Sunday, October 19, 2008

General advice to investors of structured products

1. Lodge your complain

The first priority is for each investor to lodge a formal complaint with the financial institution indicating how they had been misled into investing in the structured product. MAS have asked the financial institution to deal with the complaint expeditiously and not to take an “overly legalistic approach”. They also advised that is not necessary for the investor’s statement to be made under oath (i.e. no need for statutory declaration).

It is important for the investor to make a truthful statement to outline how they were misled into investing in the product. Many investors told me that they were misled by the advertisement, sales brochure, and/or assurances and explanation by the sales representative (given verbally or by e-mail).

Many investors were told, or had led to believe, in some of all of the following statements:

> That the funds are invested in the bonds of the reference entitles
> That all of the reference entitles have to fail, before we lose our entire principal
> That their principal is protected, if we keep the investment to the maturity date

I wish to give the following guidelines to prepare your statement to support your complaint with the financial institution. You must give a truthful statement, to the best of your knowledge and memory.

Your statement should cover the following points:

> Your name, NRIC, address, telephone
> How did you get involved in the investment?
> Which financial institution, branch, amount invested, date
> What happened when you purchased the investment?
> Were you alone or accompanied by another person? Who?
> What did the representative (who sold the investment to you) tell you about investment?
> Did the representative tell you about any guarantee on your investment?
> Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
> Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
> Do you have any other statements to make regarding this matter?

If you fear that the financial institution will challenge with by using the forms that you have signed (for which you were not properly briefed), you can prepare your statement under oath (i.e. statutory declaration) with the assistance of a lawyer.

You can contact Glenn Knight (Telephone Ms Ivy Goh 68999888). His fee is $120 plus GST to prepare the statutory declaration.

2. Outside of “vulnerable group”
MAS have asked the financial institutions to give priority to the vulnerable investors. These are the elderly, low educated and the first time investors. The financial institutions have agreed to take full responsibility for these vulnerable investors who have been mis-sold. The full responsibility includes compensation for part or the full amount that they have lost. This is an encouraging first step.

I wish to ask the other investors, who do not fall into the “vulnerable group” to be patient and to strong. If you have been equally misled into investing in these structured products, and it seems to be clearly the case, you have a strong case to ask for compensation. But, you have to be reasonable in your expectation and may have to accept partial compensation that is lower than the “vulnerable investors”.

You should take the first step now and lodge your complaint.

3. Structured products not connected with Lehman Brothers
If you have bought any structured product that is not connected with Lehman Brothers, you can also file a complaint now against the distributor for mis-selling, if the structured product is different from what you had been led to believe at the point of sale.

For example, if you were told that it is “like a bond” or “low risk” and it actually had credit default swaps or were invested in high risk assets (such as collateralised debt obligations), you can file a complaint now. Do not wait for any of the swaps or assets to fail.

4. Interview with the financial institution
After lodging your complaint, you will be asked by the financial institution to attend an interview. You can attend it with a family member or friend.

At the interview, you have to state the truth as contained in your statement. You should explain the circumstances in which you were sold the structured product and the assurances and explanations that you have received from the sales representative. You can explain your low risk profile and preference.

If the financial institution shows the forms that you have signed, you can reply that you were not informed about the content or that it was not explained to you or that it was written by the sales representative without your consent (if this was indeed the truth).

You should state the truth and not worry about its legal implications. Let this matter be decided by the independent person or by the higher authority. Just state the truth, to the best of your memory.

MAS have asked the financial institution to avoid taking “an overly legalistic approach).

5. Negotiate with the financial institution
The financial institution is required to give you a reply within three weeks. If they offer compensation, you can discuss with them to reach an acceptable sum.

You should consider for 50% to 80% of your invested sum, depending on your personal circumstances. (This is a rough guide only. You can decide what is best for yourself).

If they reject your complaint, you can ask them to state their reasons in writing.

6. Complaint to FiDREC
If your complaint cannot be settled directly with the financial institution, you can send it to the FiDREC (see You can visit their office and get the help of their full time officer.

FiDREC is independent of the financial institution. The officer will explain to you on how the process works.

7. Collective legal action
You can consider collective legal action if the matter is not resolved at FiDREC.

Legal action can be expensive. You should consider it only as the last resort.

If several investors are willing to take collective legal action, you can approach a lawyer and get the lawyer to brief the investors as a group. You should also find out the legal cost and how they are to be shared by the investors.

8. Contact with fellow investors
I will be putting you in contact with fellow investors who bought the structured product from the same financial institution. I will give you the name, e-mail address and contact numbers of the other investors. You can call or e-mail them. You can appoint a leader among the group to arrange meetings.

You can meet on Saturdays from 5 to 7 pm at Speaker’s Corner in Hong Lim Green. I will book the place for the next few weeks.

9. Get updates from my Blog
You can get updates from my blogs:

Do not send individual e-mails to ask me on matters that can be found in my blog. I have to cope with 50 to 100 e-mails a day and cannot find the time to attend to each person individually. It is even difficult for me to read your e-mail and give a reply.

Tan Kin Lian


Anonymous said...

I saw some lawyers at Hong Lim Park giving out name cards.

I really dont know their capability and experience. Please think wisely if you are planning for a class suit. Should we have one or many class suits?

As for us, we have decided on Mr Knight because of the following reason.

1) He is recommended by Mr Tan
2) My lawyer friend told me that he is a highly-regarded lawyer in the legal circle.
3) He was ex-CAD chief.
4) He had made a mistake before I believe mistake creates greater experience and shrewdness.

Some investors are looking for Mr Knight on Hong Leong and Maybank mis-selling cases. Do give him a call to discuss if you have a valid case.

Anonymous said...

On the subject of interview with financial institution, can I ask those who have attended, how was the interview conducted, face to face or over the phone?
Someone mentioned that a questionnaire would be completed, is this done by the Bank staff or the Investor himself? At the end of the interview, is the Investor required to sign on the answers and whether a copy was provided to the Investor?
I ask these questions because if the answers form the basis of supporting the investor's claim, any mistakes in the answers may result in adverse decision to the claim.

Anonymous said...

Class action is the last resort to get a fair payment.

However, do not fall into a trap in which the lawyer gets your money without delivering his best. We can lose the case and the lawyer pops champaign.

The only way to prevent that is to insist that the appointed lawyer is paid ONLY AFTER THE CASE IS WON. IF WE LOST, HE GETS NOTHING. Only then does the lawyer puts in his best. EVEN THEN, HIS FEE SHOULD ONLY BE A REASONABLE PERCENTAGE OF THE SUM AWARDED.

The fee should be apportioned to each investor according to the same percentage of the award given to each investor.

We have to have a lawyer who is able to stand up to the likes of well-known Senior Councils because that's what the banks will appoint.
Beware of legal touts. Do not jump from the frying pan into the fire!

Anonymous said...

Bravo Mr.Tan cos u are a great man out there to help the helpless. Thank U very much.

C H Yak said...

Those who had personal experiences with legal cases would agree with me that corporate lawyers would even cast untrue slurs and created white lies in their final submissions and replies, out of the tricky questions(traps) they asked of witnesses during cross-examinations, just to please their corporate clients and to demonstrate they are fighting loyally to earn their fees. This is just to gain long term goodwill in their business, for commercial gains.

Do not be unduly worried, get an experienced lawyer in this special case; a lawyer who has the personality like Mr Tan Kin Lian who is willing to fight for fairness for the commoners who are unfortunate "investors".

This is simple justice and "equity in law" no matter how aggressive corporate lawyers might be.

Anonymous said...

Dear Mr. Tan,
If we are going to the legal route, I would prefer G Knight as well. But it may be a good idea also if you can find and recommend another one or two lawyers with the standing of Knight as we will be facing a lot of legal fire power from the FI.

Anonymous said...

Do we need to go for the "Interview"? Since we have mentioned all our points in our complaint letter, and have nothing to add? Why should we go for "Interview" to "disadvantaged" ourself and weaken our case?
Any advice? Thank you.

vertigoer said...

Mr Tan, why do you ask individual victims to go through the same route?

Shouldn't a bunch of grass stronger then individual leaf?

If MAS has no authority over DBS, may I suggest a court case for justice?

It is clear evidence that the brochure is misleading with
1. 'credit event' instead of 'bankrupt'.
2. 'Basket of eight' instead of 'Basket used by eight'.
3. 'First to default' instead of first to bankrupt.

This brochure is targeted at retail and not financial professionals.

Anonymous said...

To anonymous 10.51am:

The lawyers representing the banks will surely be from the top law firms in Singapore, and they are able to charge the banks millions of dollars in fees to defend them. Don't forget that banks wants to come out of this financial debacle paying as little as possible --- now and in similar events in the future (do you think the banks will stop selling investment products?). Hence, the best possible chance for investors here is to band together in unity. So far, we have all seen that MAS and the banks weren't responsive at all until Mr Tan step in to gather up all investors. With only 983 investors out of the 10,000, MAS cannot ignore you and sweep it under the matt. Your strength lies in your numbers!

I believe the legal system in Singapore does not allow lawyers to be compensated based on a percentage of the amount recovered. In any case, you seem to have overlooked the complexity of this case and the amount of work involved if your intention is to recover the full amount and compensation for your pain and emotional suffering. Do you reasonably expect your lawyer to work full time on this case without pay through the months ahead against the big shot lawyers in Raffles Place. Who will pay the rent and salary for the secretary?

Anonymous said...

I am not one of the investors. Fortunately for me I learned about all these securitised packages years ago and it stinks, but I really sympathise with those who had invested. Unfortunately also there was no avenue for me to give the other side of the story.

For whats is worth I am taking this opportunity to air my views here.

1. when meeting with the institutions, do not sign any paper as Mr Tan has advised.

2. Better still as a group, appoint a lawyer to meet with the financial institutions then make that statutory declarations. I presume fees can be arranged if acting as a group.

3. In my opinion Glenn Knight is a good choice, as he has a lot of experience from his days in CAD. If I may add, GK has not asked me to write this here. It is my opinion.

Like I said, I have no interests in this "affair", but a sense of justice...Why should the "man in the street' always have to bear the burden

Anonymous said...

The investigation officer from FI has called me & claimed that it will be a final round for them to submit the facts of the process to the panel to decide whether will there be any compensation loss granted, after a verbal phone converation. When I asked should the outcome be unsatsifactory to me, will the FI dislosed their decisions or reasons to those facts mentioned? The reply was that it will not & unless requested by MAS or FIDREC. Hence, Mr Tan this is to highlighte the point when you stated that we can request for the reasons of the FI rejection, not sure this was indeed the case?

Anonymous said...

Hi Dear Mr Tan,
it would be appreciate if u could confirm with me that Leonard Loo & Co, Mr Leonard Loo is working with u. Is he good. I would also appeal to those who want to sue the FI to unite together n set up a meeting point to discuss n appoint a lawyer to take class action.

Anonymous said...

Dear Mr Tan,

Thanks for championing for the general public who had bought into these structure products, especially the Minibonds Series.

You mentioned that there is a Hong Kong bank keen in being the sawp counterparty. Not sure whether the deal can go through, but can I suggest that the government, say Temasek be the swap counterparty.

All they need to do is to assume the role of the arranger, & continue the series till maturity. They can take 1% from the dividend payouts as a profit or for assuming the risk - that can translate to $5mil, out of a $500 mil total investment. Do not think the investors mind getting lesser divident payouts (1%lesser out of average 4.3%) & can see their invested funds matured with full capital paid back.

Its a profitable business proposal for Temesek & they can hold the bonds to maturity with ease. If Temasek can come in, quite sure it can pacify the investors.


Anonymous said...

There is a typo:

reference "entitles" should be reference "ENTITIES"

Anonymous said...

Investors who invest in products irrespective are responsible for their own actions. No one can force anyone to invest in a product unwillingly. Several factors induce investors to invest, greed being one of them. If the product is not paying more, why invest. Higher risks are generally associated with products with higher returns.
Since such investments involve substantia amounts of monies, people who are not familiar with such instruments should beware and not ivest foolishly.
Mr.Tan Kin Lian is previously from NTUC Income and its past Chief Executive. I do not have favorable impression of what NTUC Income has done in terms of educating the public about insurance and finance when Mr Tan Kin Lian was the Chief Executive. I am curious why he is now doing this after leaving the NTUC?

Unknown said...


I do not know your personal profile to state your personal opinion.

I have been buying insurance policies from various insurance co. in pass 25 years.

I also attended Mr. Tan's sale talks when he is a CEO. How often you can see a CEO do sale talk to common folk. I can say that he take care of his customer's interst above every things. He gave his sincere advice on his products.

Do you know that NTUC Income agent got lower commission compare to other insurance companys. He tried his best to ensure NTUC Income deliver higher return to his policy holders with lowest risk. I hope the new management team of NTUC Income could deliver the same result.

I can stand next to Mr. Tan and say he is consistent in his beleif and cannot bear seeing other FIs not doing their social duty to takie care of the common folk's interest.


Anonymous said...

Julie @ 8:37 AM

How much do you think each has to contribute$$ should we decide to join in. I invested 50K in mini-bond. I am feeling the pinch of the loss already, a retiree, and cannot afford to lose any money further.

Anonymous said...

to 10:51 AM

I like your idea, would you like to volunteer to form group and pursue the matter. Count me in. Others who are interested can join in.


Anonymous said...

Hi everyone,

I do not hold any share or lehman mini bonds. But, I deeply share your pain.

I've consult one of my friend who had studied laws. I will post some of his opinion in Chinese. Hope you are able to read the Chinese text. If someone can help to translate in English will be better. Then, both people from who are English and Chinese educated also can read the opinion :

李资政说的话 - 从早报的引述


Anonymous said...

Hi everyone,

Belows are some advice for your reference:

(3)原来这些老人家只是要去存定存,却被银行的财务经理(relationship manager)的花言巧语,被误导成这些投资是利息比较高的定存。
(c)风险和银行定存相比一样或者更低 - 要所有8间银行都倒闭才会出事。(事实是 : 只要一家银行倒闭这个产品就血本无归。)
(e)适合老人家的退休金 - 可以保本,还可以赚取比较高的利息。
(f)英文的说明并没有一条一条的说明里头的内容 - 包括风险等等。

以上各点,只要有任何一个(a)到(f) 的说法成立,就可以确定银行误导了苦主。



Anonymous said...

连DBS自己都承认误导性的销售发生了, 而且也正在承担法律责任作出赔偿。内部也惩处了作出误导性销售的RM。

值得注意的是 - DBS并不是在 “不承认错误的前提”下作出赔偿。而是承认了错误 -
inappropriate sales, 而作出了赔偿。

还有 - 被赔偿的投资者并不是因为他们是那种“不懂英文,教育程度不高”的弱势投资者 (vulnerable investors), 而是纯粹是因为银行作出了误导性的销售。


法律上,个别职员的mis representation 就是银行的mis representation.

当然了,个别职员的mis representation 就意味着每一个投诉都必须个案处理 - 一个一个来调查。如果是系统性的mis representation, “宣传手法不妥, 印刷材料不实, 理财顾问没接受正确训练”,那就不必个案处理,全部都要赔了。





Anonymous said...

李资政说的话 - 从早报的引述

驳斥李资政的谈话disagree with LKY:


也就是说,如果说这句话的人是一个普通人,那自然影响不到法庭。如果说这句话的人是一个律师,那只是因为他有可能会代表当事人所要表明的立场。(也就是说- 代表银行的律师一定说银行没错,代表苦主的当事人一定说银行有错)。如果是法律系的教授,那只是一个学术的讨论。

但是,没有一个法官可以现在就说- 银行没有错。这样的话,法官就失去了公平的立场,也就失去了判案的资格。因为当法官自己都已经有偏见了,还能期望他公平的判案吗?进而,,如果法官本身持有相关银行的股票,或者有亲属任职于相关的银行,都会因为利益冲突而失去审判这个案件的资格。

所以,法官一定不能对任何还没有经过终审(final trial ) 的法律案件发表谈话,说那一方有没有错。就算这个法官自己不是承审的法官,对任何案件发表谈话都有可能会造成不管是因为他和其他法官的私人关系,或引起社会舆论,而起到影响司法的效果。




Anonymous said...

Dear Mr.Tan,

I wish you are able to read the Chinese text. It maybe useful for your speech tomorrow. It may also be useful for the investors to get back their money.

Many thanks for your hard work to help the investors.

All the best to you and the investors.

Anonymous said...

Mr Tan, would appreciate if you can continue to "gather" those investors and fight for justice for these investors in the next few months.

Was very disappointed that up-to-date the response from the authority is really half-hearted and so far no clear indication for the majority investors that have been "hit" by this minibond saga

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