27 Jan 2010
The Lehman Brothers minibond mess could have been avoided had the Securities and Futures Commission imposed the measures needed to properly vet their sale and suitability to investors, a former senior manager with the regulator said.
Harold Ko Ping-chung, the commission's former head of insurance-related policies and products, told lawmakers that he believed different standards used by the commission's investment products and corporate finance departments, and lax supervision and staff inexperience contributed to the Lehman minibond fiasco.
Minibonds were handled by the corporate finance department, which only required that necessary product information be disclosed, and not the investment products department, which looked at whether the various parties involved in the product were suitably qualified.
Since leaving the commission about five months ago, Ko has been keen for lawmakers to hear his evidence. He testified publicly yesterday for the first time before the Legislative Council subcommittee investigating what went wrong. He also met the subcommittee last week behind closed doors.
The collapse of Lehman Brothers in September 2008 left holders of minibonds linked to it virtually worthless. Minibonds are not corporate bonds, but are high-risk, credit-linked derivatives. They are marketed as a proxy investment in well-known companies.
Ko spent much of his two decades with the commission vetting investment products. His deep understanding of the regulator's work in authorising Lehman minibonds is seen as invaluable as lawmakers prepare to summon banking representatives to testify.
Ko is no stranger to politics. In the 1990s he was a core member of United Ants, a grass-roots human rights group. He also ran unsuccessfully for a seat in Legco in 1995.
Harold Ko Ping-chung, the commission's former head of insurance-related policies and products, told lawmakers that he believed different standards used by the commission's investment products and corporate finance departments, and lax supervision and staff inexperience contributed to the Lehman minibond fiasco.
Minibonds were handled by the corporate finance department, which only required that necessary product information be disclosed, and not the investment products department, which looked at whether the various parties involved in the product were suitably qualified.
Since leaving the commission about five months ago, Ko has been keen for lawmakers to hear his evidence. He testified publicly yesterday for the first time before the Legislative Council subcommittee investigating what went wrong. He also met the subcommittee last week behind closed doors.
The collapse of Lehman Brothers in September 2008 left holders of minibonds linked to it virtually worthless. Minibonds are not corporate bonds, but are high-risk, credit-linked derivatives. They are marketed as a proxy investment in well-known companies.
Ko spent much of his two decades with the commission vetting investment products. His deep understanding of the regulator's work in authorising Lehman minibonds is seen as invaluable as lawmakers prepare to summon banking representatives to testify.
Ko is no stranger to politics. In the 1990s he was a core member of United Ants, a grass-roots human rights group. He also ran unsuccessfully for a seat in Legco in 1995.
Anything about minibond info is good. We are still boiling inside.
ReplyDeleteI believe some have gone to Fidrec for settlement . Any news about their settlement? Is the class action still on?
ReplyDeleteGo to Fidrec can only agaist the FI who sold your these toxic products.
ReplyDeleteWe need to agaist the toxic maker also. But do not now how as the MAS didn't help at all.
I have settled and put all behind me even though slightly more than half of my notes are still waiting for liquidation. I am also boiling inside on the reminding notes. My conclusion:
ReplyDeleteTime heals. Going into adjudication on the later part of last year, I believed, tilted towards my favour because:-
i) Public sentiment changed after much publicity on the toxic notes
ii) Fidrec Judges, with months of experience since Mar 08, are more fair after gaining experience
iii) FIs is less stubborn to compensate especially after the MAS report.
The bad thing is people who bought under the same scenario as me got nothing or much less if they don't approach FIDREC. This applied to people who have accepted compensation from FI during their initial complain as it is usually unfair and lower i.e. 10-20%.
Things get worst for those who bought over the counter or their RM had left the company.
On the cooperate governance view, Hong Kong is doing and continue to do a fairer post mortem while Sgp MAS still no where to be found in terms of looking into the interest of the Minibond victims. Asking them to go FIDREC or take up private suit is a irresponsible way of handling an issue as an regulator.
In my opinion, DBS HN5 & MB2 suit is as good as dead as banks' strategy of not negotiating and bleed the private investors law suit piggy bank dry will succeed once the respective private lawyer raise the per hour rate e.g. $400 to $700. Respective lawyers will likely take the exit reason that will not hurt their reputation by saying the private investors' fund is too low to support future court proceeding.....
I believe HN5 lawsuit is still on going. HN5 group stand a very good chance.
ReplyDeleteIn situations like this, a good question to ask is "What has my MP done for me lately?"
ReplyDeleteThis question should apply to both PAP MPs and opposition MPs. I would also add the NMPs.
Good to hear HN5 lawsuit is alive and kicking. Is there anyone successful in HN5 FIDREC Adjudciation and what is the % of compensation?
ReplyDeleteSgp has a weird system of Govt's MAS regulating financial services, Govt's DBS misrepresented Minibond and Govt's Court deciding the outcome of the quarrel between Govt's DBS and Singaporean Minibond investors.
All the best to HN5 investors suit.
My impression they are getting more arrogant and paid too much. About time to get rid of them in next GE. Have not benefited from their policies especially SINGLES lose out in owning a decent home/property to hedge against high inflation. When the cat is old cannot kill rats, get rid of it. PAP has outlived its purpose to serve Singaporeans. No help in these bad economic times, food prices surging and no decent jobs around. Our GDP growth is artificially generated by high inflation, rising property/asset prices and population increase via immigration. No magic bullet invented.
ReplyDeleteAxe-Maker
The lawsuit aginst RBS is still on
ReplyDeletebut the process is time-consuming
and we are losing hope.
We would not believe in this Govt
anymore.
My MP is the mayor of Central Singapore in Bishan, and he did not even have the courtesy to reply to my complaint, as if I did
ReplyDeletenot see him for any help whatsoever
regarding the minibonds. So much for being my MP, invisible when we need help, visible only when election comes around.
I have made up my mind to not vote for my pap mp - he did nothing for me in this minibond fiasco
ReplyDeleteMy MP also ignored my letter to help. The next time he come around during election, I will slam door in his face. That's what he deserve for asking for my vote than ignoring me when I in need
ReplyDeleteI cannot believe other countries government are helping their citizens to get back compensation, like HK, Taiwan, Belgium, etc but I am here going in circles with the FI, FIDrec and court case and not getting a single cent after more than year.
ReplyDeleteHow can spore treat sporean like this when i spent my life helping to build it?
Anyone knows when the class action's hearing date in court?
ReplyDeleteIt has been a long time since the filing, any chance of out of court settlement?
I believe besides the FI's, the minibond group is also suing Minibond Ltd and Lehman Borthers Singapore.
ReplyDeleteYes, this was published i.e. MIAG is suing the 3 entities with lawyer conrad representing them. The 3 entities have also engage top lawyers in replying to MIAG. From then, no news or only the 160 MIAG investors know what is happening. It is a one sided fight which I personally think the 3 entities are trying to bleed MIAG as their fund is very limited.
ReplyDeleteThe whole setup with the financial industry and the law is very one-sided against the retail investors.
ReplyDeleteMost people do not know that although Lehman Brothers is bankrupt, it still has US$640 billion worth of assets. It owes or is fighting against claims of US$830 billion. It is now known as Lehman Brothers Holdings Inc. Big creditors include Barclays, UBS, Abu Dhabi Investment Authority. Who do you think will get higher chance of repayment -- big boys or man-in-the-street?
Since declaring Chapter 11 in Sep 2008, it has been restructured under a bankruptcy company, and has already paid over US$588 in salaries and fees to the restructuring staff and lawyers. Many of these people are just doing administrative work and getting paid the equivalent of S$30,000 per month salary.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFKZqXVr4GS8
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awk64mYvm714
Jan 29 5:38pm How the 3 entities bleed the MIAG if all the evidence is in your favour?
ReplyDeleteFeb 01, 8:27. The 3 entities have engaged top notched lawyers of the land to fight the suit while there is only one Mr. C to fight them. As long as they refuse to negotiate or settle out-of-court, it is going to be a long drawn, expensive legal battle. Since one of the entity is RBS, those other banks on the sidelines also know that if MIAG succeed with RBS, they will be next thus it is their interest that RBS wins.
ReplyDeleteI wish and hope MIAG wins but the odds against them is high especially when you have a Govt own bank facing the same kind of suit. Anyway, this is a different of opinion while let's wait for the outcome of those 2 suits. I will be very happy if I am wrong while I think the victims are dealing with a group of legal gangsters.
Let's not be too quick to judge the government. maybe the government is genuinely fair. Government may find it improper to intervene in the process in favor of the victims for fear of setting a precedent and encouraging moral hazard. They may feel that it would be better if the disputes are sorted out in the court of law, unlike the government in hk. Let's wait for the outcome of the lawsuit before judging the government.
ReplyDeleteFeb 01, 12.55pm- If the FI's is clever enough, they should come to the negotiation table as any settlement there is on " without prejudice" basis. Damage to the FI's in full trial is even more.
ReplyDeleteLet's see the outcome of DBS HN5 suit. One stone kill two birds i.e. See how fair is the government & whether DBS think negotiation with HN5 investors is the best option in order to protect their reputation.
ReplyDeleteAnyone has the next hearing for DBS vs HN5 investors?
To settle at Singapore Mediation Centre is not compulsory for all parties, especially when it involves points of laws. If FI's agrees to settle at SMC, it is a good start!
ReplyDeleteFrom what I know, the FIs to meet together and make decision together thus you will find that there is no surprises. If they want to settle early, they could of done it long ago. All of them are probably also looking at DBS outcome before deciding what to do.
ReplyDeleteFrom what I hear, the arguement by Highnote 5 and Minibond series 2 are completely different.
ReplyDelete10.44pm- outcome of one case may not have reprecusion in another un-related case.
http://www.mas.gov.sg/
ReplyDeleteMinibond valuation value is out at the above website.
I think it is a consolation but am still sore on the remaining loss. My sympathy for HN5/Jubilee/Pinnacle as they have very low liquidation value. I still feel the govt and MAS should have helped as this is a gross injustice to the victims.