Monday, November 07, 2011

Kin Lian the link between Pinnacle, High Notes cases

Published in the Business Times. I hope that the top management of DBS reads the Business Times and decide to be magnanimous.


By GRACE LEONG(SINGAPORE) Two court rulings issued this week - one in Singapore and the other in New York involving Singapore investors of DBS High Notes 5 and Morgan Stanley's Pinnacle Notes respectively - couldn't have turned out more differently.But they have one thing in common - former presidential hopeful Tan Kin Lian. He was among those providing advice to investors affected by the bankruptcy of US investment giant Lehman Brothers, and organised petitions to the government to investigate possible wrongdoings by local banks in the sale and marketing of Lehman- linked products such as High Notes, Pinnacle Notes and Minibonds.He said that the Pinnacle Notes ruling highlighted the difference in legal recourse available to investors in Singapore and America.'In the US, a lawyer can bring cases 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 lawyer takes on such cases after studying the chances of success for the effort, time and expense he makes in undertaking the case. But it gives the small people a chance to seek redress.'So far, the Pinnacle Notes investors have not had to cough up a single cent in bringing the case against Morgan Stanley and its affiliates in New York. And even if they lost the case, they're not liable for the defendants' legal costs.But that's not the case for DBS High Notes 5 investors, who lost their appeal against the High Court's decision that the Singapore bank owes them nothing.'The investors already lost all of their investments. They now have to bear their legal expenses and, possibly, the expenses of the DBS lawyer,' Mr Tan said.The DBS investors, who collectively lost $18 million when the structured product failed with the Lehman Brothers' collapse in 2008, had sued the bank, arguing that the DBS High Notes 5 were void at the time they were issued.But the Singapore Court of Appeal, in a judgment this week, ruled: 'A person who signs a contract which is set out in a language he is not familiar with or whose terms he may not understand is nonetheless bound by the terms of that contract.'In contrast, the US federal court hearing the Pinnacle matter observed that warnings in offer documents do not always provide immunity.'While there is little doubt that the cautionary language warned plaintiffs that (Pinnacle) Notes carried some risk, it is inadequate to have put the reasonable investor on notice of the alleged fraud,' US District Judge Leonard Sand ruled.That finding is pivotal because it allows the issue to be examined at trial of whether issuers and arrangers of such products should have legal immunity through 'generalised warnings of risk' buried in many investment products.Now that the Court of Appeal has ruled, Mr Tan said that it would be a 'a good time for DBS to be compassionate and magnanimous in undertaking to bear the legal cost of both sides, so that their customers do not have to bear any further loss'.

12 comments:

Tan Kin Lian said...

On the DBS High Notes, I managed to get the investors to come together.

The investors decided to engage the lawyers to fight their case against DBS on the grounds of a flaw in the prospectus. I was not a party to this decision - as I left it entirely to their judgement.

On hindsight, it was not a strong argument, as it was thrown out by the court and the appeal court.

Anonymous said...

Strong argument can still be thrown out by a kangaroo court.

I hope S'porean voters can see clearly what kind of government we now have in this country and do the right thing in 2016.

Anonymous said...

I have not participated in any local legal action cause I know the investors will not win thus saving further investment on sunk investment cost.

yujuan said...

From the High Five Notes Court case, guess everyone is fully convinced now, it' a losing battle trying to fight against a Company that is closely related to the PAP Govt, it's a Goliath and David battle where the huge sledgehammer is used to bash down little David flat like a pancake, leading to the Chinese saying, you lose both your wife and your own army.
Same with the SLA white colar crime case, if a citizen cheats a private Company, he pays with only a few months or a few years jail, if he cheats on a Govt Agency like SLA, woe betide him, could be slapped with more than 20 years behind bars.
Motto, just swallow down any injustice meted out by anyone or any Company related to the Govt, and move on. The legal costs will first kill you, there is no legal justice in Singapore when you take on the mighty PAP Govt in the local Court, it's their Court, not ours.

Anonymous said...

In fact these are just one of the many issues highlighted by concerned bloggers like Tan Kin Lian.

But the 60% mandate and 93% seats for PAP in GE 2011 shows that even combined together, these does not pose a serious problem for the PAP, like losing its 66% seat majority.

With 93% seats, PAP is far from being even denied a 66% majority, let alone below 50%.

Anonymous said...

Don't bring a knife to a gunfight.

Just vote wisely in GE 2016.
That is the only recourse you have left.

Anonymous said...

In the May 11 GE and Aug 11 PE, I already did the right thing, however it is not easy convincing the 60% to come over, until they also lose their life long savings and their govt will just stand by and tell you that you signed the contract and hence must bear the consequences, unless of course you are the national bank and you can escape scot free even with a careless mistake in the contract.

Anonymous said...

Don't waste your money and time fighting the banks and insurance companies in the court, sure lose.They are protected. What about the consumers? They are the suckers
who are making them rich.

Anonymous said...

The money in HN5 was our hard earned money. We lost it because we believe the bank and their staff would not do anything that could harm our saving.

I guess we have to find another way to go after DBS.

Anonymous said...

But now the HN 5 investors must pay cost. This will amount to millions I suppose. How are they goingto pay it. If they can't what will DBS do.

maybe the investors should have chosen a different approach in the case. They should have claimed they were mislead into buying the investment

Anonymous said...

But what other ways can you go after DBS, all other ways have failed. Fidrec, lawsuite, what can you do now.

Anonymous said...

Let me share from an insider point of view,

this sub prime notes are beyond ordinary investors or even seasoned banking pros, so it is sad the greedy , ignorant..etc has to pay a high price. This is a case where someone engineered a product that suited careful investors..preying on the need for 5% yield..with low risk..
i will say this is a grey area where both sellers and buyers must pay a price ....for their greed n ignorance

as for TKL i salute u for helping theses pple .. as i know this pple didint help u in the election...

if they did u shd get at less yr deposit back...

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