Tan Kin Lian's Blog: Minibond Series 5

Wednesday, October 01, 2008

Minibond Series 5

PUBLISHED IN STRAITS TIMES ONLINE FORUM

Dear Sir/Madam,

My wife and I are joint account holders of Maybank Singapore. We purchased S$100K of Minibonds Series 5 from Maybank's investment banker around Aug'07. We were under the impression then that these were supposedly very safe bonds. Every few months, I'll even call up Maybank to inquire the well-being of our Minibonds and whether I should still hold on to them. Each time, I was informed that these bonds were still sound, and there wasn't any need to bail out.

Now that Lehman is bankrupt, and the public disclosure that our Minibonds has in fact, nothing at all to do with bonds, but are instead CDO-related derivatives, we are extremely disappointed, distressed and upset with Maybank's lack of professionalism and very poor-product knowledge. The investment advisers are more interested in closing the deal and going through the motion during the investors' risk-analysis.

We believe there are many more thousands of retail investors in Singapore whom are similarly short-changed by the high profile advertisements, aggressive marketing, and misleading sounding products such as "Minibonds", "High notes", etc, which gives a false impression of highly rated bonds or notes. This is compounded by the lack of explanation and product knowledge by the private-bankers/investment advisors. Obviously, no one of sound mind will be willing to accept a 5% return for taking on the risk of CDO-related derivatives!

We fully understand the concept of buyers beware. However in this situation, how is the layman supposed to beware of what they're being sold when the 60-odd pages of prospectus is filled with legalese and technical jargon that even the sellers themselves do not fully comprehend!

We seriously implore MAS and Maybank to investigate and not condone such unethical practices, lest Singapore's hope of becoming a leading fund-management and financial centre is tarnished.

Your faithfully,
Ngo Chee Keong (Mr)
Ng Wee Lay (Ms)

CC: Maybank, ST Forum, MAS, CASE, Mr. Tharman Shanmugaratnam - Minister for Finance, Mrs Lim Hwee Hua - Senior Minister of State for Finance

5 comments:

Anonymous said...: Not sure if GIc or Temask evaluated such structured products? Whether they have bought any?
If the experts also don't buy, why expect the layman to understand the risks, and bound by "buer beware"?
The worse part is these risky products are sold to many risk adverse persons thinking that they are safe.; October 01, 2008 1:58 PM
Anonymous said...: Dear Mr Tan,

I salute you and your team to help al the helpless, without seeking any financial benefits. S'pore need more people like you.
The thing that I am puzzled is why do we have to sign a petition to ask the S'pore government to step in to help. What was the promise during elections, they forgot their basic responsibility is to serve the people who "voted" them into government? Many people think more oppositions are needed, just look at Taiwan and HK actions.; October 01, 2008 2:09 PM
Anonymous said...: Dear Mr Tan,
Thank you for your sacrifices of time and energy to help people like us.
Through what I've gathered from your blog entries, I've written a letter to the bank (copied to MAS & FIDRec) who sold me the Minibond Series 6 after my verbal complaint. So far, the branch manager of the bank as well as a lady from MAS have called me to scknowledge receipt of my complaint.
Let's see what is the outcome.; October 02, 2008 12:31 AM
Anonymous said...: It is sad to note that so many innocent people have lost their hard earned life savings into these mini-bonds and High Notes having been advised that it is a low risk investment, but to add salt to injury,it is sadder still to read statements from a senior cabinet minister to say: "But that's life - if you want to have good rewards, you've got to take risk. Otherwise leave your money in your CPF... Four percent is a fabulous return without risk". However, to justify the salary increment to ministers, the rationale given was that "it only cost a plate of CHAR KWAY TEOW from each adult citizen" - peanuts!!; October 04, 2008 5:35 PM
LVH said...: MAS the financial guard dog was definitely caught off-guard. They were most probably sleeping on the job...these highly paid scholar-type people running the govt and MAS should take out $$$ from their own pocket and compensate us the structured products investors. We trusted them to safe guard our financial system but they failed us. Now they should pay for their mistake instead of sitting on the side line and just point fingers at the FIs.; December 22, 2008 2:54 PM