeans | 2.64 | 2.83 |
| Adequate wages | 2.92 | 2.77 |
| Education system | 2.80 | 2.69 |
| Time to enjoy | 2.68 | 2.61 |
| Transport system | 2.84 | 2.51 |
| Foreign workers | 2.64 | 2.39 |
| Government leaders | 2.64 | 2.34 |
| National Service | 2.38 | 2.32 |
| Taxes, GST, charges | 2.24 | 1.96 |
| Cost of living | 1.96 | 1.87 |
| Overall score | 3.00 | 2.87 |
The ratings for most of the items were lower based on a larger group of respondents. The inital batch had a higher proportion of the older and higher income respondents, which gives a relatively higher rating.
BBC: The financial cost of Redundancies
Making redundancies could lead to a significant financial loss for both employer and employee, an expert warns.
http://news.bbc.co.uk/go/em/fr/-/2/hi/business/7750146.stm
http://news.bbc.co.uk/go/em/fr/-/2/hi/business/7750146.stm
SCMP:More claims for compensation by investors to be heard in court
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=XLOJAU7GY907&linkid=277a14c9-c247-49a3-a4f1-74c1ee1008c2&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
9 Jan 2009
The Small Claims Tribunal may refer to the District Court more of the compensation cases filed with it by investors in financial derivatives linked to collapsed US bank Lehman Brothers. Seventeen investors yesterday brought cases against four banks that sold them minibonds and similar derivatives. Representatives of two of the banks, DBS and Bank of China, requested that the District Court hear the cases. They were adjourned until March 23, when the tribunal will announce whether or not it will refer the cases. It is considering whether to transfer to the court 13 similar cases. The tribunal handles claims for up to HK$50,000.
9 Jan 2009
The Small Claims Tribunal may refer to the District Court more of the compensation cases filed with it by investors in financial derivatives linked to collapsed US bank Lehman Brothers. Seventeen investors yesterday brought cases against four banks that sold them minibonds and similar derivatives. Representatives of two of the banks, DBS and Bank of China, requested that the District Court hear the cases. They were adjourned until March 23, when the tribunal will announce whether or not it will refer the cases. It is considering whether to transfer to the court 13 similar cases. The tribunal handles claims for up to HK$50,000.
Friday, January 09, 2009
SCMP:Regulators' reports on Lehman minibond fiasco f
9 Jan 2009
Enoch Yiu, Maria Chan and Paggie Leung
Legislators and brokers are disappointed with regulators’ reports into the lessons learned from the Lehman Brothers minibond scandal.
The reports by the Securities and Futures Commission and the Hong Kong Monetary Authority carry recommendations including having a cooling-off period in which investors can cancel their investments, and tightening banks’ techniques in selling investment products.
The HKMA also recommends it exclusively regulate banks’ securities business, a role it shares with the SFC.
Kenny Lee Yiu-sun, the chairman of the Hong Kong Stockbrokers Association, said there was a danger the cooling-off measure could be abused. He said some people who lost money because of market movements instead of mis-selling might take advantage of such measures.
“There should be some preventive measures if the recommendation is implemented,” Mr Lee said. He disagreed with giving the HKMA the sole role of regulating banks selling securities products.
Lawmaker Kam Nai-wai, who has actively helped Lehman minibond investors fight to get their money back, expressed dismay at the report: “It does not include any help to existing victims, as there are no measures addressing their concerns.”
However, Mr Kam supported recommendations including establishing a financial services ombudsman and not allowing banks to sell investment products over deposit counters.
Peter Chan Kwong-yue, the chairman of the Allied Victims of Lehman Products, said the reports failed to solve the key problems.
“They are just speaking after the fact,” Mr Chan said. “Someone gets shot by an arrow and [the HKMA and SFC] are not going to save the injured but ask where the arrow came from to avoid getting shot in the future. It’s nonsense to talk about this now.”
Asked about the plan to give the HKMA more authority to regulate banks, Mr Chan said it could help prevent incidents similar to the “misselling” of Lehman minibonds.
A senior banker said it would be clearer if the HKMA took on the role of regulating banks’ non-banking business, but it would be difficult to implement the cooling-off period.
Billy Mak Sui-choi, an associate professor in the department of finance at the Hong Kong Baptist University, agreed the HKMA taking on a sole role was one way to improve the current two-regulator model.
“Regulators who are responsible for the supervision will have to bear all the responsibility, and they can’t blame the other.” Mr Mak said a cooling-off period would allow customers who buy products impulsively to reconsider their decision, helping minimise future disputes.
A spokesman said the SFC would work with the government and HKMA to improve the regulatory structure and investor protection.
Enoch Yiu, Maria Chan and Paggie Leung
Legislators and brokers are disappointed with regulators’ reports into the lessons learned from the Lehman Brothers minibond scandal.
The reports by the Securities and Futures Commission and the Hong Kong Monetary Authority carry recommendations including having a cooling-off period in which investors can cancel their investments, and tightening banks’ techniques in selling investment products.
The HKMA also recommends it exclusively regulate banks’ securities business, a role it shares with the SFC.
Kenny Lee Yiu-sun, the chairman of the Hong Kong Stockbrokers Association, said there was a danger the cooling-off measure could be abused. He said some people who lost money because of market movements instead of mis-selling might take advantage of such measures.
“There should be some preventive measures if the recommendation is implemented,” Mr Lee said. He disagreed with giving the HKMA the sole role of regulating banks selling securities products.
Lawmaker Kam Nai-wai, who has actively helped Lehman minibond investors fight to get their money back, expressed dismay at the report: “It does not include any help to existing victims, as there are no measures addressing their concerns.”
However, Mr Kam supported recommendations including establishing a financial services ombudsman and not allowing banks to sell investment products over deposit counters.
Peter Chan Kwong-yue, the chairman of the Allied Victims of Lehman Products, said the reports failed to solve the key problems.
“They are just speaking after the fact,” Mr Chan said. “Someone gets shot by an arrow and [the HKMA and SFC] are not going to save the injured but ask where the arrow came from to avoid getting shot in the future. It’s nonsense to talk about this now.”
Asked about the plan to give the HKMA more authority to regulate banks, Mr Chan said it could help prevent incidents similar to the “misselling” of Lehman minibonds.
A senior banker said it would be clearer if the HKMA took on the role of regulating banks’ non-banking business, but it would be difficult to implement the cooling-off period.
Billy Mak Sui-choi, an associate professor in the department of finance at the Hong Kong Baptist University, agreed the HKMA taking on a sole role was one way to improve the current two-regulator model.
“Regulators who are responsible for the supervision will have to bear all the responsibility, and they can’t blame the other.” Mr Mak said a cooling-off period would allow customers who buy products impulsively to reconsider their decision, helping minimise future disputes.
A spokesman said the SFC would work with the government and HKMA to improve the regulatory structure and investor protection.
HK Legco fire set for finance chiefs after holidays
Legislator Raymond Ho Chung-tai said the Legislative Council probe on the Lehman Brothers minibonds saga will restart after the Lunar New Year.
Monetary Authority chief executive Joseph Yam Chi-kwong and Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung will be the first officials to be summoned, Ho said.
They will be followed by Financial Secretary John Tsang Chun-wah and Securities and Futures Commission chief executive Martin Wheatley.
Ho expects the hearings to last six to nine months.
http://www.thestandard.com.hk/breaking_news_detail.asp?id=11714&icid=3&d_str=20090109
Monetary Authority chief executive Joseph Yam Chi-kwong and Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung will be the first officials to be summoned, Ho said.
They will be followed by Financial Secretary John Tsang Chun-wah and Securities and Futures Commission chief executive Martin Wheatley.
Ho expects the hearings to last six to nine months.
http://www.thestandard.com.hk/breaking_news_detail.asp?id=11714&icid=3&d_str=20090109
New business ideas
A reader of my blog is curious about my intention to publish a survey about booking for a taxi by SMS.
I am developing a new business to allow customers to book for a taxi using SMS for $1. The technology is almost ready. My survey indicate that many commuters are interested to use this service. My challenge now is to enrol taxi drivers to join this service.
I also want to develop a new business to offer surveys to SMEs at a modest cost. This allows them to gather information from their customers, business associates and employees. It helps them to improve their business.
The cost of a survey is $100. It is affordable. The value of the information is worth a lot more. Some people are familiar with the use of Survey Monkey. They can get the survey done for free. But other business owners, who are not familar with this software, have the option to pay $100 to get this survey done for them.
The curious people may also ask - why am I developing these new businessses, when I am quite well off and able to retire. I hope to pass the businesses to younger people, so that they have meaningful jobs and a good future.
I am developing a new business to allow customers to book for a taxi using SMS for $1. The technology is almost ready. My survey indicate that many commuters are interested to use this service. My challenge now is to enrol taxi drivers to join this service.
I also want to develop a new business to offer surveys to SMEs at a modest cost. This allows them to gather information from their customers, business associates and employees. It helps them to improve their business.
The cost of a survey is $100. It is affordable. The value of the information is worth a lot more. Some people are familiar with the use of Survey Monkey. They can get the survey done for free. But other business owners, who are not familar with this software, have the option to pay $100 to get this survey done for them.
The curious people may also ask - why am I developing these new businessses, when I am quite well off and able to retire. I hope to pass the businesses to younger people, so that they have meaningful jobs and a good future.
Keeping seniors at work
Prime Minister Lee Hsien Loong spoke at the Reinventing Retirement Asia Conference organised by the Council of The Third Age. He urged “no let up in keeping seniors at work”. He said that outmoded social attitudes and systems have to change, and that seniors should continue to work beyond the customary retirement age.
I agree.
Read the rest of the article here:
http://theonlinecitizen.com/2009/01/keeping-seniors-at-work/
HK: Minibond saga sparks rethink of bank rules
Enoch Yiu and Maria Chan
Jan 09, 2009
Financial Secretary John Tsang Chun-wah yesterday ordered “ an immediate review” of Hong Kong’s financial regulatory structure after both the Securities and Futures Commission and the Monetary Authority issued reports on last year’s Lehman Brothers minibond fiasco.
The government will first focus on “ administrative measures” to improve existing regulations and better protect investors. These would include a cooling-off period for buyers and restricting the sale of investment products at bank branches.
“Later we will carry out a structural review that may be required for improving the regulatory structure and protecting investors as well as other measures that need to be implemented through legislation or legislative amendment,” Mr Tsang said.
The SFC wants laws changed to give it the power to order financial intermediaries to compensate investors in the event of misselling or other irregularities.
In the longer term, consideration should be given to establishing a financial services ombudsman, both regulators say.
A government source said the administration would soon issue a consultation paper on how and when to implement short-term measures.
In the longer term, the government wanted to review the entire regulatory structure for banks’ securities businesses. This would include whether to allow banks to use their branch networks and teller staff to sell investment products.
Mr Tsang ordered the review after the government released reports submitted by the HKMA and the SFC on the minibond crisis.
When US bank Lehman Brothers collapsed in September, 43,700 Hong Kong investors were left holding derivatives it had issued or guaranteed but which had lost much or all of their value. Most were minibonds, which, despite their name, are complex, credit-linked derivatives. Investors claim banks and brokers mis-sold the products as low-risk.
The SFC and HKMA called for tighter oversight of the sale of financial products but rejected – at least in the short run – a call for a single regulator to oversee their sale.
At present banks and their securities businesses are regulated by the HKMA. The SFC regulates brokers but is also responsible for investigating and sanctioning bank staff who sell investment products.
The HKMA report recommended that all bank security business be brought under its supervision.
Both the SFC and HKMA reports said having the same bank branch sell investment products and handle client deposits created a conflict of interest.
The SFC said banks may consider establishing a clear-cut division between their banking and securities services by registering separate subsidiaries or affiliates with the SFC.
“ This is not the only way, however, that such separations of functions can be achieved,” the SFC report said.
There could be “a clear demarcation of premises and staff to avoid confusing customers as to the nature of the services being offered”.
Both reports called for introducing a cooling-off period for investors within which they could cancel their investments, as well as a requirement that intermediaries disclose the commissions they receive for selling such products.
The SFC would also require all investments to contain a brief description of the product and include a “risk reminder” for investors.
Both reports rejected calls to ban the sale of investment products without regulatory approval.
Wednesday, January 07, 2009
HK regulator: HK suffered a mis-selling issue
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/400786/1/.html
7 Jan 2009
HONG KONG: Hong Kong's securities regulator on Wednesday insisted the city's monitoring system had stood up to the financial crisis, despite criticism complex products were wrongly sold to vulnerable investors.
"Hong Kong's system has broadly worked well," said Martin Wheatley, chief executive officer of the Securities and Futures Commission (SFC). "We have not had a systemic failure."
Wheatley said the fact that Hong Kong had so far avoided the collapse of any major financial institutions or a huge fraud on the scale of disgraced US financier Bernard Madoff showed its regulatory regime had worked well.
Madoff was arrested on December 11 after allegedly admitting he had run a multi-billion dollar pyramid fraud in which individual investors, banks, charities and universities lost vast sums of money.
Wheatley conceded the city had suffered from a "mis-selling issue" over the sale of so-called minibonds backed by failed US bank Lehman Brothers.
However, he said it was too early to say if the banks who sold the products or the regulators were to blame.
Critics have accused the city's regulatory bodies of failing to protect investors from the derivative-backed products.
"We have got a problem with retail selling, we need to put that right," he said at Hong Kong's Foreign Correspondents' Club.
More than 40,000 Hong Kong investors – including many retirees – had put a total of 15.7 billion Hong Kong dollars ($2.0 billion US dollars) of their savings into minibonds and other complex products backed by Lehmans.
The collapse of the Wall Street giant in September meant the value of their investments dropped dramatically, which has sparked protests across the city from investors who said they were mis-sold the products.
The SFC and the city's de factor central bank, the Hong Kong Monetary Authority, are investigating hundreds of cases related to the sale of the bonds.
7 Jan 2009
HONG KONG: Hong Kong's securities regulator on Wednesday insisted the city's monitoring system had stood up to the financial crisis, despite criticism complex products were wrongly sold to vulnerable investors.
"Hong Kong's system has broadly worked well," said Martin Wheatley, chief executive officer of the Securities and Futures Commission (SFC). "We have not had a systemic failure."
Wheatley said the fact that Hong Kong had so far avoided the collapse of any major financial institutions or a huge fraud on the scale of disgraced US financier Bernard Madoff showed its regulatory regime had worked well.
Madoff was arrested on December 11 after allegedly admitting he had run a multi-billion dollar pyramid fraud in which individual investors, banks, charities and universities lost vast sums of money.
Wheatley conceded the city had suffered from a "mis-selling issue" over the sale of so-called minibonds backed by failed US bank Lehman Brothers.
However, he said it was too early to say if the banks who sold the products or the regulators were to blame.
Critics have accused the city's regulatory bodies of failing to protect investors from the derivative-backed products.
"We have got a problem with retail selling, we need to put that right," he said at Hong Kong's Foreign Correspondents' Club.
More than 40,000 Hong Kong investors – including many retirees – had put a total of 15.7 billion Hong Kong dollars ($2.0 billion US dollars) of their savings into minibonds and other complex products backed by Lehmans.
The collapse of the Wall Street giant in September meant the value of their investments dropped dramatically, which has sparked protests across the city from investors who said they were mis-sold the products.
The SFC and the city's de factor central bank, the Hong Kong Monetary Authority, are investigating hundreds of cases related to the sale of the bonds.
Constructive total loss of vehicle
Dear Mr Tan,
I bought a comprehensive motor insurance on my vehicle. Unfortunately, I met an accident and the the insurance company informed me that they are only willing to pay me based on the OMV of my car (PARF and COE $28,800/-) value plus cash of $1,000/- ( approx $30,000/-). My vehicle is coming to 5 years old, the cost of repair is estimated to be around $15,000/-.
They claim that it is no longer economical to repair the car. May I know my position in this situation.
REPLY
Under the insurance policy contract, the insurance company has the option to pay the current market value of the vehicle, instead of repairing it. This is called a "constructive total loss".
Usually, if you get the current market value, you will be able to buy a vehicle of similar age and condition as your insured vehicle. If you find that it is not possible to get a replacement vehicle, you can discuss with the insurance company to find a better solution.
I bought a comprehensive motor insurance on my vehicle. Unfortunately, I met an accident and the the insurance company informed me that they are only willing to pay me based on the OMV of my car (PARF and COE $28,800/-) value plus cash of $1,000/- ( approx $30,000/-). My vehicle is coming to 5 years old, the cost of repair is estimated to be around $15,000/-.
They claim that it is no longer economical to repair the car. May I know my position in this situation.
REPLY
Under the insurance policy contract, the insurance company has the option to pay the current market value of the vehicle, instead of repairing it. This is called a "constructive total loss".
Usually, if you get the current market value, you will be able to buy a vehicle of similar age and condition as your insured vehicle. If you find that it is not possible to get a replacement vehicle, you can discuss with the insurance company to find a better solution.
Tuesday, January 06, 2009
Thought for the day - OB markers
"The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum."
-- Noam Chomsky (1928- ) Institute Professor Emeritus of Linguistics
Contributed by Ho Cheow Seng
-- Noam Chomsky (1928- ) Institute Professor Emeritus of Linguistics
Contributed by Ho Cheow Seng
Survey – a service to business
Knowledge is everything. It is important for a business to know what its customers, employees and other stakeholders think and what drives their behaviour and action.
A survey is useful in getting information that can help you to make the right decisions.
We provide a service to help you to design the survey questions and to give you a link that you can send to your target audience. They click on the link to reply to the survey. It is easy.
We will give you a weekly progress report until the survey is closed.
2. Cost
The cost is modest. You pay a fee of $1 per survey reply, subject to a minimum of $100 per survey. There is no additional charge to create the survey form of up to 15 questions. For each additional question, there is a charge of $3.
3. Contact us
If you are interested in this service, send an e-mail to tkl@tankinlian.com with the following:
Your name:
Your company name:
Your e-mail:
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A list of survey questions
Thought of the day - Democracy
"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both."
- Justice Louis D. Brandeis
(1856-1941) US Supreme Court Justice
Contributed by Ho Cheow Seng
- Justice Louis D. Brandeis
(1856-1941) US Supreme Court Justice
Contributed by Ho Cheow Seng
Monday, January 05, 2009
Website to post results of surveys
I wish to ask for a volunteer to manage a blog to post the results of the surveys. I need the survey results to be presented in a chart (where appropriate) and to write some comments. This person should be able to use an appropriate software (e.g. WordPress or Blogger). If you are interested to spend time on a vountary basis, send an e-mail to kinlian@gmail.com.
A survey is useful, in spite of its limitations
I am actively using surveys in this blog. I find the results to be useful, as follows:
> It collects the views of a larger number of persons (instead of one person's views)
> Usually 25 replies are sufficient, as results are usually close to a larger sample
> The respondents are usually random and generally unbiased.
There are obvious limitations - hence the results have to be used with caution. Furthermore, it is important to phrase the questions fairly, so as to obtain useful answers.
Some people argue that it is important to select a proper sample. I agree, but this is costly and difficult to achieve. In the absense of this budget and luxury, a simple sample survey on the internet is better than nothing. As someone said, "knowledge is everything".
I wish to encourage people to use sample surveys to gather information for business and social decision.
> It collects the views of a larger number of persons (instead of one person's views)
> Usually 25 replies are sufficient, as results are usually close to a larger sample
> The respondents are usually random and generally unbiased.
There are obvious limitations - hence the results have to be used with caution. Furthermore, it is important to phrase the questions fairly, so as to obtain useful answers.
Some people argue that it is important to select a proper sample. I agree, but this is costly and difficult to achieve. In the absense of this budget and luxury, a simple sample survey on the internet is better than nothing. As someone said, "knowledge is everything".
I wish to encourage people to use sample surveys to gather information for business and social decision.
Partial retreat from globalisation
RBS's shift towards its home market is a microcosm of what most banks are doing all over the world.
And as banks do their patriotic duty and direct their increasingly precious and scare capital resources towards their domestic markets, the amount of credit available in the world as a whole is being compressed.
What's going on can be seen as a partial retreat from globalisation in the financial economy.
The scale and longevity of that retreat in this new year will determine all our economic fortunes, wherever we may be in the world.
And as banks do their patriotic duty and direct their increasingly precious and scare capital resources towards their domestic markets, the amount of credit available in the world as a whole is being compressed.
What's going on can be seen as a partial retreat from globalisation in the financial economy.
The scale and longevity of that retreat in this new year will determine all our economic fortunes, wherever we may be in the world.
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/01/british_banks_have_to_lend_mor.html#top
Sunday, January 04, 2009
Saturday, January 03, 2009
Thought for the Day: study of history
Contributed by Ho Cheow Seng
"The study of history is a powerful antidote to contemporary arrogance. It is humbling to discover how many of our glib assumptions, which seem to us novel and plausible, have been tested before, not once but many times and in innumerable guises; and discovered to be, at great human cost, wholly false."
- Paul Johnson
"The study of history is a powerful antidote to contemporary arrogance. It is humbling to discover how many of our glib assumptions, which seem to us novel and plausible, have been tested before, not once but many times and in innumerable guises; and discovered to be, at great human cost, wholly false."
- Paul Johnson
Regular visitors to my blog
Based on 103 replies
Age band
Below 20: 0.0%
20 to 29: 9.7%
30 to 39: 17.5%
40 to 49: 21.4%
50 to 59: 35.9%
60 and above: 15.5%
Gender
Male 72.3%
Female 27.7%
Occupation
Professional 32.4%
Retired 14.7%
Management 12.7%
Student 2.9%
Office worker 7.8%
Home maker 2.9%
Service worker 2.9%
Sales and mkg 2.9%
Consultancy 2.9%
Other 17.6%
How often do you visit my blog?
Daily 50.0%
A few times each week 44.0%
Less frequently 6.0%
I will not come back 0.0%
What types of information do you find most useful ?
Investments 76.7%
Insurance 57.3%
Credit-linked notes 55.3%
Economic issues 48.5%
Life in Singapore 45.6%
General topics 42.7%
Surveys 17.5%
Friday, January 02, 2009
Market price understates the value of the shares
I invested in a REIT a few months ago at a dividend yield of 6%. The price has dropped by 50% during the past few months, due to the global financial crisis. The REIT now yields 12%.
During the economic recession, the rentals may fall. If it drops 50%, the REIT will still yield 3% based on my purchase price or 6% based on its current price for a new investor.
Eventually, the economy will recover and the rentals will go up. The price of the REIT will also go up.
There is little risk that the REIT will go bust, as it comprise of a few good, well managed properties. The borrowings are capped at a certain percentage (maybe 30%) of the value of the assets.
The current price represents the price that a distressed holder has to sell the shares and the lack of buyers. The price is low, compared to the intrinsic value of the assets and the rental income. According to the experts, the "valuation is attractive".
For a long term investor, the current prices are attractive. When the economy recovers, the price will run up rapidly and many investors will not be able to catch the low prices.
During the economic recession, the rentals may fall. If it drops 50%, the REIT will still yield 3% based on my purchase price or 6% based on its current price for a new investor.
Eventually, the economy will recover and the rentals will go up. The price of the REIT will also go up.
There is little risk that the REIT will go bust, as it comprise of a few good, well managed properties. The borrowings are capped at a certain percentage (maybe 30%) of the value of the assets.
The current price represents the price that a distressed holder has to sell the shares and the lack of buyers. The price is low, compared to the intrinsic value of the assets and the rental income. According to the experts, the "valuation is attractive".
For a long term investor, the current prices are attractive. When the economy recovers, the price will run up rapidly and many investors will not be able to catch the low prices.
DJ:HK Regulator: Investigating All Minibond Distributors
31 Dec 2008
HONG KONG (Dow Jones)--Hong Kong's securities regulator said Wednesday it is investigating all distributors of the structured products, known as minibonds, that were backed by Lehman Brothers Holdings Inc. (LEH).
This is the first mention of an investigation by the Securities and Futures Commission into all distributors of the minibonds. Previously, it said it would investigate distributors of the products that it had received complaints against for mis-selling.
When Lehman filed for bankruptcy protection in September, thousands of Hong Kong investors in the minibonds, who thought their money would be safe, found out they faced huge losses.
A person familiar with the situation said the SFC's investigation now involves more than 20 local financial institutions.
An SFC spokesman, who asked not to be named, declined to comment, saying any comment may prejudice the integrity of the investigation or any action that may follow.
HONG KONG (Dow Jones)--Hong Kong's securities regulator said Wednesday it is investigating all distributors of the structured products, known as minibonds, that were backed by Lehman Brothers Holdings Inc. (LEH).
This is the first mention of an investigation by the Securities and Futures Commission into all distributors of the minibonds. Previously, it said it would investigate distributors of the products that it had received complaints against for mis-selling.
When Lehman filed for bankruptcy protection in September, thousands of Hong Kong investors in the minibonds, who thought their money would be safe, found out they faced huge losses.
A person familiar with the situation said the SFC's investigation now involves more than 20 local financial institutions.
An SFC spokesman, who asked not to be named, declined to comment, saying any comment may prejudice the integrity of the investigation or any action that may follow.
Taxi drivers - booking for taxi by SMS
This survey is for a taxi driver, or someone answering on behalf of a taxi driver:
Reply to Ho Yew Kee
Sent to Straits Times on 13 December 2008, but not publised.
Editor
Forum Page
Straits Times
I refer to the letter by Mr. Ho Yew Kee entitled “A mistake to overreact” (ST, 13 Dec 2008).
Mr. Ho said, “It would be imprudent for the stewards of town council funds to play it safe and place their reserves in fixed deposits or government bonds, as the returns would not even offset the inflation rate.” He also said, “Corporate bonds provided a yield of 4 to 6 percent, but the corporate have different credit ratings”.
In my view, it would be prudent for the town councils to invest in corporate bonds, provided that the investments are spread over several corporate bonds to reduce the impact of the failure of some of these bonds.
In fact, over 10,000 people were sold the credit linked notes. They were misled into believing that they were investing in a basket of 5 to 8 of the entities, which were financially strong companies or sovereign governments.
They were told that if one entity should fail, they would only lose their invested sum on a proportionate basis. If 1 of 8 entities failed, their loss would be 12.5%.
They were shocked to learn later that they were actually selling credit insurance against the failure of any of these entities. If any single entity failed, their entire principal would be lost. Instead of spreading the risk proportionately over 8 entities, they were taking 8 times of the risk of any single bond!
In addition, their principal was actually invested in a portfolio of 100 to 150 underlying securities, which could comprise of collateralised debt obligations of lower rating. This has additional risk to the investors.
The combined risk of failure of “toxic” credit-linked notes is very high. This explains why many of these notes have failed totally, compared to bond funds.
The stewards of the town councils, who have access to professional advisers, should explain if they were aware about the nature of the credit-linked notes and if the return of 5% is insufficient to match the risk. If the town councils were also misled about the nature of these products, it is their fiduciary duty to take appropriate action to recover their loss.
Several local government bodies in the UK were also misled into investing in similar high-risk products. They took legal action and were able to obtain a court decision to rescind the contracts. I urge our town councils in Singapore to do the same.
Tan Kin Lian
Editor
Forum Page
Straits Times
I refer to the letter by Mr. Ho Yew Kee entitled “A mistake to overreact” (ST, 13 Dec 2008).
Mr. Ho said, “It would be imprudent for the stewards of town council funds to play it safe and place their reserves in fixed deposits or government bonds, as the returns would not even offset the inflation rate.” He also said, “Corporate bonds provided a yield of 4 to 6 percent, but the corporate have different credit ratings”.
In my view, it would be prudent for the town councils to invest in corporate bonds, provided that the investments are spread over several corporate bonds to reduce the impact of the failure of some of these bonds.
In fact, over 10,000 people were sold the credit linked notes. They were misled into believing that they were investing in a basket of 5 to 8 of the entities, which were financially strong companies or sovereign governments.
They were told that if one entity should fail, they would only lose their invested sum on a proportionate basis. If 1 of 8 entities failed, their loss would be 12.5%.
They were shocked to learn later that they were actually selling credit insurance against the failure of any of these entities. If any single entity failed, their entire principal would be lost. Instead of spreading the risk proportionately over 8 entities, they were taking 8 times of the risk of any single bond!
In addition, their principal was actually invested in a portfolio of 100 to 150 underlying securities, which could comprise of collateralised debt obligations of lower rating. This has additional risk to the investors.
The combined risk of failure of “toxic” credit-linked notes is very high. This explains why many of these notes have failed totally, compared to bond funds.
The stewards of the town councils, who have access to professional advisers, should explain if they were aware about the nature of the credit-linked notes and if the return of 5% is insufficient to match the risk. If the town councils were also misled about the nature of these products, it is their fiduciary duty to take appropriate action to recover their loss.
Several local government bodies in the UK were also misled into investing in similar high-risk products. They took legal action and were able to obtain a court decision to rescind the contracts. I urge our town councils in Singapore to do the same.
Tan Kin Lian
SCMP:Finance chief given report on minibonds saga
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=6Y578OGP5WS5&linkid=88f1302c-d784-4e0d-b5bb-8d062e4593fc&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
1 Jan 2009
Joyce Man
The banking and securities regulators handed a report on the minibonds saga to the financial secretary yesterday, three months after investors started complaining.
The Monetary Authority and the Securities and Futures Commission filed the report, on the lessons learned and issues they identified during an investigation into complaints about the Lehman Brothersissued minibonds, to acting Financial Secretary Chan Ka-keung.
Although there has been speculation that the report would pinpoint a few banks, sources at the regulatory bodies said the securities commission’s investigation had highlighted more than 20 distributors that sold minibonds, including banks and brokers.
The report focused on the misselling of the investment product.
Minibonds are not corporate bonds, but consist of high-risk creditlinked derivatives. They are marketed as proxy investments in well-known companies.
Although the Monetary Authority regulates banks, it has referred all the cases to the commission for further investigation, the sources said.
The government would keep an open mind on any review of the regulatory system and on whether the city needed a single regulator for all investment products, a spokesman for the Financial Services and the Treasury Bureau said.
He said the government would probably publish the report but that the regulators who submitted it had expressed concern that doing so would affect the ongoing investigation and any improvements to the system.
The Monetary Authority and the commission declined to comment on the report.
Meanwhile, two leaders of Singapore’s Lehman investors flew to meet their Hong Kong counterparts yesterday in the hope of finding common ground for a class action in the US.
Both the Singaporeans and Hongkongers said they were considering inviting leaders for similar investors from Taiwan to form a Southeast Asian group to mount the suit on US turf. They would probably meet again soon in Hong Kong, which had greater political freedom than Singapore, they said.
Lung Tze Kuen, a Minibond Victims Group committee member, and Goh Meng Seng, a National Solidarity Party executive council member, met Hong Kong’s Kam Nai-wai– a Democratic Party member – and Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products.
The four investors’ leaders hope to go to the US because the legal system there provides for class action, which Hong Kong’s does not.
Mr Lung added that the jury system and contingent fee – where clients do not pay lawyers if they lose their cases – would work in the favour of investors who decided to join the suit.
They attempted to identify commonalities in the products sold in the two cities that would allow them to unite for a class action in the United States.
Mr Chan said: “ The Lehman products are very similar in their basic structures, in issuer, trustee, and even the law firms that drew up their documents.”
In Singapore, about 10,000 people invested S$500 million (HK$2.69 billion) in Lehman-related investment products, of whom 8,000 purchased minibonds, Mr Lung said.
Buyer beware and seller beware too
Business Times - 01 Jan 2009
By R SIVANITHY
AS A dismal 2008 rolls to a close, it's customary for us to draw up a wish-list for the new year. Last year, our list focused mainly on disclosure, particularly with regard to IPO prospectuses, short-selling positions and structured warrants. Some of these calls have been met - the Singapore Exchange (SGX) recently circulated a discussion paper on short-selling disclosure, and although IPOs were virtually non-existent in 2008, disclosures with particular reference to use of IPO funds have undoubtedly improved.
As for structured warrants, we are optimistic that it can only be a matter of time before SGX turns its attention to improving information dissemination in the segment. Having said that, which other areas could do with disclosure improvements in 2009? Before going into specifics, our preference is for a regulatory framework that not only stresses 'buyer beware' but should now also give equal emphasis to 'seller beware'.
For instance, the fiasco involving various failed structured products such as Lehman Brothers' Minibonds and DBS's High Notes exposed the very real possibility that those who sold these instruments did not adequately disclose the risks involved to hapless retail investors and yet appeared to have avoided accountability. Surely, these parties have to bear some responsibility for their lapses.
In addition, if an instrument is in essence one thing, the disclosure documents should describe that thing accurately and not imply something else - for example, the Lehman Minibond was an insurance policy to protect Lehman from defaults in debt instruments issued by five other banks but the prospectuses were cleverly worded to make it appear as if it was a bond issued by those five banks while Lehman's role was downplayed. This obfuscation started with the very name 'Minibond' which diverted attention from the product's true nature.
Stronger regulatory action would have been welcome but although it wasn't forthcoming, it isn't too late for the authorities to engineer a shift towards sterner penalties for parties that hide behind the fine print or legal disclaimers. In other words, if finance professionals don't call a spade a spade and try to conceal the true nature of a product they are selling, they should be penalised.
Similarly, we'd also like to see better disclosure on 'sell' side research reports, especially of how much risk there is to target prices, the extent of any investment banking relationships between the organisations in question for the past six months or one year and of the credentials and track record of the recommending analyst.
All of the above requires a stronger regulatory stance than what the market has become accustomed to since deregulation 10 years ago, which means that change has to start at the top.
For starters, SGX should scrap its controversial policy of privately censuring listed companies whose disclosures are less than satisfactory; and going public instead with all disciplinary actions. SGX says that it wants to have a range of measures at its disposal to tailor the punishment to fit the crime. Thus, if SGX judges a company's lapse to be minor and not having a material impact on the market and investors' decision-making, then a private censure is warranted, it argues.
But corporate governance advocate Mak Yuen Teen has already described the disadvantages of such a covert, private approach in a letter to this newspaper ('SGX should publicise all its enforcement actions', Nov 11). Suffice to say that the practice of judging what can be privately penalised and what might be publicly disclosed is in effect a step backwards to a merit-based regulatory system, the very system that the exchange sought to scrap when the market deregulated, giving way to a disclosure-based regime.
Perhaps the best suggestion we can make to the SGX and its overseeing body, the Monetary Authority of Singapore, is the same given to all listed firms, namely: a disclosure-based regime relies on full and public disclosure. If there're grey areas, then the correct approach should be 'when in doubt, disclose'.
By R SIVANITHY
AS A dismal 2008 rolls to a close, it's customary for us to draw up a wish-list for the new year. Last year, our list focused mainly on disclosure, particularly with regard to IPO prospectuses, short-selling positions and structured warrants. Some of these calls have been met - the Singapore Exchange (SGX) recently circulated a discussion paper on short-selling disclosure, and although IPOs were virtually non-existent in 2008, disclosures with particular reference to use of IPO funds have undoubtedly improved.
As for structured warrants, we are optimistic that it can only be a matter of time before SGX turns its attention to improving information dissemination in the segment. Having said that, which other areas could do with disclosure improvements in 2009? Before going into specifics, our preference is for a regulatory framework that not only stresses 'buyer beware' but should now also give equal emphasis to 'seller beware'.
For instance, the fiasco involving various failed structured products such as Lehman Brothers' Minibonds and DBS's High Notes exposed the very real possibility that those who sold these instruments did not adequately disclose the risks involved to hapless retail investors and yet appeared to have avoided accountability. Surely, these parties have to bear some responsibility for their lapses.
In addition, if an instrument is in essence one thing, the disclosure documents should describe that thing accurately and not imply something else - for example, the Lehman Minibond was an insurance policy to protect Lehman from defaults in debt instruments issued by five other banks but the prospectuses were cleverly worded to make it appear as if it was a bond issued by those five banks while Lehman's role was downplayed. This obfuscation started with the very name 'Minibond' which diverted attention from the product's true nature.
Stronger regulatory action would have been welcome but although it wasn't forthcoming, it isn't too late for the authorities to engineer a shift towards sterner penalties for parties that hide behind the fine print or legal disclaimers. In other words, if finance professionals don't call a spade a spade and try to conceal the true nature of a product they are selling, they should be penalised.
Similarly, we'd also like to see better disclosure on 'sell' side research reports, especially of how much risk there is to target prices, the extent of any investment banking relationships between the organisations in question for the past six months or one year and of the credentials and track record of the recommending analyst.
All of the above requires a stronger regulatory stance than what the market has become accustomed to since deregulation 10 years ago, which means that change has to start at the top.
For starters, SGX should scrap its controversial policy of privately censuring listed companies whose disclosures are less than satisfactory; and going public instead with all disciplinary actions. SGX says that it wants to have a range of measures at its disposal to tailor the punishment to fit the crime. Thus, if SGX judges a company's lapse to be minor and not having a material impact on the market and investors' decision-making, then a private censure is warranted, it argues.
But corporate governance advocate Mak Yuen Teen has already described the disadvantages of such a covert, private approach in a letter to this newspaper ('SGX should publicise all its enforcement actions', Nov 11). Suffice to say that the practice of judging what can be privately penalised and what might be publicly disclosed is in effect a step backwards to a merit-based regulatory system, the very system that the exchange sought to scrap when the market deregulated, giving way to a disclosure-based regime.
Perhaps the best suggestion we can make to the SGX and its overseeing body, the Monetary Authority of Singapore, is the same given to all listed firms, namely: a disclosure-based regime relies on full and public disclosure. If there're grey areas, then the correct approach should be 'when in doubt, disclose'.
Thursday, January 01, 2009
Exchange Traded Fund (ETF) information
Dear Sir,
I am Kay from moneytalk.sg. I have wrote a series of posts that discusses about the STI ETF in detail. The reason why I'm doing this is that I wish to create more awareness that STI ETF is a good form of investment that can give adequate returns if one is willing to hold in for the long term. Instead of putting their hard-earned money into risky products that offer poor returns, I hope more people can consider the STI ETF.
Some of the information in my posts include an explanation of the STI ETF, likely returns in the long run, dividend yield, when to buy it and a dollar cost averaging plan.
Thanks and all the best for 2009 :)
Kay
I am Kay from moneytalk.sg. I have wrote a series of posts that discusses about the STI ETF in detail. The reason why I'm doing this is that I wish to create more awareness that STI ETF is a good form of investment that can give adequate returns if one is willing to hold in for the long term. Instead of putting their hard-earned money into risky products that offer poor returns, I hope more people can consider the STI ETF.
Some of the information in my posts include an explanation of the STI ETF, likely returns in the long run, dividend yield, when to buy it and a dollar cost averaging plan.
Thanks and all the best for 2009 :)
Kay
HK: Finance chief given report on minibonds saga
Joyce Man
Jan 01, 2009
The banking and securities regulators handed a report on the minibonds saga to the financial secretary yesterday, three months after investors started complaining....
In memory of Mr. J. B. Jeyaretnam
Please participate in this survey:
Speech at Hong Lim Park, New Year's Eve Party
I wish to thank Chee Siok Chin for inviting me to this event and giving me the opportunity to speak a few words in memory of Mr. J. B. Jeyaretnam.I do not know Mr. Jeyaretnam personally. I attended only one of his election rally in the late 1970s and only for a few minutes.
What I knew of him came mainly from reports in the newspapers over the next 20 years. They covered the unhappy events in his life, like defending against defamation suits or for infringements of certain regulations on his political activities. Like most Singaporeans, I had a somewhat negative opinion of him from these reports.
In July this year, my friend invited me to the inaugural dinner of the Reform Party that was just set up by Mr. Jeyaretnam. At the dinner, I decided to buy two copies of his books as a show of support. The book was a collection of his speeches in Parliament over the years.
My impression of Mr. Jeyaretnam changed quite completely after reading a few paragraphs from the book. Here was a man who was passionate about the well being of the people of Singapore and, especially in uplifting the life of the lower income levels in our society.
I realised that I shared many of his values and passion. I thought of finding the occasion to get to know him better as a person.
That opportunity is now gone forever. Mr. Jeyaretnam passed away suddenly a few months later.
Someone circulated an e-mail containing a tribute to Mr. Jeyaretnam. He described Mr. Jeyaretnam as a person who had done his best for what he believed to be good for Singapore and Singaporeans, and yet many Singaporeans did not know of him and his sacrifice. I decided to post this tribute in my blog.
A few people asked for signatures to an open letter to the Prime Minister to ask for the public service of Mr. Jeyaretnam to be recognised. I decided to join in and to help to get more signatures.
I was disappointed in getting only 25 signatures after a week, in spite of several efforts to publicise it. This number was so small, compared to an earlier signature campaign on the credit linked notes which collected nearly 1,000 signatures. Perhaps, Singaporeans did not see Mr. Jeyaretnam in a positive light or were afraid to be seen as supporting the call in the open letter.
I was disappointed in getting only 25 signatures after a week, in spite of several efforts to publicise it. This number was so small, compared to an earlier signature campaign on the credit linked notes which collected nearly 1,000 signatures. Perhaps, Singaporeans did not see Mr. Jeyaretnam in a positive light or were afraid to be seen as supporting the call in the open letter.
I hope that, over the years, Singaporeans will get to know better of Mr. J. B. Jeyaretnam and what he has done for Singapore.
2008 has been a difficult year. 2009 will continue to be challenging. In spite of the uncertainties, let me wish all of you the very best for 2009 and the years ahead.
2008 has been a difficult year. 2009 will continue to be challenging. In spite of the uncertainties, let me wish all of you the very best for 2009 and the years ahead.
Tan Kin Lian
Credit freeze in Singapore
A few weeks ago, the Government took the bold step of guaranteeing all bank deposits in Singapore. This was to prevent the outflow of deposits to other countries that provided similar gaurantees. (Personally, I do not agree with this approach, as it continued to depress interest rate in Singapore).
Later, the Government provided some guarantee for banks to provide credits for business operations, subject to some due diligence. I remembered that the guarantee was for 50% of the lending.
I heard from a business friend that the guarantee had since been increased to 80 or 90 percent, but the banks are still reluctant to lend. (I have not verified this information). The unwillingness of banks to lend is causing some business failures - as they depend on credit to continue their operations.
In my view, it is a bad idea for business to depend on short term credit from banks for their operations. They should increase their capital or issue long term bonds that pay a higher rate of interest (say 4 to 7% p.a.). They can earn a higher return on their investment, so they can afford a higher and fairer payout to the bond holders.
To make these bonds attractive to long term investors, the guarantee can provide a guarantee on the principal and dividends and charge a guarantee fee to the issuer. This will allow the issuer to get a source of long term funding and do not have to worry about talking to the bank yearly.
This Government guarantee fee can be at a subsidised rate, to support the economy in its current phase. When the conomy stabilises, it can be done at the market rate, which depends on the risk. The Government can also set up a separate insurance company to provide the credit default insurance on commercial terms.
Summary: Encourage businesses to issue long term bonds to get a secure source of funds for their long term operations. The Government can provide a guarantee on these bonds (subject to due diligence and a guarantee fee), to help businesses to overcome the current economic turmoil.
MAS acting on complaints
Dec 31, 2008
I REFER to last Wednesday's letter by Mr Leong Kok Ho, 'Why MAS should handle complaints'. The Monetary Authority of Singapore (MAS) understands the anxiety of many investors who have bought DBS High Notes 5, Lehman Minibond Notes and Merrill Lynch Jubilee Series 3 LinkEarner Notes.
I REFER to last Wednesday's letter by Mr Leong Kok Ho, 'Why MAS should handle complaints'. The Monetary Authority of Singapore (MAS) understands the anxiety of many investors who have bought DBS High Notes 5, Lehman Minibond Notes and Merrill Lynch Jubilee Series 3 LinkEarner Notes.
We assure investors that we are monitoring the financial institutions' complaints handling and resolution process. Our priority is to ensure that all complaints are handled seriously and impartially without the process becoming overly legalistic.
Independent parties have been appointed to review the resolution processes of the financial institutions concerned to ensure that these processes are independent, fair and transparent.
MAS has, in consultation with the independent parties, conducted on-site visits to assess the handling and review of complaints, including observing the internal review panels in action. We are working with the independent parties to ensure that each financial institution has a robust assessment framework to identify indicators of potential mis-selling and offer fair financial settlement where appropriate. The independent parties have provided feedback to MAS on how the financial institutions have applied the framework across a sample of actual cases. We are ensuring that the assessment framework is consistent across financial institutions.
Investors who are not satisfied with the outcome of the financial institution's review of their complaints may refer their complaints to the Financial Industry Dispute Resolution Centre (FIDReC) for resolution. FIDReC is an independent body set up to provide investors with an affordable and impartial avenue to pursue claims against their financial institution. The decision of the FIDReC adjudicator is final and binding on the financial institution, but not on the investor. If the investor is not happy with the decision made at FIDReC, he is free to reject the decision and pursue his claim through other avenues.
As part of MAS' formal investigations, we are looking at financial institution-wide issues, such as the financial institutions' due diligence on structured notes, the procedures used at the point of sale, and the training and supervision of relationship managers. MAS will take firm and appropriate regulatory actions where there are breaches of law or regulations by the financial institutions or their representatives. MAS is also working with the independent parties to ensure that any potential financial institution-wide issues identified in the course of investigations have been incorporated into the assessment of individual complaints.
Angelina Fernandez
Director (Communications)
Monetary Authority of Singapore
http://www.straitstimes.com/ST%2BForum/Story/STIStory_320293.html
MAS has, in consultation with the independent parties, conducted on-site visits to assess the handling and review of complaints, including observing the internal review panels in action. We are working with the independent parties to ensure that each financial institution has a robust assessment framework to identify indicators of potential mis-selling and offer fair financial settlement where appropriate. The independent parties have provided feedback to MAS on how the financial institutions have applied the framework across a sample of actual cases. We are ensuring that the assessment framework is consistent across financial institutions.
Investors who are not satisfied with the outcome of the financial institution's review of their complaints may refer their complaints to the Financial Industry Dispute Resolution Centre (FIDReC) for resolution. FIDReC is an independent body set up to provide investors with an affordable and impartial avenue to pursue claims against their financial institution. The decision of the FIDReC adjudicator is final and binding on the financial institution, but not on the investor. If the investor is not happy with the decision made at FIDReC, he is free to reject the decision and pursue his claim through other avenues.
As part of MAS' formal investigations, we are looking at financial institution-wide issues, such as the financial institutions' due diligence on structured notes, the procedures used at the point of sale, and the training and supervision of relationship managers. MAS will take firm and appropriate regulatory actions where there are breaches of law or regulations by the financial institutions or their representatives. MAS is also working with the independent parties to ensure that any potential financial institution-wide issues identified in the course of investigations have been incorporated into the assessment of individual complaints.
Angelina Fernandez
Director (Communications)
Monetary Authority of Singapore
http://www.straitstimes.com/ST%2BForum/Story/STIStory_320293.html
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