Friday, February 05, 2010

Immoral profit

Some financial institutions offered partial compensation to the investors and took over the Minibonds. These notes now have a recovery value that is higher than the compensation given. The financial institution had made a profit.

Take this hypothetical example. The financial institution offered 50% compensation on a $50,000 bond and took over the bonds. The bonds now have a recovery value of 70%. The financial institution made a profit of 20% or $10,000, while the investor lost 50% or $25,000. It would be immoral for the financial institution to keep this profit. I hope that they will be honorable and refund the profit to the investor.

Tan Kin Lian


Anonymous said...

I know that for Maybank if they compensate you $5K of your $20K minibond bought, they only take away $5K worth of your minibond and you still have $15K with you. I think this is very fair, I dont know how other FI handle compensation.

Tan Kin Lian said...

The formula adopted by Maybank is good, i.e. to buy back x% of the bonds at the full price. In this case, they bought back 25%. I feel that a fairer percentage is to buy back 50% - so that the outcome is shared equally between the distributor and the end customer.

Anonymous said...

In the beginning of FIDREC adjudication i.e. around March 09, Maybank and other FIs also paid small percentage and took 100% of the Notes. e.g. paid 40% value and victim transfer 100% of the notes based on Reading of the Judgement issued by Mad Judge.

There seems to be numerous cases and I believed both MAS, FIDREC and FIs knows about it.

MAS should take the lead and suggest FIs to return the differences if the liquidation value is higher than the compensation that took back 100% of the notes.

FIs should do the honorable thing and not profit from this. By paying back the difference, they have no lost as they took back their e.g. 40%.

Knock, Knock? Hello MAS, are you going to disappear again and continue to work hard on the coming election?

Anonymous said...

What is "Moral" in Singapore ? We victims are stressed for so many months and some even get a "lecture" by Fidrec judges. After going thru' the Merry-Go-Round, FIs are the ones who gained most from this SAGA !

Anonymous said...

The current situation here reminds me of the wet markets we had in Singapore about 40 years ago.

It was a buyers beware market. And may God help the newby housewife doing her shopping there for the first time.

How we have progressed since then! Our wet markets now operate like banks and our banks now operate like the wet markets.

The wet market today is fair and transparent. Weighing machines are monitored to weed out tampering.

And our banks are now the wet markets of our yesteryear. Anything goes! Incredible!

Anonymous said...

Not too long ago, banks were wary of customers who were out to cheat them.

Now, customers are wary of banks which are out to cheat them.

"Pagar yang makan padi"

Anonymous said...

My sixth sense nagged at me not to
go thru Fidrec for compensation,
as this org is aligned to the Govt
and pro FIs according to what we have heard from those who approached them for help.
How to trust an organisation that
is set up by the Govt, who has let
us down.

Anonymous said...

I am hopeful that MAS will step in or the Banks and FI will do the right thing i.e. return the difference to the victims.

If nothing done, then this is the kind of people you have voted in during the last election i.e. good for nothing and only know how to pay themselves first.

Anonymous said...

Just imagine you go to XXX assuming Pinacle notes is now zero value.
Then FI or Fidrec offer to buy back from you at 15% of the value.
Should you accept?
It may turn out in 2-3 years time that that particular note mature and those who keep it to maturity can get back 100%.

Should you go to Fidrec now, or should you wait another 2-3 years to see if that note become "zero" value before going to Fidrec?
It is hard to decide. Fidrec may not allow you to wait so long also. So what should you do???

Anonymous said...

Let's go back to the principle.

First, FI was found at fault thus a compensation was melt out in FIDREC by semi-retired judge.

Most assuming valuation is low or none because none understand the nature of this product except Lehman Brothers.

Then residual value exceed all expectation.

FI profited from the judgement.

Should FI wish the public to go away thinking irresponsible selling principles is rewarded by profiting from the victims?

Let's see how it ends. If MAS or Govt do what they did previously, then it will be another nail their coffin for a poor performance in the next election.

Do understand that Singaporeans are the quiet sort and understand what is going on. The power of words of mouth can be the wind of change for coming election. Asking a air stewardess to vote for PAP because of her $ gain in Daxton due to govt HDB policy can also applies to people's anger on PAP for the mishandling of the problem of the 10,000 victims by MAS and FIs.

php said...

I have had very bad experience with FIDREC. When I filed a claim against a bank here, I indeed won the case. But the Fidrec adjudicator awarded me an amount which was even lower than the original sum offered to me by the bank. How ridiculous that was!!!!!!!!!

Anonymous said...

FI's offered only 40% cash and got 100% notes in return. FI's if the residual value is now more than 40 %, please return the surplus to the investors if you have any soul! You may be right legally but not morally.

Anonymous said...

Mr Tan

How different are you from the FIs, or those whom you regularly put down on this blog on grounds of misrepresentation?

What I had written on your comments re this post was valid and non-partisan.

I had my doubts when writing, if you'd publish it, since it doesn't serve your purpose.

And am disappointed to be proven right.

You're just like those organisations and individuals whom you criticise on your blog.


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