The investors can take legal action on the following grounds:
a) against the distributor (i.e. the financial institution that sold the product to you) on the grounds that they have mis-represented the product or have failed in their duty to give proper advice.
b) against the issuer (i.e. the bank that created the product) on the grounds of mis-representation, fraud or other wrong doings.
If the investors take legal action, their lawyers have to prove the case in court. This is expensive and has an uncertain outcome. There are two class actions (involving the Mini bond and the High Notes 5) being heard in the Singapore court.
Many investors have taken an adjudication case in FIDREC, which is rather inexpensive. Some investors were satisfied with the decision by the FIDREC adjudicator, but many were dis-satisfied with the outcome.
CLASS ACTION IN USA
A US lawyer is holding a seminar in March to explain how investors can participate in a class action to recover their losses against the issuers in USA. More details are set out in a separate posting in this blog.
Tan Kin Lian