Saturday, January 24, 2009

SCMP:Sun Hung Kai Financial may lose 'caring' award over minibond saga

24 Jan 2009
Ambrose Leung

Sun Hung Kai Financial may be the first of several financial institutions to lose an award that honours their corporate social responsibility as a result of their involvement in the minibonds saga.

The Council of Social Service, which confers the annual Caring Company awards, is reviewing its decision to give the award to Sun Hung Kai, after its subsidiary Sun Hung Kai Investment Services was reprimanded by the Securities and Futures Commission for the way it sold the high-risk derivatives to customers.

Sun Hung Kai and more than a dozen banks accused of misleading vulnerable investors are understood to be among the winners who will be unveiled and honoured next month.

Cliff Choi Kim-wah, business director of the council, said the vetting committee would meet soon.

“Those being awarded know well that we reserve the right to strip them of their titles,” he said. A spokesman for Sun Hung Kai Financial declined to comment.

Christine Fang Meng-sang, chief executive of the council, said it was prepared to withdraw the honours if the banks were officially censured by relevant authorities, or if they were found to have committed criminal offences.

“We have received e-mails from some minibonds victims who were unhappy with the banks getting the award,” she said.

Any wrongdoing by the banks, however, could not wipe out the charitable work that they had done, she noted.

“ We can’t strike them off the award list just because people are protesting outside their branches. But we are prepared to review their awards if any of them is found by the authorities to have done wrong,” Ms Fang said.

The council will give out more than 1,700 awards this year to businesses and public organisations for demonstrating good corporate citizenship and their contributions in community work.

Among the 60-plus banks that were honoured last year, more than a dozen – including the Bank of China, DBS Bank and the Bank of East Asia – now face thousands of angry investors who are seeking compensation for their losses after the collapse of Lehman Brothers, which had issued or guaranteed the minibonds they bought.

Investors, some of them elderly, claimed the banks had lied about the investment risks when persuading them to buy the highly complex products. Many of them have filed complaints with the Monetary Authority, made police reports or resorted to the courts to seek redress.

Since the scheme was launched seven years ago, only one company has had its award withdrawn. No company with a criminal record or which has been officially censured by astatutory body in the previous three years can receive an award.

Lawmakers who are helping the minibond investors seek redress were outraged. Democrat Kam Naiwai said the council should rethink its awards plan.

“ How can these banks be so shameless and still have the guts to brandish the ‘caring company’ tag after conning old people into buying their poisoned minibonds?”

Audrey Eu Yuet-mee, leader of the Civic Party, said: “It is so ironic that the basics of a caring company, which is to care for the customers, are not reflected in the awards, while it recognises contributions to the environment and donations to charities.”

The Bank of China, Bank of East Asia and DBS all said their awards this year had nothing to do with the minibonds saga.

SCMP:Boost investor security without stifling market

24 Jan 2009

It may be premature for most people who face losses on investments in Lehman Brothers minibonds to celebrate a victory for the small handful who have got all their money back. But any breakthrough in the saga over alleged mis-selling of the products as low-risk is welcome news for them. Aggrieved investors could not ask for more than full compensation. The HK$85 million voluntary settlement agreed by Sun Hung Kai
Investment Services for some 300 investors puts pressure on the 21 banks and two other brokerages involved in the sale of the minibonds in Hong Kong. The outcome in this case appears to vindicate the Securities and Futures Commission’s top-down approach of investigating the way institutions sold the minibonds, rather than a protracted case-by-case examination of complaints. Any adverse conclusions about an institution’s conduct can then cover all its affected clients.

Sources said the investment company apparently came forward with the settlement offer, although it has denied any liability or wrongdoing. The company obviously believes it is better to put the matter behind it quickly by settling with its clients than face the prospect of drawn out legal proceedings and the possible loss of its trading licence. In any case, its decision is commendable, as it saves its clients from further anguish and, above all, financial losses. But the real significance of the settlement is to be found in the reasons for a reprimand issued by the SFC over concerns about the way the broker sold the minibonds.

Despite their name, they were not corporate bonds but complex credit-linked instruments. The SFC was concerned about the adequacy of the company’s due diligence, training of sales staff, risk assessment, and record-keeping in relation to the minibonds. The company agreed the concerns were serious.

One question now is whether such shortcomings were prevalent at other institutions that sold the minibonds, mostly banks. It seems unlikely that the SFC’s investigations will find that this is an isolated case.

Another question is whether institutions whose clients make up a higher proportion of the 47,000 investors in HK$15.7 billion of minibonds will be as willing to settle their losses in full.

The SFC does not have the power to impose a settlement. But by publishing the results of its investigations, it does have the power to exercise some moral persuasion. If other institutions find that the concerns in this case have some application to them, they may conclude that the example of Sun Hung Kai is a better way to conclude the affair than dragging it out. It is significant that in announcing the settlement, the SFC dodged the issue of whether claims of mis-selling of the minibonds as low-risk investment products have been substantiated, and Sun Hung Kai admitted no liability or wrongdoing. The terms of the settlement sets a rather appealing precedent for other institutions that are eager to put the matter behind them quickly. Every situation is different, however, so the terms of any settlement could depend on the extent and seriousness of any misconduct. Whatever the terms for each case may be, it is important, and only fair, that even where banks reach settlements with their clients, the SFC will still insist on disclosure of any concerns arising from its investigations.

The financial secretary has called for a review of regulations after receiving reports on the minibond affair from the SFC and the Hong Kong Monetary Authority, which regulates banks. For the sake of confidence in our financial system, the government must move swiftly to enhance investor protection without stifling a free market.

SCMP:Minibond deal raises pressure for more refunds

24 Jan 2009
Joyce Man Additional reporting by Maria Chan, Enoch Yiu and Albert Wong.

More institutions and banks were likely to consider compensating minibond investors after Sun Hung Kai Financial announced it would offer full refunds, a knowledgeable source said yesterday. But the source said they would each propose a deal on their own terms.

“ I think they will see what has happened with Sun Hung Kai and realise it’s a quick, better way to put this behind them,” said the source, who did not want to be named.

Sun Hung Kai Financial, parent company of Sun Hung Kai Investment Services – which sold minibonds linked to Lehman Brothers, the US investment bank that collapsed in September – announced on Thursday it would buy back minibonds from 310 customers for about HK$85 million.

At the same time, the Securities and Futures Commission raised concerns about Sun Hung Kai Investment Services’ due diligence, salesstaff training, risk assessment and record-keeping on minibonds. Minibonds are not corporate bonds but consist of high-risk credit-linked derivatives, marketed as a proxy investment in well-known firms.

Asked whether other banks might respond with compensation of 70, 80 or 90 per cent of original investments, the source said that would “depend on how serious [the commission’s] concerns are about the conduct”.

But the commission had no authority to force this on them, the source said. A spokeswoman for the Monetary Authority, which regulates banks, also said it could not do so.

The source said the deal on Thursday proved the efficacy of a top-down approach, under which the commission investigated whole institutions, not individual complaints.

Secretary for Financial Services and the Treasury Chan Ka-keung said Sung Hung Kai Financial’s repurchase offer proved the commission’s investigation was effective in protecting investors’ interests. He would not say if he thought other banks would be pressured into following suit, only that he believed the commission and the Monetary Authority would be fair in their investigations.

A banker who asked not to be named said the settlement would put pressure on banks as investors would have high expectations. However, the banker said the top-down approach the SFC used had its drawback as banks would have to compensate all customers if the SFC found they had systematic problems in selling investment products.

“It’s unfair if we have to pay for all customers unless the systematic problem is very big,” the banker said, adding that it was hard to judge how big the problem would need to be to warrant compensating all customers.

Another banker expected there would be more pressure for banks to reach a similar agreement with the SFC. But he believed few would strike deals.

“It is not because the amounts of minibonds sold by banks are bigger; the major reason is that it’s unreasonable. We only compensate customers if we are wrong.”
Investors poured HK$15.7 billion into Lehman Brothers derivatives.

However, Kenny Lee Yiu-sun, chairman of the Hong Kong Stockbrokers Association, said the buyback offer had set a very good example. “Banks should also refund investors in full if they are found to have made similar mistakes.”

Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, said the number of clients who bought minibonds from Sun Hung Kai Investment Services and the sum they invested were relatively small, so the repurchase deal was not totally suitable for larger banks.

Democratic Party lawmaker Kam Nai-wai said the refund would set a good precedent. “ I can’t see how other banks and institutions … with similar structural deficiencies will be able to evade responsibility.”

Those eligible for the repurchase deal will receive details in the post in the first week of February.

KPMG, provisional liquidators of eight Lehman Brothers firms in Hong Kong, will begin meeting creditors on February 11.

Financials fall after buy-back offer.

Broker compensates HK investors

HK brokerage agrees to refund minibond buyers

By Tom Mitchell in Hong Kong
Published: January 23 2009 04:22 | Last updated: January 23 2009 04:22

A Hong Kong brokerage has agreed to refund retail investors in full for their losses on so-called “Lehman Brothers Minibonds”, in a settlement that will set a worrying precedent for other financial institutions in the territory that have sold about $2bn worth of the controversial investment products.

In a deal reached with Hong Kong’s market regulator, the Securities and Futures Commission, Sun Hung Kai Investment Services agreed to refund $11m to more than 300 buyers of the minibonds, which are in fact complex derivative instruments linked to the now defunct US investment bank.

The agreement goes beyond calls by the Hong Kong government last year for banks to repurchase the instruments at their “market value”. Instead, Sun Hung Kai will repay investors their entire principal. Twenty-four banks and brokerages, led by Bank of China’s Hong Kong branch, sold Lehman Brothers minibonds with an estimated face value of $2bn to more than 40,000 investors.

“We are very pleased with the outcome that has been achieved and we believe the approach adopted has produced a result which is in the best interests of the investors,” Martin Wheatley, SFC chief executive, said in a statement.

The controversy surrounding the mini-bonds has sparked a political firestorm in Hong Kong, with burned investors descending regularly on bank offices, SFC headquarters and the territory’s legislature. Many have lost their life savings and claim that the risky minibonds were mis-sold by bank and brokerage staff.

While Sun Hung Kai did not admit to any wrongdoing in its settlement with the SFC, the brokerage acknowledged concerns raised by the regulator including inadequate due diligence, training of sales staff and record keeping.

“We achieved an outcome which we believe represents the best possible solution for our minibond customers,” Lee Seng-huang, Sun Hung Kai executive chairman, said. “We understand it has not been an easy time for all concerned, but we believe that this voluntary initiative will bring closure to our affected customers, particularly in light of this challenging economic environment.”

The Hong Kong Monetary Authority, the territory’s bank regulator, has received about 20,000 complaints related to the sale of minibonds. As of January 15 the authority had formally opened more than 4,500 investigations and referred 251 cases to the SFC for possible enforcement action.

Hong Kong’s politicians have also leapt into the fray, working with the protesters and forming a special legislative subcommittee to look into the controversy.

Friday, January 23, 2009

Comparing US Departments with Singapore Ministries

Here is a comparison of the US departments with the Singapore ministries. 
The US has a Department of Justice which is similar to our Ministry of Law. Perhaps, there is a difference in emphasis?

Obama Whistle Stop Tour

Watch this short video.
It is truly inspirational ... what a Government should be.

Thursday, January 22, 2009

Make a donation from your 100% compensation

In America, some lawyers are willing to take a case on a contingency fee. If they win the case, they receive 10% to 30% of the amount recovered. If they lose the case, the client only pay the expenses.

Some noteholders are interested to engage lawyers on a contingency fee to recover their money. But contingency fee is not allowed in Singapore.
Think again. Many volunteers have spent several hundred hours of time and their expertise to help the noteholders to recover their money, without any promise of payment. As a result of their work,  1,280 of the noteholders will be getting back 100% compensation.
I like to ask these noteholders to consider giving a donation, if you have directly benefit from the work of any specific volunteer. This is just a small donation (far smaller than the contingency fee expected by the lawyer). It is for the volunteer to decide if they wish to accept it. Some of the volunteers are able to spend the time because they are not working. They do need an income.
If you wish to make a general donation of say 5%, I will put the money in the legal fund to engage a senior counsel or queens counsel to give a legal opinion to help the other noteholders. If there is any balance in the legal fund, I will contribute it to the financial services consumer association (FISCA) that will be establised to provide financial education to the public.
If you wish to make a contribution to the legal fund or any volunteer, you can contact me at  I will appoint someone to manage the accounts. Be generous. Remember - you could be one of the noteholders who has been rejected or have been offered inadequate compensation.

Honesty and fair play

My friend told me this story. A businessmen and a Government official were very happy. They have found a way to make a few million dollars for the businessman to import of rice into the country through a licence given by the official and to share the illegal profit in an overseas bank account.

My friend said that the illegal profit will have to be borne by the poor people who have to pay a higher price for the rice. He is sad that people can be so happy to make profit from the suffering of the poor people.

This does not refer to Singapore.

Obama: the price and promise of citizenship

For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies.  It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours.  It is the firefighter's courage to storm a stairway filled with smoke, but also a parent's willingness to nurture a child, that finally decides our fate. 

Our challenges may be new.  The instruments with which we meet them may be new.  But those values upon which our success depends - hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism - these things are old.  These things are true.  They have been the quiet force of progress throughout our history.  What is demanded then is a return to these truths.  What is required of us now is a new era of responsibility - a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.

This is the price and the promise of citizenship.

Wednesday, January 21, 2009

A bank sue for being misled

After Sure-Bet Investment Fails, a Bank Contends It Was Duped

Focus on the complaint case

Dear Mr. Tan,

There is something that disturbs me tremendously. I read your blog post that talked about some of the factors that affect the final decision of the FIs on the investors complaints. I empathize with many of the investors whom I believe have been most sadly given inadequate and inaccurate information and advice by the relevant FIs and their staff, which led to them buying the structured products, in particular Minibond and Pinnacle Notes and suffering loss and distress in the process.

I have received news that there are endless delays and repeated changes in the timeline given to clients who have lodged complaints with the FIs. All too often, investors have received a letter in the mail, hoping that it communicates the FIs compensation decision, only to be notified that the FI is still reviewing their case and will reply soon. 'Soon' can mean a couple of months.
In the questionnaires that the FIs are asking investors during the complaint interview, many investors have been quizzed on their education level, past investment experience, source of funds and the amount of savings they have. Many of such questions have no actual connection to their complaint on mis-selling and make no sense at all.

I have also heard news that some FIs are investigating into the wealth and property held by the investors, which once again is totally senseless and only serves to terribly delay the reviewing process.

I hope that the FIs can focus on the facts of the investors' complaint case and offer a swift and fair reply to investors, cutting short their torment over their failed investment products, rather than dig into the investors private information on their finances and assets.


SCMP:Watchdog to select minibonds case soon


21 Jan 2009
Joyce Man

The Consumer Council will soon choose a representative complainant to support in legal action over banks’ sale of financial derivatives issued or guaranteed by Lehman Brothers.

The products lost much or all of their value with the US bank’s collapse in September.

Democratic Party legislator Kam Nai-wai held talks with council chief executive Connie Lau Yin-hing yesterday on when the watchdog would select a case, and its progress on dealing with the 7,000 complaints the party had referred to it about the sale of Lehman Brothers derivatives.

Some 43,700 Hong Kong investors bought Lehman Brothers derivatives, mostly minibonds, worth HK$15.7 billion. Despite their name, minibonds are not corporate bonds but complex, credit-linked derivatives.

Investors claim the products were mis-sold as low-risk.

The council has been sorting through complaints to single out cases suitable for help from its legal action fund, and has identified 45.

Mr Kam urged the council to consider not only cases that involved elderly or novice investors, but also less winnable cases. Banks were more willing to settle out of court with elderly and less experienced complainants, who had a higher chance of winning in court, he said. The council should choose some younger and well-educated complainants to send to court.

The Democratic Party said Ms Lau told it that taking a representative case to court would not have any impact on a class-action lawsuit investors may bring in a US court.

What will Obama do?

Barack’s plans and approach:
Transition team’s website: 
Portal to the citizenry: 

Tuesday, January 20, 2009

Great value in voluntary help

I was shocked to learn that a senior lawyer charges $2,000 an hour to look into the credit linked notes.
Adrian Tan, who help me in the credit linked notes, must have spent 100 or 200 hours in helping many noteholders. He earns nothing. Adrian was a lawyer and also a financial expert. The value of his advice and help must be worth more than the senior lawyer.
Adrian was able to spend so much time, as he is not working at this time. He spends his time managing his investments. But, if given the opportunity, he would be happy to be earn an income.
I hope that the noteholders who managed to receive 100% compensation should reflect on what Adrian Tan, and other volunteers, have done for them. I am not suggesting that they should pay the volunteers, but I want the noteholders to know that if they have used a lawyer for the same help, they would have to fork out $10,000 or more, just to get the same result.

Complaining to sellers of credit linked notes

Message from Adrian Tan

Mr Tan Kin Lian has urged that the many people who have yet to lodge a complaint to do so.
If you are one of them, you should because the results of the MAS/FIs Complaints Resolution process are more favourable than many have expected. Read this.

In particular, minibond investors who have not complained, should do so because "For the Lehman Minibond Programme Notes which were sold by banks and one finance company, 34% will receive offers of full settlement and 41% will receive offers of partial settlement; for those sold by stockbroking firms, 1% will receive offers of full settlement and 12% % will receive offers of partial settlement."
The following form, was drafted for the use of the layperson complainant.  It is self-explanatory. Many investors have used the format.
(Note to users -- You can just type the questions down in an email message, and answer them according. You need not, print out a hard copy and answer on it. Just use the format in an email message.)  After completion, you can send the form here.
As said earlier, the form is self-explanatory, and anyone who has a secondary school education in English should have no problem filling it in for himself, a relative or friend. But for anyone who doesn't want to fill it in person, and is willing to pay me S$120, I will prepare a draft based on the information provided. I can be contacted at
No point asking me to do it for free. If you can send me an email in English, you can fill it in yourself at no monetary cost to yourself or to complainant.
A Tan

Talk to Singapore Government

Give your votes on 18 suggestions for the Singapore Government. You can add your own suggestions for other people to vote. President-elect Obama has a similar website that attracted many vistiors. The most popular suggestion collected over 40,000 votes of support.

Reduce commuting

Work near your home. Abolish stamp duty on purchase of home. Read this article.

Thought for the day - Power

"In order to get power and retain it, it is necessary to love power; but love of power is not connected with goodness but with qualities that are the opposite of goodness, such as pride, cunning and cruelty.": Leo Nikolaevich Tolstoi - (1828-1910) Russian writer
Contributed by Ho Cheow Seng

Monday, January 19, 2009

Stop cheating

Read this article.

Factors affecting the quantum of compensation

An investor who helped an elderly relative to get 100% refund of a large investment in mini-bond wishes to share the following information:

Factors affecting the quantum of compensation:
1. Vulnerable
It seems like the definition of vulnerable is a combinition of following:
- age > 62 yrs old
- uneducated
- non-english speaking

2. Tranche of your minibond.
Different minibond series are invested in different combination of assets. Some tranches invest more in corporate bonds such as those issed by GE Capital, hence their underlying value are worth more and likely to worth more if held longer, when conditions of the captial market improves. In return for compensation, you need to transfer your rights of the minibond to the FIs, hence FIs are more willing to compensate more for those series with higher underlying value, especially the ealier tranches of minibond, as they will be able to benefit in future, if any.

3. Written Evidence.
As minibond is considered to have high risk profile, if you have written evidence that your risk profile is on the contrary (most if not all FIs need to do some form of needs analysis for you and there is a section on risk profile), then the chances of mis-selling is very high. On this basis alone, you have a high chance of winning under Common Law (i.e. sue the FI in court).

4. Customer-centric
Some FIs with progressive leadership team are more customer-centric and more willing to compensate on the basis of good will.

Whether you get compensation and how much depends mainly on the interplay of the above four factors (although some other factors may also be relevant).

Survey: Life in Singapore

How do Singaporeans feel about life in Singapore?
Here are the survey results.
Read this report.

Happy noteholders who received 100% compensation

I wish to pass this message to the 1,200 happy noteholders who received 100% compensation. 
You have spent a few months of agony and worry. You were uncertain about whether your money would be gone forever. 
You were deilighted to receive the recent letter or telephone call that you would be getting 100% compensation. Some of you wrote an e-mail to thank me for helping to achieve this happy outcome.
I wish to ask you to consider this possible situation. Suppose you had received a offer of partial compensation (which you consider to be insufficient) or a rejection. How would you have felt? There are 10,000 noteholders who are in this unhappy situation.
What can you do to help the other noteholders? I ask you to consider to express your support and solidarity for them. 
Perhaps, if you are generous, you can consider donating 5% of the amount that you received towards a fund to help them to get legal opinion and assistance? This is just a thought. If there are sufficient people interested to make this donation, I will get someone to organise it.

Role of private capital

Private capital thrives well in a booming economy. They make easy money. They even contribute towards creating bubbles in asset prices. As the prices keep going up, they make more money.
When the bubble burst, private capital is unwilling to take risk. This caused the collapse of the credit market.
Read this article.
The Governments have to step in to provide funds to re-capitalise the banks, to guarantee bank deposits, to guarantee the credits of borrowers (i.e. homeowners, small businesses). In this case, what is the purpose of private capital?
This has happened in USA, UK, Singapore and many other countries. 
What is the solution in the future? I believe that the capital has to be provided by the state (it is already happened) or by state-sponsored mutual funds. Ir should not be provided by private capital that are driven by short term gains.

Sue the relationship manager

A noteholder wanted to sue the relationship manager for giving bad advice. Other people said that there is no point to sue the relationship manager, as he will not be able to compensate the noteholder for the financial loss.

Someone told me that this is a good strategy. The relationship manager is likely to confess and tell the truth. In that case, the wrong-doings of the financial institutin will be brought to light. They might be more willing to give a fair settlement.

Google documents

I am now using Google documents to publish my survey findings. I wish to thank the reader that give me this wonderful tip. 

Tips - what to avoid

1. Never invest with borrowed money
2. Never invest from a marketing company (e.g. time share, land banking, etc)
3. Never invest to get a free gift (it comes from your own money)
4, Nver invest in something that is too good to be true (it is!)

Read this article about Storm Financial.

Sunday, January 18, 2009

Current market values of the credit linked notes

I wish to ask visitors to share what you know to be the current market values of the various series of credit linked notes (i.e. minibonds, high notes, pinnacle notes, jubilee notes, etc).
Please post the current values here, with the dates. Also, indicate the source of the information, e.g. website. 
The note-holders will be receiving the offer of compensation from the financial institution soon. They will need to compare the offer with the market values, to make sure that the offer is at least higher.
If I have sufficient information, I shall organise them in an easy to read format. Please share your information for the benefit of all.

My view: decision on 5,000 complaints

Here are my views about the decisions made by the banks on the complaints of mis-selling of the credit linked notes.
1. About 1,280 (25%) noteholders will receive full compensation. This is good news and is higher than I had expected. I like to know the amount of compensation to see if the full compensation is given mainly to the small investors or is well distributed among the small and large investors.
2.  About 1,670 noteholders (33%) will be offered partial compensation. To help them decide on whether to accept the compensation, they should be informed the current value of their notes, so that they can make an informed decision. 
3.  Another 6,000 noteholders have not lodged their complaints yet. They should step forward to lodge their complaint now, if they have been mis-sold.

Contact persons (distributor, products)

Click here for the email address of the contact persons based on the distributor and type of credit linked notes:

Rating of political leaders

How do Singaporeans rate our political leaders?
Here are the survey results.

Survey: Looking for a job in 2009?

Are you likely to look for a job in 2009? In view of the recession, are you prepared to consider non-standard job options? Do you need help? 

Take part in this survey.

Here are the survey results.

Book a taxi by SMS

Are you willing to pay $1 for a taxi to pick you from your home, office or outside?

Here are the results:

Current prices of Credit Linked Notes

Click here to check the latest prices of the following:

I do not have the source for Minibonds. Anyone knows where to find the prices?

A generous financial institution

I observe that many of the 100% refund came from a certain financial institution. I am not able to name this institution now, due to insufficient evidence. But I wish to congratulate this institution for its generous approach. 

I am sure that their customers will appreciate their gesture and will tell other people about it. I hope that this financial institution will prosper in the future, with the renewed trust of its customers and new customers.

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