Tan Kin Lian's Blog: Offer of compensation

Wednesday, December 17, 2008

Offer of compensation

Some investors are getting offers from the distributor (financial institution) to compensate at 30% of the invested sum. They are given a deadline to accept the offer. If they do not accept, the offer expires and they get a rejection letter from the distributor.

They ask my views on whether to accept this offer. It is difficult for me to give this advice. My view is that a fair offer is 50% of the amount of loss (i.e. difference between the invested sum and the current market value).

Some investors feel that 50% is inadequate and wish to fight for a higher compensation. Other investors feel that they should accept the offer of 30%, as this is the best under the circumstances.

What is your view? Please reply to this survey:
http://www.surveymonkey.com/s.aspx?sm=_2b2e2PBMeL_2bR3lqPs9dmcBQ_3d_3d

25 comments:

Anonymous said...: I think the FIs may estimated that the current value is at the range of 30% of the invested sum to form the basis for the proposed compensation.

To me , I will agree to 50% of the amount of loss (i.e. difference between the invested sum and the current market value).

The probelm is when can we know the actual amount of loss at the rate MAS work on it.

In this case, I would settle with 30% + 35%(50% of 70% loss) = 65% of the invested sum to close the case NOW and move on and will not trust any FI, RM , US ever after.; December 15, 2008 10:09 PM
Anonymous said...: You have to tread this carefully in case you will be accused of poor advice in the future. Money is an evil and when it is not enough it can make people say and do all sort of things.; December 15, 2008 10:12 PM
Unknown said...: lets summise

30% of 10k is 3k

30% of 50k is 15k

30% of 100k is 30k

3k is enough for starters to join a strong class action, IF THERE WILL BE A CLASS ACTION, recommended by lawyers to be about 500 congregated, earliest news if its even possible in end Jan

30k is STILL not enough for an individual suit estimated at around 50 to 80k LEAST, actual duration, counter-sues, counter-claims AND psychological trauma notwithstanding.

I'd say its well worth a consideration.

I have one further suggestion, get EVERYONE in your group to co-write a jointly signed letter (or petition as now its frequently called), preferably drafted or even witnessed by some laywers ASKING (by asking, i mean INSISTING) for an extension of this duration. and lets see their reply to that (IF ANY), shouldnt costs much more than 50bucks each if numbers gather, well worth isnt it, even a month mobile bill cost more than that these days

AGAIN PLEASE PLEASE PLEASE ASK TO TAKE BACK FOR TIME TO GO THRU AND READ WHAT YOU ARE ABOUT TO SIGN.

Dont make the same mistake twice..whats the point of 30% compensation by what, Dec 2019?? in Investment Vouchers!?; December 15, 2008 11:03 PM
Anonymous said...: The issue of how much of compensation considered enough is tough but think of those who were rejected or still waiting for the FI to reply (I am one of them).
How many of us have enough time and "bullets" to compete with the FIs?
I prefer to put a closure and move on.

Jasmin; December 16, 2008 7:12 AM
Chan J C said...: If the sales information out there such as fact sheet, prospectus and what have you are cleverly done up such as to deceive ones' "open eye" and hence caused an investor to make a wrong decision, under the contract law, shouldn't the contract be void?

If this is true, then why should these victimised investor accept anything that is less than 100% of compensation?

The contract is void and this should serve as the basis of compensation.

JC; December 16, 2008 10:17 AM
Unknown said...: "I prefer to put a closure and move on."

versus

"..why should these victimised investor accept anything that is less than 100% of compensation?"; December 16, 2008 1:26 PM
Bea said...: Would you know who are these investors that are being offered compensation and which are the financial institutions?

It'll be good to get an understanding if investors who aren't offered compensation are being discriminated against.; December 16, 2008 5:53 PM
anthonykohhy said...: What institutions are these that are offering at 30%? Are these offers to normal or the 'vulnerable' investors?; December 16, 2008 8:27 PM
Anonymous said...: Nothing less than 100% compensation as miselling and mispresentation equals fraud !; December 16, 2008 10:59 PM
Anonymous said...: To Wayang and no logic person (nologist)

There won't be any funeral for your related ones as you will prefer to move on... since you won't cry for anyone...

Likewise.. when your time comes, we will move on since you prefer to put yourself a closure.; December 16, 2008 11:41 PM
Anonymous said...: JC,the purchase contract can be voided if misrepresentation can be proofed against the distributor. To proof misrep you have to proof the product is fraudulent. Most investors do not understand how CLNs operate, much less they are scams. It is very difficult to proof fraud, only investment fraud specialist litigators from U.S are good at it.
PLoh; December 17, 2008 8:46 AM
Anonymous said...: Several weeks ago the consensus among investors was that distributors were guilty of mis-selling or making misrepresentations when they were flogging these various toxic products. And there is truth that mis-selling or misrepresenting had indeed occurred, so parties guilty of mis-selling or misrepresenting were "advised" to do the "right thing" that is, compensate victims who were mis-sold.

If you have mis-sold, then you will have to make proper compensation; it is only fair to people who have become victims of your improper actions,

A 30% compensation is not, IMHO, a proper compensation. An offer of 70% would be "reasonable" and would bring this fiasco to a close, with both sides patting each other's back. It would be a mutually amicable settlement.; December 17, 2008 10:35 AM
Anonymous said...: After months of waiting and interviewing, I had finally received the "FINAL REPLY" from DBS that they are unable to accede to my request for compensation.

In the course of interview, I was questioned on the joint account with my mum, which was totally irrelevant to my investment or claim. They even asked where the money come from? Though, I emphasized that my mum is the principal holder of the account and it has nothing to do with my personal account and investment, I still received a call the couple of days later asking what is my mum's occupation.

Can anyone out there tell me what does my family's background got to do with my lost?

I am now given 6 months to contact FIDReC, which I couldn't put any hope in..... or maybe a waste of effort.

Doubtful; December 17, 2008 11:00 AM
Anonymous said...: We should be compensated in full. BTW, i understand that the Legman doesn't own a banking license in Singapore. Please assist to confirm it. If in this issue, can HSBC sells Legman's product in Singapore ?? If not, then we shld be compensate in full and agony we have gone through these couple of months.. We had been totally mis-lead into it. MAS shld answer to.; December 17, 2008 1:28 PM
Unknown said...: "Anonymous said...

There are so many things in this world that are beyond our control.
By accepting and moving on, it gives us a sense of spirit to live on.

Jasmin

7:18 AM"; December 17, 2008 2:19 PM
Unknown said...: I'm just not going to trust any of these RM, FI on these so-called safe "savings or investment" again. It's been a real let-down and long-process for me. Fortunately I did not really slip into depression as I always "talk to myself" about to let one get into that situation, regardless. I called the (Maybank) FI yesterday after their 2nd letter to me about "they said still investigating and come back to me soon they can", and yet to hear from anyone as of today; 12/17/08 , one month after receipt of their 2nd letter. Depressed...; December 17, 2008 3:14 PM
Unknown said...: "Anonymous said...

After months of waiting and interviewing, I had finally received the "FINAL REPLY" from DBS that they are unable to accede to my request for compensation...

11:00 AM"

"Anonymous said...

...You have to fight it in court. No other way.

1:27 PM"; December 17, 2008 4:33 PM
Unknown said...: "...Legman doesn't own a banking license in Singapore...If in this issue, can HSBC sells Legman's product in Singapore ??...We had been totally mis-lead into it.. "

Not one single player in the English Premier League has a football license in this Little Red Dot.

But heck many here rush to queue up to wager who gets to kick a stupid ball into the back of the net first almost every other weekend!?

That MUST be misleading.; December 17, 2008 4:45 PM
Unknown said...: !PLEASE PUT THIS ON THE TOP OF THE FRONT PAGE!

COMPENSATION? READ THIS:

Goldmine Sachs: As jobless toll soars, investment bank's bonuses for staff are cut to a MERE £4.3bn

By Karl West and Nick Mcdermott
Last updated at 8:10 AM on 17th December 2008

Investment bank Goldman Sachs is to pay £4.3billion in bonuses to its City workers.

Despite the financial crisis and the spectre of soaring unemployment, staff at the bank will get an average of £142,600 each.

The international group, which is estimated to have 5,400 employees in London, is already nicknamed ' Goldmine Sacks' for the large extra payouts it awards to its star performers.

Yesterday the firm posted its first loss for almost a decade. And earlier this year it was forced to accept a £6.5billion lifeline from the U.S. government after falling prey to the economic crisis. Goldman Sachs is estimated to have 5,400 employees in London (Fleet Street branch pictured)

Goldman Sachs is estimated to have 5,400 employees in London (Fleet Street branch pictured)

Now, an amount equivalent to two thirds of that aid will be paid to its workers as bonuses.

The news emerged as experts in Britain warned of a 'middle-class recession' with hundreds of thousands of white collar managers expected to lose their jobs over the next year.

Goldman's bonus plans come as anger grows among taxpayers at the way banks - in particular those that have received billions in bailout funds - have failed to pass on cash or interest relief to customers.

Criticising Goldman's, LibDem Treasury spokesman Vince Cable said: 'It's absolutely outrageous. It's clear that these people have learned nothing from the financial crisis. It shows the greed and lack of sensitivity - and ultimately stupidity - in gambling behaviour which caused this crisis can continue indefinitely.

'It is rewarding the taking of excessive risk and we know this caused the downfall of much of the financial markets.'

Labour MP John McFall, chairman of the Treasury select committee, questioned the wisdom of such a large payout during an economic crisis in which the banks played a central role.
Vince Cable says the bonuses for staff are 'outrageous'

Vince Cable says the bonuses for staff are 'outrageous'

He said: 'Is Goldman Sachs going to the taxpayer to get help in order to keep its staff bonuses at the same levels and prevent them from experiencing the problems that the rest of the economy - and normal people - are suffering during the current crisis?'

Goldman said its 'pay and perks' pool fell to £7.1billion for the full year, down from last year's record £13.2billion.

The bonus portion of this, estimated at 60 per cent of total pay, dropped to £4.3billion but is still worth an average of £142,598 per employee.

Overall, each worker is likely to suffer a 45 per cent cut in average pay to £237,470.

Goldman began telling staff who would be getting what in their January pay packet as it revealed its first quarterly loss since floating on the Stock Exchange nine years ago.

Among those not included in the bonus distribution is chief executive Lloyd Blankfein and six deputies who gave up their additional rewards this year.

The bank has about 400 partners who typically share a bonus pool worth about 20 per cent of the total payout, which in good years can mean bonuses in £5million - £10million bracket for top performers.

However, big fee earners can make much more. In 2006, one star employee, Driss Ben-Brahim, is believed to have banked a £50million bonus - a record for a single City trader.

Those days are a distant memory now, however, as the big merger and acquisition deals have dried up.

Wall Street's financial titans have been brought to their knees by the worst financial crisis since the Great Depression of the 1930s.

Goldman has had to take massive write downs on the value of its toxic investments in property and real estate.

The financial group made a loss of £1.4billion in the fourth quarter. Goldman said it had cut 2,500 staff in the quarter, bringing total numbers employed by the bank down to just over 30,000.

It is thought the bank laid off about 600 of its 6,000 workers in the City of London as part of the cull.

http://www.dailymail.co.uk/news/article-1096086/Goldmine-Sachs-As-jobless-toll-soars-investment-banks-bonuses-staff-cut-mere-142-000-EACH.html; December 17, 2008 5:07 PM
Anonymous said...: Anon @ 11.00am asked:
"Can anyone out there tell me what does my family's background got to do with my lost?"

Now you can empathise with how the girl who was raped is being interrogated by the rapist lawyer whether she is a virgin at the time of the rape.; December 17, 2008 6:29 PM
siewkhim said...: Kin Lian,

By offering 30% they know that many will not accept. Once it is not accepted all offers will be withdrawn and no other offer will be made.

So thet expect the investors will sue in court of law. They are no afraid as they are likely to win with 99% probability because their financial and powerful political backing are as solid as a rock. I don't have to say more, you and I know the consequence when fighting with people with so much power. You will be crushed!! There are already adequate examples.

So the FIs will end up paying nothing.

Hence I would think it is best to go for the 30% otherwise they get nothing!!!!! and never never trust FIs and Insurance companies.; December 17, 2008 6:56 PM
Anonymous said...: According to Morgan Stanley (MS) website, MS issued a notice of 8 Dec 2008 to its distributors concerning the aggregate losses suffered by Pinnacle Series 1, 2, 3, 5, 6 and 7. I am not sure about the rest but I have not received any notification from my FI to-date.

http://www.morganstanley.com/pinnaclenotes/notes.html

The current market values of Series 1, 2 and 7 are below the interest payments due in Mar, May and Jan respectively. I expect these notes (and probably Series 6) to be the next to fail.; December 17, 2008 8:03 PM
Singapore Kopitiam - Voices of Singaporeans said...: Hi:

In the light of recent development that some RMs are willing to come forward to testify against the FIs, the offer of 30% compensation from the FIs should be rejected.

The strategy now is to go for class action to recover 100% of the investment amount plus cost.

The technicalities appear to be:

(1) The RMs were given the wrong information and training by the FIs;

(2) The RMs passed on the wrong information to the investors;

(3) The RMs had been pressurized by the FIs to cover up their wrong-doings;

(4) Because of point (1), the RMs made the wrong assessments of the risk profiles of the investors;

(5) The respective prospectus did not make the full disclosure related to the CDSs and CDOs to enable investors to make informed decisions;

(6) The advertisements of the structured products were misleading;

(7) Because of points (1), (2), (5) and (6), the investors were mis-sold the structured products.

Regards,
Victor Sun
Singapore Kopitiam - Voices of Singaporeans
http://forums.delphiforums.com/sunkopitiam; December 18, 2008 6:21 AM
Unknown said...: Yes agreed, if the Whistle blower coming onboard, just REJECT 30% OUTRIGHT..nothing lesser than 100% should be the right direction from now on; December 18, 2008 10:40 AM
Anonymous said...: I am sure those RMs kenna played out will come forward to testify against the FIs.
They can testify that they
1.were trained to lie about the products
2.. to suppress material information
3. to use underhand methods to push the products.
4. to manipulate the old folks until they are confused
5. to fabricate the fact finding forms to fit the clients' profile
6. only to push high commission products; December 18, 2008 11:56 PM

Wednesday, December 17, 2008

Offer of compensation

25 comments:

Blog Archive