The Straits Times journalist asked for my views about the dismissal of the appeal by the High Notes investors against the earlier judgement. I replied that I am sad to learn about this outcome for the following reasons:
- The investors already lost all of their investments. They now have to bear their legal expenses and, possibly, the expenses of the DBS lawyer.
- This decision came around the same time as the good news received by the Pinnacle Notes investors that the New York court has agreed to hear their class action against Morgan Stanley. Furthermore, the New York case is being heard under a "success fee" arrangement where the investors do not have to bear any legal cost, if they do not succeed in the case.
- The High Notes were created by DBS and sold to its own customers. This gives a higher responsibility to DBS, as they should be aware of the risk of this product and should have communicated it clearly to their customers The other credit notes were created and sold by different banks.
I hope that DBS Bank will at least undertake to bear the legal cost of both sides, so that their customers do not have to bear any further loss. It would have been nicer if DBS Bank had offered to give an ex-gratia payment to the investors, instead of having this case decided in court. I believe that DBS Bank might have sold a similar product in Hong Kong and they probably had agreed to compensate the investors in some way - but I do not really have the facts.
Tan Kin Lian
It is sad especially because the side that won was represented by a member of parliament who is supposed to be a people representative but instead fought against the peoplevin real life
ReplyDeleteInvestors go in with their eyes open. Let this be a lesson for all.
ReplyDeleteRex comments as follows,
ReplyDeletei am particularly disturbed by the language used by the Court when they dismiss the appeal.
They play on mathematical trick, The report said that the investers would get around 36% interest if all goes well. In fact it is about 5% per annum. You can't just take 7 years and multiple by 5% and say 35% interst. It is a one dimensionsal approach whereas in the financial world we always have to judge by per annum basis.
This is the same trick some banks used when they ask you to put their money in fixed deposit, they say it is 14% interest. You divide that by 5 years the tenure the lock you in.., it's just a little over 2% interest a year.
In the verdict the judges use this same trick, to lead the casual reader to believe that the investors are greedy want to get 35% interest. Whereas in actual fact they are looking at 5% interest p.a. which is a reasonable request by conservative not crazy gamblers. As it is the High Notes were packaged in deceivng manner from the start, and now the judges continue to deceive the public with this simple trick, 35% interest, good grief, total distortion of mathemactial principles.
rex
For this very reason, I have purposed in my heart not to have any investments taken with the banks now nor in the future.
ReplyDeleteIf the bank customers continue to believe in them and place their hard-earned money in their hands, they have themselves to be blamed after what already have been played out to be seen by all eyes.
Trust the local banks, not me. I have not made any profits after locking up with them for more than five to six years. I did not get back my capital amounts as well.
Many I've spoken to said that they have lost trust in financial institutions here, especially insurance companies.
ReplyDeleteWe are a very passive lot. We got bullied left and right. Just look at the meagre interest rates. Just look at how insurance companies tried to wriggle their way out of paying. Just look at how they wring you dry because all cars must have insurance. Just look at the complicated formula they use to explain your policy bonuses.
Finally, just look at how they can always count on the law to be on their side.
A conservative investor bought a financial product from a financial institution with the understanding (from the sales brochure and newspaper advertisements) that it is a long term bond issued by six leading banks. The bond pays 5% interest per year for a 5-year tenure.
ReplyDeleteHe discovered later that the product he bought is not a bond. And worse, it is bad or toxic.
The product he bought is a very high risk complex financial product. A group of “elites” (financial and legal experts) is responsible for the drafting of the newspaper advertisements, sales brochures and prospectus so that it appears similar to those low risk bonds issued by banks.
The investor complains to the authorities, but the authorities is having an opinion that he must be invested with his eyes open because he did not satisfy the conditions of “vulnerable investors” (i.e. education level must be below primary 6 and age must be 65 or above).
The authorities did not investigate into the complaints of misleading advertisements, sales brochures and the quality of the product (whether bad or toxic). Instead, it is more interested in how the financial institutions train their sales staff.
The group of “elites” and their associates managed to create an impression that the victim is greedy and has unrealistic expectation (such as expect high return and no risk …).
The poor investor not only lost most of his 30-years hard earned money, but also deeply humiliated.
DBS HN5 investors were told this product was very stable and safe because the risk was spread out across different bonds. Some of them were told this product was as good as FD.
ReplyDeleteUnfortunately, investors who were DBS's preffered customers took the bait and did not record the statements of their RMs and signed the dotted line. Even they read the prospectus, they would not be able to understand. they took their RM's recommendation as final.
Just wonder what kind of bank and RMs would do such a thing to their own customers, that is betting against their customers.
I believe, on average, this group of people had been with the bank for no less than 20 years.
The outcome was a foregone conclusion from the start.
ReplyDeleteAll along it is a kangaroo court what.
ReplyDeleteMr. Tan, thank you for co ordinating with the USA lawyer to initiate our claim. I have lost $200,000 in pinnacle notes, a large part of my retirement money that I will never earned back and accumulated over many many years of work. Believing that my risk is with the five referenced entities and earning small return. If they would have offered like 10% interest it would have heighten my guard so it was very clever of them to offer a small interest to convey that it is not a risky investment as we all know high risk high return so low interest is low risk and low return. How wrong can I be and now ending to seek justice in USA!
ReplyDeleteHi Rex, do you think those investors are newbies?
ReplyDeleteBeing a Singaporean is a added disadvantage. From my understanding, Hong Kong regulator secured a high compensation for the victims, DBS included. Same bank but different outcome. Compensate foreigners but eat locals money because local court is "own-people" as both banks and court are government linked......
ReplyDeleteWhat to do? 60% still think Govt is great and look after it's own people. Maybe wait till this 60% get burn in the financial market and realized that MAS and Govt only look after foreigners. Good luck.
rex comments as follows
ReplyDeleteto anon @4.44
It is not very important whehter the investors were newbies or expereienced investors.
The point is very clear, the notes were said to be linked to Bonds, but in reality it was to CDO bad debts from USA.
I also made the point that the investors were made to look as if they were greedy seeking 35% interest rates. Whereas the interest rate is just 5% on per annum basis. It is not much different from shares investment where you get dividents of 3 to 5% in the blue chips anyway. How could the Court of Apppeal make such terrible insinuations by mathematical trick which ignore the time factor spread, i am very angry.
It is law of the jungle in singapore, survival of the fittest and most elites only. Very very sad.
rex
Yes, not only one did not get any help like hong kong investors, one get humiliated as well and it almost feel ashame that one tell others that one invested in those products to be seen as greedy!
ReplyDeleteThe experience has changed me from a die hard pap supporters to one that will vote for anyone who is not pap!