Saturday, August 01, 2009

Re-build the trust in the integrity and reputation of Singapore

I call on the banks and stockborking firms who are involved in selling the credit-linked notes in Singapore and Hong Kong to offer the same compensation to investors in Singapore that they offer to those in Hong Kong. The compensation is 60% to 70% of the invested sum, and any excess, if the proceeds on maturity exceed the amount of the compensation.

Do act early, to protect your repuation. Equally importantly, your action will rebuild the trust in the integrity and reputation of the the financial system in Singapore in providing honest dealing and fair treatment of customers. This will enhance the role of Singapore as a trusted financial hub of the region.

Tan Kin Lian

Major US financial regulation initiatives

Read this report in Reuters.

I am impressed with the fast and appropriate action taken by the Obama Administration in addressing the failure of the financial market in USA. I believe that the measures are necessary and will be helpful in creating a fairer and better financial system.

This is an example of what can be achieved under a free, democratic system that draws on the best brains from all sides and respect the views and contributions of many people.

TKL Sudoku - Challenging Puzzles

I have printed a book of 128 challenging Sudoku puzzles. It contains tips on how to solve Sudoku puzzles, explains how the puzzles are generated and also gives a history of Sudoku. The book is available for $7.90 from Other books on the intelligence (Einstein) quiz and shape quiz (T puzzles) are also available. Watch this video.

Please help to promote these books to your friends or buy them as gifts for your family or friends.

SCMP:Mainland investors claim HK$500m loss on 'misleading' accumulator bets

1 August 2009

A group of mainlanders who said they had lost up to HK$500 million in accumulator investments complained to the Hong Kong banking regulator yesterday about banks in the city allegedly misleading them.

"We were misled by Hong Kong banks into purchasing stock accumulators. We were not warned about the risk of the products," the convenor of the Alliance of Hong Kong Private Banking Victims' - who said he preferred to be known as Jacky Jin Liang - said. With legislator Chan Kam-lam, Mr Jin and six other mainlanders met Hong Kong Monetary Authority executive director Raymond Li Ling-cheung yesterday.

Mr Jin said the alliance's 12 members bought the high-risk accumulator stock derivatives from five banks - HSBC, Hang Seng Bank, Citibank, DBS Bank and ABN Amro Private Banking. They had suffered losses of between HK$400 million and HK$500 million.

He said some were told that the products were "shares with discounted prices" rather than high-risk products. "And some of us believed the stock market would plunge but [the banks] still asked us to buy accumulators that led to severe losses."

Mr Chan said the authority had promised to investigate the alliance's complaint. The lawmaker said the HKMA promised to look into the cases in the coming three months.

An accumulator is a term-limited contract that allows investors to buy shares or foreign currency regularly at a fixed price below the market price when the contract begins. If the value of shares or currency rise, they can make a substantial profit. If the value falls to below the purchase price, there is no limit to potential losses.

At least two of the group made police reports to the Commercial Crime Bureau yesterday.

One, lawyer James Lai Jian-ping, said ABN Amro Private Banking had sent a staff member to Beijing two years ago to ask him to open a Hong Kong account. He said he was then "cheated" 15 times into investing more than HK$100 million.

DBS Bank (HK) and ABN Amro Private Banking said they had stringent sales procedures conforming to regulatory requirements. The Hong Kong Association of Banks and Citibank said they did not have enough information to comment.

Separately, legislator Kam Nai-wai said 18 Lehman Brothers "professional" minibond investors also met Mr Li. They wanted to be covered by the latest repurchase agreement but were told they were not eligible. They would be asked if they wanted the authority to continue investigations into their cases.

The Asian Banker:SFC, HKMA and 16 banks reach agreement on Minibonds

31 July 2009

The Securities and Futures Commission (SFC), the Hong Kong Monetary Authority (HKMA) and 16 distributing banks (the Banks) (Note 1) have jointly announce that they have reached an agreement in relation to the repurchase of Lehman Brothers Minibonds from eligible customers (Note 2).

The Banks have agreed with the SFC and the HKMA without admission of liability that (Note 3):

each of the Banks will make an offer to repurchase from each eligible customer all outstanding Minibonds (Note 4) at a price equal to 60% of the nominal value of the original investment for customers below the age of 65 or at 70% of the nominal value for customers aged 65 or above as at 1 July 2009. Customers will be entitled to retain any coupon payments received to date;

once the underlying collateral is recovered and paid to the Banks, each of them will make a further payment of initially up to 10% (depending on recoveries) of the nominal value of the Minibonds to eligible customers below the age of 65 and, if recoveries exceed 70%, the Banks will pay the entire excess amount to eligible customers who have accepted the repurchase offer (Notes 5 and 6);

each Bank will make available an amount equivalent to the amount of commission income received by it as a distributor of the outstanding Minibonds to the trustee of the Minibonds to assist in the recovery of the underlying collateral for each outstanding series of Minibonds;

each of the Banks will immediately implement special enhanced complaints handling procedures to resolve, in a fair and reasonable manner, all complaints in relation to the sale and distribution of other structured products (Note 7); and

to demonstrate their commitment in serving the investing public with the highest standards of conduct, each of the Banks: (i) will engage an independent reviewer, to be approved by the SFC and the HKMA, to review its systems and processes relating to the sale of structured products, to report to the SFC and the HKMA and will commit to the implementation of all recommendations by the independent reviewer; and (ii) will engage a qualified third party, as approved by the SFC and the HKMA, to review and enhance complaints handling procedures, and will commit to the implementation of all recommendations by such third party.

People who have previously reached settlement with the Banks in relation to Minibonds will not qualify for the repurchase offer. However, the Banks have undertaken to the HKMA to make ex gratia payments to those customers that have already entered into settlements with the Banks and who would have been eligible to receive the repurchase offer where those customers have received settlement amounts less than they would have received under this agreement. The intention is to bring those customers in line with eligible customers under this agreement.

In consideration of the agreement, the SFC will discontinue its investigations into the sale and distribution of Minibonds by the Banks. The HKMA has also informed the Banks that as the agreement contains detailed arrangements for the settlement of claims and the implementation of robust systems for selling unlisted structured products and dealing with related customer complaints in future, it is not its intention to take any enforcement action against the Banks in relation to Minibond cases that involve eligible customers who accept the offer.

The SFC considers that this agreement meets the SFC's criteria for resolution under section 201 of the Securities and Futures Ordinance for the following reasons:

The repurchase scheme should ensure that eligible customers who accept the repurchase offer will, subject to the recovery and distribution of the underlying collateral, receive a total amount that is equal to or greater than what they would otherwise recover if they were simply paid the current market value of the collateral.

The agreement takes into account that the recoverable value of the collateral is not certain. Even if the recoverable value of the collateral is below the values estimated by experts engaged by the Hong Kong Association of Banks in late 2008, the proposal will still deliver a return for the eligible customers that is equal to or exceeds 60% of their investment (or 70% for customers aged 65 or above).

The agreement includes a commitment by the Banks, as noteholders, to take reasonable steps to expedite the return of the collateral. It is important that any claim on the collateral that might reduce its recoverable value is negotiated robustly.

The agreement represents an opportunity to resolve outstanding investigations involving 16 banks in a way that will bring benefits to nearly all holders of outstanding Minibonds.

The agreement includes special measures in which the Banks will investigate and resolve in a fair and reasonable manner all complaints involving the sale and distribution of other structured products.

The agreement also remediates the Banks' systems and processes to meet the highest standards that will provide enhanced protection to the investing public in the future and give the investing public an assurance that the parties are determined to ensure these events are not repeated.

The SFC and the HKMA believe that the repurchase offer by the Banks is a reasonable one and is in the public interest.

"Strong markets, like Hong Kong's, need strong regulations. This agreement will provide substantial benefits for the vast majority of customers holding Minibonds that would not otherwise be received by them and, given the number of Banks and customers involved, the agreement is a watershed in the regulation of financial services in Hong Kong," said the SFC's Chief Executive Officer, Mr Martin Wheatley.

"Specifically, the agreement paves the way for customers who hold Minibonds to receive a substantial return of their capital. Secondly, the financial support of the Banks, using the commission income received in the sale of Minibonds, will expedite the return of the underlying collateral to Hong Kong Minibond holders. This aligns the interests of the Banks and customers holding Minibonds. Thirdly the agreement provides the framework for the Banks to develop higher standards of practice in the future and to resolve complaints in relation to other structured products. For these reasons, the SFC firmly believes it is an appropriate resolution of the Minibond issue with these banks," remarked Mr Wheatley.

Mr Y K Choi, Deputy Chief Executive of the HKMA, said: "The HKMA welcomes and supports the repurchase scheme and considers it to be practical, reasonable and in the interests of the great majority of Minibond investors. The HKMA encourages eligible customers to consider the repurchase offer by the Banks."

Dr The Hon Sir David Li Kwok Po, Chairman and Chief Executive of The Bank of East Asia, Ltd, said on behalf of the Banks: "The Banks are pleased to have reached this agreement with the SFC and the HKMA which we believe will benefit Hong Kong as an international financial centre. It evidences our joint effort to assist the Minibond investors in Hong Kong who have been impacted by the sudden collapse of the Lehman Brothers Group, and to reinforce public confidence in Hong Kong’s banking, financial and regulatory systems. This agreement demonstrates our unwavering commitment to the good of Hong Kong and the welfare of our customers. We will continue to work with the SFC and the HKMA to maximise the confidence of our customers in Hong Kong’s banks, and to ensure that the standards maintained by Hong Kong’s banks will be in line with international best practice."

The SFC acknowledges the substantial assistance of the HKMA in the investigation of these cases.

Travel Picks: Top 10 cities to visit with children

Read this report. Singapore is listed as No. 8

FISCA Website

First posted on 26 July 2009

I wish to introduce you to the FISCA website.

It will be officially launched in 1 month's time through a media conference. Prior to the official launch, we welcome visitors and feedback. We are also able to take membership at an annual fee of $36 per year.

I invite you to be member of FISCA. At this time, we are providing information free to all vistors. So, as a member you are not getting anything extra benefit, except that it is an opportunity to show your support for this effort to raise the financial awareness, literacy and competency of consumers in Singapore.

At a later date, members will be entitled to discounts in participating in the educational and other activities of FISCA.

Do join now, to show your support and encouragement for the small handful of volunteers who are spending time to give a start to FISCA. We welcome more volunteers to come forward.

NYT: In search of competent (and honest) advisers

Read this article in New York Times. It is relevant to Singapore.

Great Eastern Life shows the way

Great Eastern Life has decided to give a full refund to purchasers of its GreatLink Choice policies. The refund is for the full invested sum, less any payments received by the policyholders. The total loss from the buy back is estimated to be $250 million.

Great Link Choice is a structured product that guaranteed against the failure of a certain number of collaterialised debt obligations (CDO). Due to the financial crisis, several CDOs have defaulted and the value of the structured product (GLC) had dropped considerably.

Great Eastern Life probably took this decision to buy back the product, following complaints by policyholders that they were badly or wrongly advised by the insurance advisers.

I congratulate Great Eastern Life and its parent company, OCBC Bank, for taking this bold decision. This will give relief to 18,000 the policyholders, who must have agonised over the loss of their savings during the past year.

On hearing the news yesterday, I wondered whether the loss would be borne by the policyholders in general (out of the surplus used to pay their bonuses) or by the shareholders. From the Straits Times report, it appears that the loss will be borne by the shareholders, including the parent company. This is a fair and correct approach, and I congratulate Great Eastern Life and OCBC for this decision as well.

I hope that Great Eastern Life will enhance its reputation by offering life insurance products (for savings and protection) that give good value to consumers, while making a reasonable profit for its shareholders. This require the products to be kept simple, described transparently and for the commission, marketing and other expenses to be kept at a modest level.

Being the oldest local life insurance company with 100 years of history, Great Easter Life can set a lead in this new direction to serve the people of Singapore.

I hope that this decision by Great Eastern Life will encourage the banks and stock-broking firms in Singapore, who have sold similar products to their customers, including the Lehman Minibonds, DBS High Notes, Morgan Stanley Pinnacle Notes and the Merill Lynch Jubilee Notes, to make a similar buy back offer to their customers who were badly or wrongly advised on these structured products.

Even if the financial institutions do not adopt the buy back arrangement similar to Great Eastern Life, a settlement similar to the one adopted in Hong Kong will be appreciated by the investors of these credit linked notes in Singapore.

I hope that the Monetary Authority of Singapore will encourage these financial institutions to consider such a settlement.

Tan Kin Lian

Friday, July 31, 2009

Great Eastern Announces One-time Redemption Offer to GreatLink Choice Policyholders

SCMP:Investors set for legal fight over lost millions

30 July 2009

The legal sector is bracing for a flood of litigation as a growing number of investors take their bankers to court in efforts to recover huge losses resulting from high-risk financial products.

On Tuesday, 77-year-old Chan Wai-yee filed a writ and statement of claim against Swiss-based investment bank UBS for allegedly advising her to buy an equity accumulator package which resulted in her losing HK$260 million.

Solicitor Bonita Chan Bow-ye of Hastings & Co, the law firm which represents the elderly Chan, said yesterday the company is also handling several other similar cases, and that it was likely more investors will follow suit.

``After seeing some investors taking their cases to court, others who are in a similar situation may consider doing the same, so it's very likely we will see more lawsuits concerning these high- risk financial products,'' Bonita Chan said.

A senior partner of ONC Lawyers, Ludwig Ng Siu-wing, told The Standard he is now handling several cases involving mainland investors who claim they had been advised by their Hong Kong bankers to buy equity accumulators months before last year's market crunch, resulting in losses totaling tens of millions of dollars.

However, Ng said not many law firms were willing to handle such cases, as they not only involved the novelty of financial products but also the potential conflict of interest between the banks and the law firms.

``Equity accumulators have become common only in the past few years, and the subject is still quite new to some lawyers,'' Ng said. ``In addition, several major law firms have close business ties with the banks, such as preparing legal documents for mortgages, and such firms may be reluctant to take up such cases.''

Ng said minibond investors were a different matter.

``Equity accumulators are for experienced investors, and where the transaction is through private bankers who normally serve only the very rich. It also means their investments in the accumulator would be huge, running into tens of millions of dollars. So those investors are a completely different group from those who subscribed to minibonds,'' Ng explained.

Last week, the Securities and Futures Commission announced a settlement with 16 banks for them to buy back all outstanding Lehman Brothers minibonds at 60 to 70 percent of their original value. The deal reached put an end to a 10-month saga.

Solicitor Henry Chiu Tuen-ting of Henry Chiu & Partners said the key element in such disputes would be whether the banks clearly explained and honestly disclosed the possible upside and downside of the stock market.

Features of life insurance policies

Hi Mr Tan,
Can you tell me what are the features for these insurance policies?
1) Limited pyament whole life insurance
2) Regular prenium investment-linked policies
3) Anticipated Endowment Insurance

I will only give a brief explanation here. Please search Google for a more detailed explanation.

A limited payment whole life policy requires you to pay premium for a certain number of years and be insured for the whole of life. If you pay premium for a shorter period, the annual premium is higher.

A regular premium investment linked policy requires you to pay a regular premium over many years. The premium is invested in an investment fund. You will get the value of the invested units.

An anticipated endowment policy pays the maturity benefit in installments during the term. For example, if you insure for 50,000 over 20 years under an anticipated endowment policy, the $50,000 is paid to you in installments over the 20 years. The annual premium for an anticipated endowment policy is much higher than an ordinary endowment policy.

A life insurance policy may take away as much as two years of your premium to pay commission to the agent. This is too much to be taken away. If you pay a premium of $300 a month, two years of premium amount to $7,200. This is the money taken away from you to pay the agent.

I advise people not to buy all of these types of insurance policies, including critical illness policy, which pays high commission. It is all right to buy term insurance policy (where the premium is low) or a single premium policy, where the commisison is less than 3%.

All the best.

Coops in focus in US healthcare debate

Read this article in Reuters.

Aging, inequity and poverty

Read this blog. The record in Singapore is not good.

Expensive car park in Singapore

Where is the most expensive car park in Singapore? Read here.

Health care realities

Article in New York Times

Quote: ... private markets for health insurance, left to their own devices, work very badly: insurers deny as many claims as possible, and they also try to avoid covering people who are likely to need care. Horror stories are legion: the insurance company that refused to pay for urgently needed cancer surgery because of questions about the patient’s acne treatment; the healthy young woman denied coverage because she briefly saw a psychologist after breaking up with her boyfriend.

The Health Debate: At a Fever Pitch

Letter to New York Times.

Permits required to appeal to the public for funds


For fund-raising appeal through door-to-door collection or soliciting in public places, the House to House and Street Collection Permit must be obtained from the Police. A licence is not needed if it is a private collection that is confined to friends or relatives, appeals made through the telephone or the media such as the Internet and newspapers, appeal letters by post or approaching individual donors.

Petition to PM on credit linked note (6)


Update: 522 signatures as at 10 PM on 24 July. On the way to target of 1,000 signatures.
Update: 590 signatures as at midnight of 27 July. The pace of signatures has slowed down. Please pass the word around for more signatures to reach the target.

Pelosi lashes out against insurance companies

WASHINGTON (Reuters) - U.S. House of Representatives Speaker Nancy Pelosi on Thursday ramped up her criticism of insurance companies, accusing them of unethical behavior and working to kill a plan to create a new government-run health plan.
"It's almost immoral what they are doing," Pelosi said to reporters, referring to insurance companies. "Of course they've been immoral all along in how they have treated the people that they insure," she said, adding, "They are the villains. They have been part of the problem in a major way. They are doing everything in their power to stop a public option from happening."
(Reporting by Richard Cowan, Editing by Sandra Maler)

Thursday, July 30, 2009

Promote the use of car sharing

Car sharing can give you the same convenience of private use of a car, but at a fraction of the cost. Read how it works here.

No parking space in HDB estates

Have you wondered why HDB estates are congested with cars, and it is difficult to find a parking space when you visit someone in HDB during the day? Find the answer here.

Online Donation towards Gathering on 22 August

If you wish to meet an online donation towards the expenses of the Gathering of 22 August, please make an internet banking or fund transfer to this account:

POSB Saving 508-01812-6

For internet banking, please give the reference "22 AUG". For funds transfer, please send an e-mail to giving details of your payment.

Waiting for the stockmarket to bottom

A few months ago, when the ST index was around 1,500, some people commented that they will buy when it reached 1,200. That was their target for the stockmarket to bottom out.

But, it did not reach that level. Instead, the ST index had recovered 1,100 points (more than 70%) over the past few months. Those who waited for the stockmarket to reach 1,200 missed the boat.

Lesson 1: Do not be greedy. If you find the stocks to be of good value, you should buy and keep for the long term.

I bought my shares when the stockmarket was around 2,500. I did not sell the shares when they lost nearly half of its value. I kept them for the long term. These shares have since recovered in value (nearly).

Lesson 2: Avoid trying to catch the right time to sell or buy. If you are not sure, keep the shares for the long term, provided that they are blue chip shares. Do not sell, when the share price is depressed due to liquidity or fear.

BBC; Car insurance premiums rising

Read this article of what is happening in UK.

Are you sure democracy cannot help you financially?

Read this article.

Wednesday, July 29, 2009

50% compensation for Minibond

Hi Mr. Tan
Thank you very much for helping the CLN victims. Your Blog has been my lifeline for the past few months. I have signed your petition to PM Lee.

I invested $X in Minibond. I have filed my case with FIDREC. Upon mediation, FI offerred 20%. I rejected and went for adjudication. FI then offered 35%. I submitted additional documents.

Later, the FIDREC case manager informed me that the FI offerred 50%, the amount I initially asked for. The final offer of 50% made me shocked, very angry and felt very bullied again. I wanted to go ahead with the adjudication. Can I ask for 100% compensation? Can I accept the compensation, as I already signed the Petition?

It is all right for you to accept the compensation, although you signed the Petition. I suggest that you should ask for compensation of 50% and any balance on maturity (in case the matuirty sum exceeds 50%). Some of the Minibond actually has value more than 50%.

Lesson: It is quite bad for the financial institution to make it so difficult and stressful for the customer to get fair compensation.

Company Y not wanting to pay out my insurance claims

Dear Mr. Tan,
I was diagnosed and operated upon for my brain cancer. The cancer is classified as terminal. With the doctor's recommendations & letters, CPF paid all my savings into my bank account. Company X initially refused to allow me to claim my DPS but after I send them the CPF statement - they paid me as well.

I did a similar claim with Company Y for 3 policies. For more than a year, they have been giving excuses after excuses in not wanting to pay me by saying the requirement for us to pay a claim for Total & Permanent Disability is:-

"totally & permanently disability so that life assured cannot engage in any occupation, business or activity which pays any income"


"suffers total and irrecoverable loss of effective use of
- both eyes; or
- any 2 limbs at or above the wrist or ankle;
- or one eye and any one limb at or above the wrist or ankle"

Company Y is adamant in not wanting to pay me - I even got a letter from my last employer as to why they could not hire me back and they verbally told me they need more proof of further rejection letters. I had paid my insurance premiums monthly for the last 23 years without any default to date.

I hope you can take advise me on how best to approach Company Y.

You can lodge a complaint with the Insurance Commissioner's Office in MAS. Show them evidence of payment by CPF and Company X. MAS will ask Company Y to justify their delay.

You can also make a complaint to Fidrec, As your claim exceed $100,000, you can select one or two policies that fall within this limit to lodge your complaint.

Lesson: Insurance companies usually make it difficult for the customer to claim under its permanent disability of critical illness cover, especially for large sums. This is why I recommend against insuring for large sums under critical illness. There is no point in paying so much premium and to face difficulty in making a claim.

Gathering on 22 August at Hong Lim Park (2)

The gathering of investors of the credit-linked notes will be held as follows:

Venue: Hong Lim Park
Date: Saturday 22 Aug 09
Time: 5 pm to 6.30 pm.

There will be signing of the Petition asking the help of the Prime Minister to get a settlement similar to Hong Kong for investors of the credit-linked notes. The online Petition has gathered 600 signatures. The physical signing is for investors who were not able to sign the online Petition.

There will be a donation box for investors to make a contribution towards the expenses of the Gathering. Any excess will be used towards an advertisement on the Petition (if there are sufficient money) or contributed to the newly formed Financial Services Consumer Association (FISCA). Any deficit will be underwritten by some well-wishers.

Books and puzzles

I like to introduce you to my books and puzzles. They are good for children, adults and seniors. They develop logic, intelligence and exercise the mind. Have hours of fun and enjoyment.

More details are found here:

The Standard:Bank wiped out my $260m

29 July 2009

An elderly woman who claims to have lost nearly HK$260 million on high-risk financial products is taking a Swiss- based investment bank to court.

Chan Wai-yee, 77, says UBS advisers talked her into buying an equity accumulator package just months before last year's market crunch.

The High Court writ filed by Chan comes less than a week after 16 Hong Kong banks agreed to buy back Lehman Brothers minibonds at 60-70 percent of their original value.

She claims she did not understand the documents she signed because they were in English, and no one from UBS informed her of the risks and nature of the investments.

The writ states that Chan was a client of Hang Seng Bank for four decades, and she opened a Prestige account there in January 2003. She was advised on investments by managers Wong Mei- lun and Shirley Cheng.

Chan says her nest egg was accumulated through hard work, and she had limited experience in stock investments. As she did not understand English, she relied on advice from Wong and Cheng.

She was only interested in low-risk investments because she wanted to preserve her capital, Chan says.

So she never went into any risky investments while her money was with Hang Seng Bank.

Then, during the market boom in mid-2007, Wong and Cheng left Hang Seng Bank to work for UBS.

Chan claims that Wong then approached her and invited her to move her assets to UBS.

She signed various documents from time to time to open an account at UBS, but never indicated to Wong, Cheng or any staff member at UBS that she was interested in changing her investment strategy.

In June 2007, Chan signed different documents, all in English, that included a client acknowledgement form, an "acceptance to be treated as a professional investor" and a "request for subscription of equity-linked notes and blocs."

Chan then transferred shares and cash from her Hang Seng account to UBS, totaling HK$260 million.

In September 2007, Chan says, Wong telephoned and persuaded her to buy a financial product known as an UBS OTC Equity Accumulator.

She claims to have been "induced" into 25 equity accumulator transactions between September 2007 and February 2008.

Last October, a total of nine equity accumulators had not been knocked out, meaning that the stock-price ceiling set in the contract with the bank had not been breached.

After taking losses of more than HK$200 million, she told UBS she wanted to terminate all investments.

As of July 23 this year, her UBS account balance was only HK$1.6 million.

Besides recovering the money, she is seeking interest, damages and costs.

NJ sues Merrill Lynch over $300 mln stock purchase

NEW YORK, July 28 (Reuters) - New Jersey sued Merrill Lynch for selling its pensions $300 million of preferred stock in January 2008 "based on misleading information" about the brokerage's finances, the state attorney general said on Tuesday.

Anne Milgram, the state attorney general, said in a statement that the lawsuit, filed in the Law Division of state Superior Court in Hudson County, also names Bank of America Corp as a defendant.

Bank of America acquired Merrill Lynch last year and is named as "a successor entity," Milgram said.

Tuesday, July 28, 2009

Work near your home

Reduce travelling time and enjoy a better quality of life. Read this.

For the benefit and welfare of the people

In his talk and the answers to questions from the floor, Dr. Boediono (Vice President Designate of Indonesia) said that decisions will be taken for the benefit and welfare of the people.

When asked about the policy on privatisation and the use of natural resources, he said that the key criteria is to improve efficiency and ensure that the outcome will be for the benefit of the ordinary people.

He also said that Indonesia has been transformed into a democratic country and that the recent general election has been completed peacefuly and fairly. The test of democracy is its ability to improve the lives of the people.

Indonesia has gone a long way in improving its governance structure to reflect the will of the people. Watch out for a printed copy of his talk, when it is reported in the mainstream newspapers.

Honesty in Politics

I attended a talk given by Professor Dr. Boediono, Vice President Designate of Indonesia arranged by the Rajaratnam School of International Studies in Singapore.

One Singapore minister asked the question to Dr. Boediono, "What is your experience during the election campaign? How much of your success is due to hard politics and how much do to soft politics?" He used an Indonesian term to describe soft politics, which appealled to human emotions.

Dr. Boediono replied, "I do not know what is hard politics and what is soft politics. I only know what is correct politics, and that is being honest."

I like this answer. It confirms that politics does not have to be manipulating public opinion or the election process. It is possible to be honest and sincere and win over the trust of the people.

What is the future for this country?

If you, MAS people, the best educated and smartest people in Singapore, allowed such unfair things to continue, I won't cry for my money, but cry for your future. If the best educated, smartest people are not looking for justice, what is the future for this country?

Read this letter.

Free market - success and failure

The free market works for certain products which are physical, transparent and easy to understand. It has produced better quality products at lower prices.

The free market has failed to work well for many services, such as financial, medical and legal services. The consumers require an expert to advise on these matters. If the experts are allowed to charge any fee and define their own standard, it is likely to lead to exploitation of consumers.

These services need to be regulated to protect the interest of consumers. It also needs a strong consumer association to help the consumers to understand and exercise their rights, and to ensure fair treatment of consumers.

In the past years, these professional services are regulated by the authority and self-regulated by the professional bodies.

The standards of regulation and self-regulation has dropped in recent years during the era of the free market. The authority believed that consumers can take care of themselves and choose the advisers who can serve them best. This view goes against empircal evidence. Many consumers are fleeced by some unscrupulous so-called experts.

The role of government is to govern. It cannot be delegated to the "free market". The government has to ensure honest and fair behaviour for the benefit of society. It has to set the example for businesses and the people to follow. It is time to re-think the role of the free market.

Tan Kin Lian

Reuters: Investors dump brokers to go it alone online


Quote: "I will never again trust anyone who is commission-driven to manage my portfolio," said Mallah. "If they're not making money off you, they have no use for you."

NY Times: Of banks and bonuses


Lehman victims international/ planning for Sep. 15

Planning for the protests on the Lehman anniversary on Sep. 15 is progressing in Germany. We are actively discussing activities and locations in our forum here: (all in German, sorry about that...)

We want to stage one or two larger events in Frankfurt (that's the banking center in Germany and that's where Lehman had their offices) and/or Düsseldorf (that's where Citibank Germany is headquartered, they sold 75% of all Lehman bonds to individual investors over here). Other cities may stage small events or vigils on that day, especially for people who cannot/will not travel. Many of the victims are elderly...

I would like to find out which other cities/countries are willing to co-ordinate a joint protest on Sep. 15. The aim is to maximize our joint press coverage and make clear that our fate is a global phenomenon and not just a local/regional aberration. The banks (and Lehman) screwed little people everywhere!!!

Please state which city/country you represent and how many people you could mobilize. Any city/country would do their own planning, we would just co-ordinate stuff like press releases and maybe some big banners.

Please forward this e-mail to anyone you know that represents Lehman victims in other places. As far as I know, we now have the following cities/countries on this distribution list:
- Hong Kong SAR
- Taiwan (?)
- Singapore
- Spain
- Switzerland
- UK
- Germany

I'm looking forward to hearing from you!

LS from Germany

Monday, July 27, 2009

Why markets can't cure health care

Article by Paul Krugman.

The Standard:61pc of minibond investors undecided on offer

27 July 2009

Investors who bought Lehman Brothers minibonds appear to be softening their stance on the banks' repurchase scheme.

According to the preliminary results of a survey conducted by the Democratic Party at a meeting yesterday, 61 percent of 431 investors are now undecided on whether or not to accept the banks' scheme, while 27 percent plan to reject the offer and just 11 percent will accept it. Previously the investors were overwhelmingly against accepting the plan.

Some 29,000 investors _ more than 90 percent of Hong Kong minibond investors _ will be refunded about 70 percent of their original investments, financial regulators said last week.

``I will not pursue litigation as I don't want to get entangled with the bank,'' an investor surnamed Lee said at yesterday's meeting.

The political party estimated more than 1,200 minibond investors attended the two sessions it held.

Investors also criticized the Hong Kong Monetary Authority and the Securities and Futures Commission for not making clear the requirements for claiming their money back. ``It's confusing as an HKMA staffer told me on phone I am a professional investor if I've invested HK$8 million,'' an investor surnamed Yu said. ``However, another person from the HKMA said the next day that it depends on whether we have signed documents to describe ourselves as professional investors.''

On concern over the definition of ``professional investors,'' HKMA executive director Raymond Li Ling-cheung said on Saturday that investors with more than HK$8 million in investments will not be classified as ``professional'' as long as they have not signed any documents to say they are professional investors.

``I advised investors not to make their final decision in a hurry as they have 60 days to consider the offer after banks inform them in early August,'' said legislator Kam Nai-wai.

Meanwhile, a representative of a group of Lehman underlying equity- linked notes investors said they hope to meet Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung today and they will hold a meeting themselves on August 2, according to Sing Tao Daily, sister publication of The Standard.

A spokesman for the secretary said yesterday: ``Resources from the two regulators could focus on misselling complaints of other non-minibond structured products.''

TODAY:We should follow HK's example ; Protect individuals, not just the banks

27 July 2009

WHILE the Lehman Minibonds affair is far from over, a final solution to the problem of the ill-fated notes linked to the now-failed American investment bank appears to be nearer in Hong Kong than in Singapore.

Last week, Hong Kong’s Securities and Futures Commission (SFC) announced BOC Hong Kong Holdings and 15 other financial institutions in the Special Administration Region had agreed to pay at least US$0.60 ($0.86) on the dollar to the nearly 30,000 people who invested in the notes.

The total compensation in Hong Kong, where some US$1.8 billion worth of the notes were sold, will amount to about HK$6.3 billion ($1.17 billion). The final compensation will however depend on the amount of collateral the banks can recover from Lehman’s liquidators. And according to Hong Kong’s Financial Secretary John Tsang, investors could get back 70 per cent or more of their original investments.

By comparison, compensation to the nearly 10,000 people here who invested some $520 million in structured notes like the Lehman Minibonds, DBS High Notes 5 and Merrill Lynch Jubilee Series 3 LinkEarner Notes amounted to far less — just over $105 million. In fact, the compensation ranged from a mere 1 per cent of the amount sold as in the case of stockbrokers UOB Kay Hian to the 67 per cent, or some $58 million paid out by Hong Leong Finance to those who complained that they had been misled into buying the notes.

Despite acknowledgment by the Monetary Authority of Singapore (MAS) that there had been at least some mis-selling by the institutions concerned, those investors who have not been offered any compensation have been told to either continue with the three-step dispute resolution process recommended by the MAS, or take legal action on their own, a step a number have since taken. Its findings on the matter were disappointing for many, to say the least.

Worse still, the MAS has also come out to say that the findings of its recent report on the matter, under which some 10 financial institutions were punished, did not automatically mean the institutions are legally liable despite the tacit acknowledgment of mis-selling. The 10 institutions concerned, which included Singapore’s largest bank, DBS Bank, and Hong Leong Finance, have been barred from selling complex financial instruments for periods of up to two years.

It appears the authorities here were more concerned about protecting the system rather than the individual.

The 10 institutions were found guilty of at least one of three failings — misclassifying the rather complex notes they were selling as lower-risk products than they really were; not providing accurate and complete information about the structured notes to sales staff; and not ensuring that the sales teams were adequately trained to sell the notes.

Many felt the punishment meted out was merely a slap on the wrist.

While some investors, especially the elderly and the more ignorant, were able to secure full compensation, the authorities here appear to have relied more on moral suasion rather than have exerted any real pressure on a settlement.

So, why wasn’t the Hong Kong model followed? After all, it isn’t as if the institutions here do not have the capacity to have been more generous with their payouts.

For sure, not all the investors were as ignorant as they made out to be. Many were led by greed to buy the notes by the relatively-high returns they promised. Others did not even bother to assess the risks involved in buying these instruments.

But the authorities must also accept some blame in not adequately monitoring the institutions and the people who sold these highly complex and risky products, which even many bankers did not fully understand.

It is ironic that Hong Kong, one of the greatest bastions of free-wheeling and dealing, was able to wrest a better deal for the victims of the Lehman Minibonds than Singapore, which has a reputation for having a better regulated financial environment.

Honesty and fairness

It is important for our society to be operated on the principles of honesty and fairness. The minibond crisis has raised many issues of deep concerns to me, and many other people in Singapore.

When I organised the Petition last September, it was very clear that the financial institutions had failed in their conduct as required under the Securities and Futures Act and the Financial Advisers Act. The Petition, signed by more than 1,000 people, asked the authority to carry out an investigation and take appropriate actions under these law.

After a protracted period, which left many investors in deep anguish, the investigation report was published. The punishment meted to the financial institutions was light. Many investors, who lost large sums of money, were not compensated. This raised serious doubts on the question of fairness and justice in our society. It seems that the ordinary people are at the mercy of the powerful people and institutions.

Hong Kong took a different approach. The authority exercised its power and influence to get the financial institutions to make compensation of 60% or more, to the investors. The amount that is being compensated is many times of the compensation in Singapore. The situation is similar, in respect of wrong doings by the financial institutions.

The Hong Kong settlement is scantily covered in our local media, although it is a matter of great importance, not only to the investors who are affected and their families, but to the other people who are not affected. It shows two different approaches taken by two states on a similar issue.

This raise another serious issue of honesty and transparency. Why is such an important issue being swept under the carpet and not reported in the mainstream media? People are not blind. They can read the news in the internet and the blog. They have ears and can listen to gossips in the coffee shops and elsewhere.

I hope that the authority will reflect on this matter and re-approach it on the principles of fairness and honesty. It concerns the future of our country, the people and our children.

Tan Kin Lian

SCMP:Monetary Authority director clarifies minibond deal rules

6 July 2009

Investors who bought Lehman Brothers minibonds will receive compensation even if they have more than HK$8 million in investments - as long as they have not signed any documents describing themselves as professional investors, the Monetary Authority executive director says.

Raymond Li Ling-cheung's comments yesterday came after a number of minibonds buyers raised questions over whether they would be eligible for a payout under a deal agreed with 16 Hong Kong banks which sold minibonds guaranteed by Lehman Brothers.

In the days since the announcement of the settlement, which applies only to buyers classified as "individual investors", the definition of "professional investor" has been widely debated. Those who had made five or more investments in structured products such as minibonds over the past five years would be considered professionals. Corporate investors would not be covered by the settlement.

Mr Li moved to clear up some of the questions yesterday.

"The definition of professional investors is very clear in the law," he said. "It does not say you must be a professional investor when you have HK$8 million in the bank.

"If the bank classifies you as professional investor, an agreement should follow and the bank must tell you that you are classified as a professional investor and obtain your approval. It is not mandatory to say you are a professional investor when you have HK$8 million.

"If you want to know whether you're classified as a professional investor or not, you had better ask the bank."

The Securities and Futures Commission, the Monetary Authority and 16 distributing banks jointly announced on Wednesday that they had reached an agreement in relation to the compensation payout of Lehman Brothers-linked minibonds from eligible customers.

The agreement means that 90 per cent of investors will get backup to 70 per cent of their money. The banks will repay at least HK$6.3 billion to 29,000 people who bought minibonds in what is likely to be the world's largest compensation package for retail investors.

More than 33,000 Hong Kong investors bought HK$12 billion worth of high-risk minibonds that became virtually worthless when Lehman collapsed last September.

Minibonds are not corporate bonds, but consist of high-risk credit-linked derivatives. They are marketed as a proxy investment in well-known companies.

The banks will send letters to investors next month, the investors will have 60 days to decide if they want to accept the deal. Those aged under 65 will receive 60 per cent of the value of their initial investment. Those over 65 will get 70 per cent back.

The Democratic Party will meet with minibonds investors today to discuss progress on the issue.

Advice on individual shares

Dear Tan Kin Lian,
I had bought a China counter Sino Environment Tech shear by using my CPF investment account. But now the shear price drop to 30 % and looks the company is having some internal problem. They did not announce the 1st Qtr result and all investment funds also selling there holding. Could you advice me is it wise decision to sell and investment other counter instead of loosing all?

I do not give advice on individual shares. Sorry.

Pensioner Health Benefits

Hi Sir,
Someone I know is a civil servant who is currently under the Pension Scheme. She is considering purchasing medical insurance. She is 50 years old. She did not opt to switch to the CPF Scheme when the change was offered.

I understand that pensioners are provided good medical coverage. Is my friend adequately covered for her hospitalisation and medical needs? I have tried to find out more details about the health benefits offered under the pension scheme but so far have been unable to find out what I need to know.

Your friend, the civil servant, should ask the employer. I do not know the answer because the medical benefit scheme are different for different categories of civil servants and have changed many times in past years.

Always ask the right source, and not someone else.

Sunday, July 26, 2009

Interest rate on 25 July 2009

Here is an update of the interest rate on savings account and fixed deposit as at 25 July 2009. It is for your easy reference. Hope you find it useful. As the interest rate changes, please verify with the financial institution.

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