Tuesday, February 16, 2010

Fee to swap counter party on Mini bond

First posted on 11 Feb 2010

If you wish to join in a collective action to ask the trustee to explain why they paid a large fee to the counter party to unwind the Mini bond, please give your particulars here. I will need some investors to volunteer to take the lead in this collective action.


Update: 
Total of 31 people replied up to 16 Feb. The response has been quite poor. Nobody volunteered to take the lead.

26 comments:

Anonymous said...

Hi,

Received letter from HSBC trustee on MB 3A

It gave a detail breakdown of the fee charged.

Majority goes to paying LBSF 29.75% and liquidation. Liquidation from original S$142955000 down to S$124386597 i.e 12.99%.

receivers took 0.38%
Legal took 0.49%

Others 0.31%

Anonymous said...

Why is there so much difference in the payment to LBSF? Some series 29% while others reported as much as 51% - is this why the recovery value of series 3 is better than series 5?

song said...

Hi Mr Tan Kin Lian,

Thanks for the help in providing a mean to collective action to ask for explaination from the Minibond trustee on the high fees to LBSF.

However, is it still contestable? the money from the liquidation is automatically refunded back to CDP account on 12 Feb 2010. Even if we do not feel fair to accept the terms, we still have to receive the money. By receiving the money, does it not mean that we are legally accepting their terms? i really hope to only accept the money after knowing the explaination given by the trustee.

Anonymous said...

Once again MAS and Authorities failed to protect the noteholders, and we are left with depending oon Mr Tan Kin Lian for help and direction.
Thank you, Mr Tan!

Anonymous said...

Now we know HSBC Trustee cannot really be trusted. They are only keen to close case and collect fee for themselves. What an unfair settlement for notesholders

Anonymous said...

Yes, those affected should band together and take the Trustee to task. May even need to have another financially competent neutral 3rd-party to determine if outcome is fair, whether any conflicts of interest, and whether any breach of fiduciary duty.

Frankly, MAS probably just went along and rubber-stamped the proposed settlement between Trustee, LBSF and PWC. I'm not surprised if MAS staff don't even understand the underlying technicalities, the market probabilities pertaining to the CDS or REs, the financial modeling and pricing movements over the past 1 year etc.

As I mentioned a few weeks ago, the restructured LB entities, the liquidators, the trustees etc are all part of a old boys' club. They ain't gonna be "lao lan" with each other, not like debt collector and debtor. It is business as usual, you scratch my back, I scratch yours. In London, analysts of restructured LB are being paid S$30K/month just to shuffle assets around, market-price the assets, see which creditors are owed what and how much, how to extract cash from assets and use which asset to pay off which creditor --- basically very admin tasks in finance world.

Don't be surprised if some big fish creditors has been deemed of greater seniority in the pecking order, and the huge fees are for paying off such creditors as well as paying generous salaries and bonuses to staff of restructured LB and the liquidators.

Anonymous said...

That is the reason why we should petition to ask HSBC trustes for an explaination. As usual, I don't think anything will come out of it as HSBC Trustee will behave like the govt. IGNORE US!

This is also the reason why we should vote loudly to tell the govt that they are taking us for granted for too long....

Anonymous said...

MAS silence is deafening with so many CDLs failing. I am wondering what is the role of MAS?

Anonymous said...

I am surprise that with majority of the payout going to Lehman, the trustee deem fit not to check with the noteholders. I for one who prefer trustee taking legal action. For series 5. Lehman gets 51 cents and note holders 29 cents so we have a large margin to fight the case.

Anonymous said...

MAS said our overall compensation of FI plus recovery proceeds at 60% is comparable to HK. Do the math:

In HK,
FI compensation = 60%
Liquidation value = 85%
Recovery proceeds = 80%
Total compensation = 60+(0.8*40)=92%
Are they the same? HK gets 92% but SG gets 60%
- MAS is just playing with figures to make out to public that they did as well as HK

Anonymous said...

You just found out the role of MAS.

To massage figure so that the statistic makes the govt looks good. HK investors were confused initially about the success of our mediation and now we thought we are comparable with HK compensation but in actual fact, we are 1/3 lower.

Good job MAS. Please continue to work hard preparing for the election. Remember your salary is paid by tax payers while you are not doing anything to help. On the contrary, you keep confusing Hong Kong people and us with your statistic.......

Tan Kin Lian said...

I have received only 22 replies (which is rather low), mostly from investors of series 2,3, 5 and a few replies for series 1, 6 and 7. All the investors are not able to volunteer to take the lead.

Anonymous said...

How about another legal action? As pinnacle note holder, we want to continue. As pinnacle note holder, we can not lead for minibond issue.

Anonymous said...

What is the risk to lead the class action? Why not?

Anonymous said...

"I have received only 22 replies (which is rather low)"

This indicates that investors do not trust the authority any more.

Anonymous said...

Mr. Tan,
You got low response because most people have given up. We all now know we are in the eyes open big big environment so there is not much that can be done. So it is not that people do not appreciate what you are doing. It is simply that people know nothing would come out of it so they got tire of it.

I can almost guarantee that even if the trustee bother to respind, it will be some meaningless type of response so why bother except to swallow the losses and never trust the FIs again.

song said...

Hi Mr Tan,

What is the job scope of taking lead in asking HSBC to explain the LBSF fees? We are not sure whether we can take it up and also not sure what to do? any guidance on this?

Anonymous said...

Mr Tan,

Most of us would have 'sell back' the bank a portion of our Mini Bonds during the settlement with the bank. So by right the bank would have quite a big number of 'lot'.

The bank should be the first to make noise about the large pay-out to the swap counter party. Their voice would definately be louder than ours.

Anonymous said...

The bank won't take any action because they should know every thing when they launched the product. They won't admite that they are cheated, how could it be? they are experts on these finacial products.

Anonymous said...

I think it is high time for CPIP to take immediate investigation action and find out whether there were any foul play in the process of the swap agreement. Two potential outcomes might be covered up by both parties, i.e HSBC trustee and LBSF. I strongly believe that :
(1) they had under table agreement benefited to both parties.
(2) officers from the HSBC trustee might be given certain amount of benefit in order to agree upon the huge percentage of residual value back to LBSF.
We hope MAS can look into this mater seriously so that we would not be lough at like a fool internationally.

Anonymous said...

It has been more than a week and

i) No response from HSBC trustees and the receivers.
ii) MAS mute on this issue
iii) FIs took advantage of the immoral profit.

What does it means?

The FIs and the receivers are just doing what MAS and the authority always done. Ignore and close case. The high and mighty attitude.

Who are we? In simple words, PEANUTS.

What will they do next? Praise themselves for a job well done and increase their own salary.

Anonymous said...

As I said many times already --- all (except you) are part of old boy's gentlemen's club. Their dealings are over fine wine and food, and legally crafted by big-5 law firms, who are themselves also part of the exclusive club. At most it is oligarch environment. CPIB won't be able to find anything out of the ordinary. Ordinary for big businesses and high-flying characters. Mind boggling and extra-ordinary to you & me.

Anonymous said...

Actually I wrote a email to this legal firm for more detail based on the email address provided on their website. I wrote 3 or 4 times but there is no reply at all. Is this company really there?

Anonymous said...

Out of 8927 complained to FI & FIDREC, 7137 has at least 50% compensation. Assuming majority are small investors with <$50,000 investment, after liquidation, they would have at least 78% of the total investment returned to them.

Summary: 80% of the 8927 investors who complained received at least 78% of their principle after liquidation.

My point: Majority would have close case unless they can sue LB or MB or HSBC without cost. Those big investors will be interested to pursue as their lost is still very significant.

Minibond saga is coming to an end unless something interesting happens e.g. seminar with American Lawyers.

Anonymous said...

To Anon 5:22pm,

Are you legally forbidden to disclose details to other 3rd-parties? Did you sign any Non-Disclosure Agreement?

If not, you should CC your email to MAS, CASE, your MPs, Bank Assoc of S'pore, newspapers including NewPaper, Sin Ming and Wan Bao, CC also to other law firms for their knowledge. Take photo of your sent emails and post to Stomp.

You will sure get response from them. May not be nice response but at least they will not treat you like a dummy.

Anonymous said...

Hi, 11:02 PM

Thanks for your advice, but I am not going to fight with the law firm. If I still have energy to fight, I will fight with the FI but not the law firm.

I just feel strange if this law firm wish to organize a collective suit for us, why they do not bored to answer their potential clients?

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