Dear Mr Tan,
Somebody put it in a nutshell on how the fortune of this world's musical money chair came to a grid lock.. called the Ponzi Scheme! Simple anedotal way to explain a complex situation... please publish it for the benefit of those who read your blogs. Thank you!
S8N
Starting Point
The Ponzi Scheme
The crux of the fraudulent Ponzi scheme is the twin pillars of:
) Fannie Mae & Freddie Mac – the two giant mortgage corporations of USA
2) The Derivative financial tool known as Credit Default Swap (CDS)
Once you have a grasp of these two concepts, you cannot but agree that we are facing total global banking collapse. Why? Because the entire global banking system has been built on these two financial pillars! But the system became irreparable in the last 7 years when CDS became the linchpin in the massive expansion of derivative trading and financial engineering.
The Mechanics
1. Banks became greedy and were unwilling to earn safe and steady profits from mortgages for housing and commercial properties which usually spread over a period of between 5 to 30 years.
2. Banks wanted massive profits in the shortest period of time and the ability to lend massive amounts and not be regulated as to how to do it.
3. The crooks devised a scheme. It was a simple idea.
4. Banks will provide mortgages to all and sundry.
5. I am going to use a simple example and using small numbers to illustrate for ease of calculation. Thus, assuming the Bank gave out US$1 million to finance mortgages, bearing interest at 10%.
6. The bank then sold the mortgages to Fannie Mae and Freddie Mac at a discount. Fannie Mae and Freddie Mac being Government Sponsored Companies (GSCs) are able to get cheap financing to purchase these mortgages as they were assumed to be "guaranteed by the US Government".
7. Fannie Mae and Freddie Mac then package these mortgages into all sorts of structured financial products and these were sold to investors (private as well governments) . Central Banks hold massive amounts of dollar reserves and they need to find a safe haven for them. Hence, and invariably, Central Banks invest their reserves in US Treasuries and financial "mortgage-backed" products issued by Fannie Mae and Freddie Mac as well as other US financial institutions.
8. With the payment of US$ 1 million by Fannie Mae / Freddie Mac, the bank by law, can lend ten times the amount after keeping 10% reserves i.e.US$100,000. Therefore, the bank can lend US$9 million by "creating money out of thin air" i.e. by crediting the borrowers in their loan accounts in amount of the loans extended. These US$9 million loans secured by mortgages are then sold to Fannie Mae / Freddie Mac again.
The cycle keeps repeating and the banks keep creating more and more loans.
It was so easy that the banks decided to create dubious loans called "Liars Loans" whereby the borrower need not state the actual income and or ability to repay.
9. As more and more of these loans were created, investors (government and private) demanded assurances that these loans were good for investments. The rating agencies (e.g. Moodys, Standard & Poor and Fitch etc.) who in collusion with banks, gave AAA ratings to what were essentially junks. This fraud led investors to believe that these financial products were good investments.
10. The rating agencies were only too aware that this scheme needed something more concrete to prolong the fraud and induce the investors to part with their monies.
11. The insurance companies like A.I.G. came into the picture. They were seduced by the idea that if they can insure against risks of accidents, storms etc., they could also insure risks against default by the mortgage holders. Thus was born the financial innovation – Credit Default Swap (CDS). Any financial product with a sound CDS would be rated AAA. It was as good as being guaranteed by Uncle Sam. Central banks all over the world fell for it – hook, line and sinker.
12. The scheme works out like this – AIG sells protection – i.e. in the event there is a default, AIG will pay out to the buyer who buys the protection (the CDS) in exchange for the payment of premiums covering the period of protection not unlike your usual insurance policy. It was easy money for everyone.
The banks get to sell their loans and have the liquidity to create more loans.
Fannie Mae / Freddie Mac and other financial institutions get the opportunity to repackage these loans / mortgages and sells them to investors with a tidy profit.
The investors are happy with their so-called guaranteed returns. The insurance companies, investment banks and other players get their premium income for selling protection. It was old fashion mafia loan sharking and protection business dressed up in modern financial jargon and everyone was too arrogant and greedy to see through the fraud.
13. When loans default and continue to be delinquent, the law (depending on each country) provides that if the loan is in default for 90 days or more, it should be declared a Non-Performing Loan (NPL) and banks must provide reserve to cover the loss.
14. What happened was banks were covering the defaults and kept them on the books for two years or more in the hope that no one would be wiser and interest income from new loans would cover the defaulted old loans – the classic ponzi modus operandi.
15. When the two years default reached critical proportions starting with the sub-prime loans, the fraud began to unravel. Investors began demanding their protection money for the losses arising from these defaults. It has been estimated that the market value of the CDS was in excess of US$60 trillion but the capital of the insurance companies like AIG are only in the billions. It is therefore a physical impossibility to make good the demand for payment for the defaults.
16. If AIG the No. 1 insurer in US and the world is in default, it means the rest are in deep shits. You can take it as a given that no one and no one has good coverage and protection anymore.
17. When there is no coverage and protection, how can there be AAA ratings for new issues of such financial products? Fannie Mae/Freddie Mac etc. cannot package these products for sale to investors and if they cannot sell, they will have no funds to buy more dubious mortgages from corrupt and fraudulent Wall Street banks. With no additional funds, these crooks in JP Morgan Chase, Goldman Sachs, Citigroup, Lehman Bros., Morgan Stanley, Merrill Lynch, Bank of America, UBS, Barclays, HSBC, Deutsche Bank, Credit Suisse, etc. will have difficulty extending new loans.
The "Musical Money Chair" will have to come to a complete halt. The entire system gets into a gridlock.
Given the above explanation, can the US government and the Fed continue to bail out banks and other financial institutions? When US is in deficit in both the budget and current accounts, where else can they get the extra monies except by creating out of thin air (virtually by keying digits into computers) or print more dollars.
If you are a sovereign lender or a private hedge fund, knowing the situation, would you lend more monies to the US Treasury knowing that each dollar issued (whether digitally or in printed notes) are not worth the value stated therein.
These dollars ARE NO BETTER THAN TOILET PAPER.
The bulk of our reserves are in US dollars. Our trade – petroleum products, palm oil and other exports are mainly traded in dollars. When the dollar dives into the cesspool of waste, what then?
Friday, October 17, 2008
Caring and responsible country
Comment posted in my blog
Though I am not a Singaporean but I follow your blog with keenness especially on the issues of losses suffered by the retail investors in the structured investments.
I believe that Mr. Tan has a point and a cause to fight for. Can you imagine those retiree who has been some how misled into these investments and now they have loss all or most of their hard earn saving.
It is only right that a caring and responsible country like Singapore should act in its upmost honesty and responsibility to get at least part if not all of the money invested by the innocents investors.
While saying that I do hope country like Singapore will set as a good example that follow what Hong Kong is doing it now.
May God bless all those who has suffered not because of their faults.
Though I am not a Singaporean but I follow your blog with keenness especially on the issues of losses suffered by the retail investors in the structured investments.
I believe that Mr. Tan has a point and a cause to fight for. Can you imagine those retiree who has been some how misled into these investments and now they have loss all or most of their hard earn saving.
It is only right that a caring and responsible country like Singapore should act in its upmost honesty and responsibility to get at least part if not all of the money invested by the innocents investors.
While saying that I do hope country like Singapore will set as a good example that follow what Hong Kong is doing it now.
May God bless all those who has suffered not because of their faults.
Petition to MAS - review sales training and marketing processes
I have extracted the particulars of 273 investors who signed the Petition to MAS to review the sales training and marketing process of the financial institutions. I will be sending the Petition to MAS today.
It does not matter that other people did not sign yet. The number of signatories is more than sufficient.
If MAS acts and carries out the review, and found that the bank has not provided sufficient training to the sales representatives, it will be helpful to the investors who have been misled.
Investors who bought directly from the brochures or advertisements, can claim that the sales materials were misleading, and that essential information have been withheld, or were presented in a misleading way. Your case is not as strong as those who were misled by the sales representatives, but there are grounds to support your case as well.
All the best!
It does not matter that other people did not sign yet. The number of signatories is more than sufficient.
If MAS acts and carries out the review, and found that the bank has not provided sufficient training to the sales representatives, it will be helpful to the investors who have been misled.
Investors who bought directly from the brochures or advertisements, can claim that the sales materials were misleading, and that essential information have been withheld, or were presented in a misleading way. Your case is not as strong as those who were misled by the sales representatives, but there are grounds to support your case as well.
All the best!
HK: Tsang vows to get justice for minibonds investors
Tsang vows to get justice for minibonds investors
Bonnie Chen, Diana Leeand Beatrice Siu
Friday, October 17, 2008
Chief Executive Donald Tsang Yam- kuen has pledged to help those caught up in the Lehman Brothers minibond row get justice if any criminal or civil liability is identified.
"Officials found guilty of misconduct in handling the Lehman Brothers minibond saga will be punished but it is not an appropriate time to see who should be responsible - all efforts should be focused on tackling the matter," Tsang said in response to a question by financial services legislator Chim Pui- chung in the Legislative Council.
Much as he hopes litigation could be avoided, he promised to pursue cases to the end. "If cases are found to have criminal liability, we will follow up seriously," he said.
Banks involved in the case are expected to respond today to Tsang's ultimatum on a buyback proposal.
Also, the Hong Kong Association of Banks will announce the appointment of Ernst & Young to evaluate the value of all Lehman-related products, including minibonds and equity-linked notes, or ELNs. The ELN evaluation is expected to be completed next Friday.
Meanwhile, DBS Bank (Hong Kong) has reportedly settled with two clients. In one case, a man surnamed Chan said his 84-year-old mother and 50-year- old brother had bought HK$560,000 worth of ELNs from the bank.
Chan declined to disclose the amount of compensation but said the bank told his family that it was a capital preservation product that would have interest paid every three months. He said the bank staff admitted they realized his brother had a mental illness.
A spokeswoman for DBS Bank (Hong Kong), however, clarified that as of yesterday, "the bank has not made any settlements with any parties on the grounds of alleged mis-selling."
Tsang reiterated the administration will inject capital to the Consumer Legal Action Fund if necessary. "But I hope banks will not seek litigation. Reputation is an invaluable asset to banks. It will be shameful and troublesome to banks if they go to court and it is time-consuming too," he said.
Tsang rejected Chim's idea of setting up a special court to handle the Lehman saga as impractical. Neither did he accept Civic Party chairwoman Audrey Eu Yuet-mee's suggestion of settling the problem through arbitration.
Tsang said both parties had to agree on arbitration or the case will have to be handled by the court. The Hong Kong Monetary Authority, he said, will also set up a mediation group for this purpose.
Spokesmen for the Bank of East Asia, ABN Amro, ICBC (HK) and Dah Sing Bank said they are considering the buyout proposal.
Consumer Council chief Connie Lau Yin-hing declined to say whether the current HK$16 million litigation fund would be enough to help people caught up in the Lehman scandal. She also hoped the problem could be solved by mediation.
Up to yesterday, the council had received 1,702 complaints from investors, involving a total amount of HK$12
http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=73064&sid=21037896&con_type=1
Bonnie Chen, Diana Leeand Beatrice Siu
Friday, October 17, 2008
Chief Executive Donald Tsang Yam- kuen has pledged to help those caught up in the Lehman Brothers minibond row get justice if any criminal or civil liability is identified.
"Officials found guilty of misconduct in handling the Lehman Brothers minibond saga will be punished but it is not an appropriate time to see who should be responsible - all efforts should be focused on tackling the matter," Tsang said in response to a question by financial services legislator Chim Pui- chung in the Legislative Council.
Much as he hopes litigation could be avoided, he promised to pursue cases to the end. "If cases are found to have criminal liability, we will follow up seriously," he said.
Banks involved in the case are expected to respond today to Tsang's ultimatum on a buyback proposal.
Also, the Hong Kong Association of Banks will announce the appointment of Ernst & Young to evaluate the value of all Lehman-related products, including minibonds and equity-linked notes, or ELNs. The ELN evaluation is expected to be completed next Friday.
Meanwhile, DBS Bank (Hong Kong) has reportedly settled with two clients. In one case, a man surnamed Chan said his 84-year-old mother and 50-year- old brother had bought HK$560,000 worth of ELNs from the bank.
Chan declined to disclose the amount of compensation but said the bank told his family that it was a capital preservation product that would have interest paid every three months. He said the bank staff admitted they realized his brother had a mental illness.
A spokeswoman for DBS Bank (Hong Kong), however, clarified that as of yesterday, "the bank has not made any settlements with any parties on the grounds of alleged mis-selling."
Tsang reiterated the administration will inject capital to the Consumer Legal Action Fund if necessary. "But I hope banks will not seek litigation. Reputation is an invaluable asset to banks. It will be shameful and troublesome to banks if they go to court and it is time-consuming too," he said.
Tsang rejected Chim's idea of setting up a special court to handle the Lehman saga as impractical. Neither did he accept Civic Party chairwoman Audrey Eu Yuet-mee's suggestion of settling the problem through arbitration.
Tsang said both parties had to agree on arbitration or the case will have to be handled by the court. The Hong Kong Monetary Authority, he said, will also set up a mediation group for this purpose.
Spokesmen for the Bank of East Asia, ABN Amro, ICBC (HK) and Dah Sing Bank said they are considering the buyout proposal.
Consumer Council chief Connie Lau Yin-hing declined to say whether the current HK$16 million litigation fund would be enough to help people caught up in the Lehman scandal. She also hoped the problem could be solved by mediation.
Up to yesterday, the council had received 1,702 complaints from investors, involving a total amount of HK$12
http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=73064&sid=21037896&con_type=1
Petition to investigate the sales training
A financial institution has announced that they will compensate investors who can prove that they have been "mis-sold".
This Petition is to ask MAS to investigate the sales training process of the financial institutions. If the training materials did not show the actual nature and risks of the products, it will show that the sales representatives had provided the wrong information or recommendation to the retail investors, i.e. misrepresentation or mis-selling.
Please read the wordings of this petition carefully. If you agree with the content, you can sign the Petition.
http://www.petitiononline.com/ISTFI1/petition.html
This Petition is to ask MAS to investigate the sales training process of the financial institutions. If the training materials did not show the actual nature and risks of the products, it will show that the sales representatives had provided the wrong information or recommendation to the retail investors, i.e. misrepresentation or mis-selling.
Please read the wordings of this petition carefully. If you agree with the content, you can sign the Petition.
http://www.petitiononline.com/ISTFI1/petition.html
Thursday, October 16, 2008
Who let the sharks in?
Here is a story told by Betsybug
The maritime watchdog (the Maritime Authority or MA) has put out a warning about the dangers of sharks - "look, long sharp teeth, large mouth, strong bite. Stay away at all costs. You could be killed by these predators".
After putting out this warning, it stands idly by when a seaside resort (let's call it the Delmar Beach Sports Seaside or DBSS) lets in sharks into its swimming lagoon. They have made a huge investment by advertising this new attraction at its resort. Many holiday-makers visit the resort as a result of this promotion. Nobody notices that the sharks were promoted as an exotic dog-fish species. In a foot-note in the promotion brochure, there is mention of the dog-fish species which called by its proper scientic name, "Carcharodon carcharias". Its layman's name is the Great White Shark. However, no-one quite understood all the marine biology jargon. Everyone thought this was a safe holiday at home, far from fears of terrorism and air-crashes.
The DBSS resort tells the holiday-makers, "Don't worry, this is a unique resort attraction. You are perfectly safe as long as you stay within the lagoon. It's not like you are swimming in the open sea. Go right ahead and swim and you will have a good time". The holiday-makers, being rather trusting of this reputable resort, proceed to wade out into the lagoon. Soon, entire families were having a wonderful time, splashing merrily in the cool waters of the lagoon. Everyone thought this was a perfect holiday.
The inevitable happens - someone has a little accident and suffers a small cut. Unfortunately, the sharks detected the minute amount of blood and their predatory instincts kicked in. They begin to attack and gobble up the poor swimmers. The carnage is quite heart-breaking. Young and old are killed or are maimed and injured. The swimming lagoon is awash with blood and gore, and very few managed to crawl out of the lagoon untouched.
The resort's lifeguards are not much help - after all, this was not something they trained for. They knew about CPR and water rescues, but shark attacks were completely new to them. Ambulances were called, but for many of the victims, help came too late. In the aftermath of the disaster, the DBSS management was hard to reach for comments. They asked that all enquiries be sent to its PR department, and that all queries will be handled in due time.
Meanwhile, MA said that the families of victims or surviving victims should put in their claims for compensation to DBSS. It said that DBSS is the correct party to judge whether the claims are valid or not. It also reminds everyone that it has issued a warning about sharks. An MA official said that there is inherent risk in every activity even on holidays. And the more fun you have, the greater is the risk you run.
A prominent marine biologist, Mr TK Lynch set up a support centre to counsel and answer the questions by the bewildered families who have lost their loved ones. He helps organise support group meetings, and writes to the MA to seek answers and redress. At the time of writing, nothing has yet happened. Meanwhile, throughout the country, at many wakes and funerals, the grieving continues and many heart-rending questions are sent skywards. But no answers descend.
The maritime watchdog (the Maritime Authority or MA) has put out a warning about the dangers of sharks - "look, long sharp teeth, large mouth, strong bite. Stay away at all costs. You could be killed by these predators".
After putting out this warning, it stands idly by when a seaside resort (let's call it the Delmar Beach Sports Seaside or DBSS) lets in sharks into its swimming lagoon. They have made a huge investment by advertising this new attraction at its resort. Many holiday-makers visit the resort as a result of this promotion. Nobody notices that the sharks were promoted as an exotic dog-fish species. In a foot-note in the promotion brochure, there is mention of the dog-fish species which called by its proper scientic name, "Carcharodon carcharias". Its layman's name is the Great White Shark. However, no-one quite understood all the marine biology jargon. Everyone thought this was a safe holiday at home, far from fears of terrorism and air-crashes.
The DBSS resort tells the holiday-makers, "Don't worry, this is a unique resort attraction. You are perfectly safe as long as you stay within the lagoon. It's not like you are swimming in the open sea. Go right ahead and swim and you will have a good time". The holiday-makers, being rather trusting of this reputable resort, proceed to wade out into the lagoon. Soon, entire families were having a wonderful time, splashing merrily in the cool waters of the lagoon. Everyone thought this was a perfect holiday.
The inevitable happens - someone has a little accident and suffers a small cut. Unfortunately, the sharks detected the minute amount of blood and their predatory instincts kicked in. They begin to attack and gobble up the poor swimmers. The carnage is quite heart-breaking. Young and old are killed or are maimed and injured. The swimming lagoon is awash with blood and gore, and very few managed to crawl out of the lagoon untouched.
The resort's lifeguards are not much help - after all, this was not something they trained for. They knew about CPR and water rescues, but shark attacks were completely new to them. Ambulances were called, but for many of the victims, help came too late. In the aftermath of the disaster, the DBSS management was hard to reach for comments. They asked that all enquiries be sent to its PR department, and that all queries will be handled in due time.
Meanwhile, MA said that the families of victims or surviving victims should put in their claims for compensation to DBSS. It said that DBSS is the correct party to judge whether the claims are valid or not. It also reminds everyone that it has issued a warning about sharks. An MA official said that there is inherent risk in every activity even on holidays. And the more fun you have, the greater is the risk you run.
A prominent marine biologist, Mr TK Lynch set up a support centre to counsel and answer the questions by the bewildered families who have lost their loved ones. He helps organise support group meetings, and writes to the MA to seek answers and redress. At the time of writing, nothing has yet happened. Meanwhile, throughout the country, at many wakes and funerals, the grieving continues and many heart-rending questions are sent skywards. But no answers descend.
Fearful about speaking
Hi Mr. Tan,
I am sure, there are many who quietly hope that you would, when the time comes, volunteer yourself for election into Parliament.
Whilst some may wish that you avail yourself for the chair of the Presidency, however, I personally feel your entry into Parliament can contribute more to the betterment of the Singapore society. Time for a change in the way how our lives is governed.
In the meantime, dear Mr. Tan, I hope to see you and your fellow cohorts in Hong Lim Park as often as it possibly permit.
It is a shame to suggest that you tread carefully in your speeches, and hence I hope you do not take offence to this reminder which I am sure you are also fully aware of.
I wish you well, dear Mr. Tan
REPLY
Thank you. It is shameful that in Singapore, we cannot speak honestly and have to be fearful.
I am sure, there are many who quietly hope that you would, when the time comes, volunteer yourself for election into Parliament.
Whilst some may wish that you avail yourself for the chair of the Presidency, however, I personally feel your entry into Parliament can contribute more to the betterment of the Singapore society. Time for a change in the way how our lives is governed.
In the meantime, dear Mr. Tan, I hope to see you and your fellow cohorts in Hong Lim Park as often as it possibly permit.
It is a shame to suggest that you tread carefully in your speeches, and hence I hope you do not take offence to this reminder which I am sure you are also fully aware of.
I wish you well, dear Mr. Tan
REPLY
Thank you. It is shameful that in Singapore, we cannot speak honestly and have to be fearful.
MAS International Advisory Panel (IAP)
Mr Lim Hng Kiang, Minister for Trade & Industry and Deputy Chairman of MAS (Chairman of IAP)
Dr Josef Ackermann, Chairman of the Group Executive Committee, Deutsche Bank AG
Mr Jacques Aigrain, Chief Executive Officer, Swiss Re
Mr Claude Bebear, Chairman of the Supervisory Board, The AXA Group
Mr Lloyd C. Blankfein, Chairman & Chief Executive Officer, Goldman Sachs, Inc
Mr Michael Diekmann, Chairman of the Board of Management, Allianz AG
Mr James L. Dimon, Chairman & Chief Executive Officer, J.P. Morgan Chase & Co.
Mr David Fisher, Chairman, Capital International
Mr Rijkman Groenink, former Chairman, ABN AMRO Bank N.V.
Mr Kenneth D. Lewis, Chairman, Chief Executive Officer & President, Bank of America Corporation
Mr John Mack, Chairman of the Board and Chief Executive Officer, Morgan Stanley Dean Witter & Co.
Mr Shigemitsu Miki, Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd
Mr Vikram Pandit, Chief Executive Officer, Citigroup Inc
Mr Michel Pebereau, Chairman, BNP Paribas
Mr Marcel Rohner, Chief Executive Officer, UBS AG
Mr Ratan Tata, Chairman, Tata Son Ltd
Mr John A. Thain, Chairman, Chief Executive Officer, Merrill Lynch & Co., Inc
Dr Junichi Ujiie, Chairman, Nomura Holdings, Inc
Mr John Varley, Group Chief Executive, Barclays PLC
Dr Josef Ackermann, Chairman of the Group Executive Committee, Deutsche Bank AG
Mr Jacques Aigrain, Chief Executive Officer, Swiss Re
Mr Claude Bebear, Chairman of the Supervisory Board, The AXA Group
Mr Lloyd C. Blankfein, Chairman & Chief Executive Officer, Goldman Sachs, Inc
Mr Michael Diekmann, Chairman of the Board of Management, Allianz AG
Mr James L. Dimon, Chairman & Chief Executive Officer, J.P. Morgan Chase & Co.
Mr David Fisher, Chairman, Capital International
Mr Rijkman Groenink, former Chairman, ABN AMRO Bank N.V.
Mr Kenneth D. Lewis, Chairman, Chief Executive Officer & President, Bank of America Corporation
Mr John Mack, Chairman of the Board and Chief Executive Officer, Morgan Stanley Dean Witter & Co.
Mr Shigemitsu Miki, Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd
Mr Vikram Pandit, Chief Executive Officer, Citigroup Inc
Mr Michel Pebereau, Chairman, BNP Paribas
Mr Marcel Rohner, Chief Executive Officer, UBS AG
Mr Ratan Tata, Chairman, Tata Son Ltd
Mr John A. Thain, Chairman, Chief Executive Officer, Merrill Lynch & Co., Inc
Dr Junichi Ujiie, Chairman, Nomura Holdings, Inc
Mr John Varley, Group Chief Executive, Barclays PLC
Impact of an offer to settle
Dear Mr. Tan,
If there is a settlement, does it apply to everybody or only those who signed the Petition?
REPLY
If there is a proposal from the distributor, it will be offered to those who fit into a certain category (e.g. who have been misled into the investment). It is subject to acceptance by the offered party.
Some investors may not be offered the settlement, e.g. they were not misled, or may not accept the offer (e.g. it was too low).
The offer for a settlement will have no unrelated to the signing of the Petition. Any party offered can accept or rejected the offer, regardless of whether they sign the Petition.
So far, none of the financial institutions have responded to my suggestion for a mediation. So, this question is premature.
If there is a settlement, does it apply to everybody or only those who signed the Petition?
REPLY
If there is a proposal from the distributor, it will be offered to those who fit into a certain category (e.g. who have been misled into the investment). It is subject to acceptance by the offered party.
Some investors may not be offered the settlement, e.g. they were not misled, or may not accept the offer (e.g. it was too low).
The offer for a settlement will have no unrelated to the signing of the Petition. Any party offered can accept or rejected the offer, regardless of whether they sign the Petition.
So far, none of the financial institutions have responded to my suggestion for a mediation. So, this question is premature.
Hong Kong Chief Talks Tough on Minibonds - Bravo
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=0AZY6TE60DJ4&linkid=8af62784-11aa-47af-89c0-d408e77ac3c9&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
16 Oct 2008
South China Morning Post
Joyce Man
The chief executive appears to be losing his patience with banks over their handling of minibonds linked to bankrupt US bank Lehman Brothers – insisting they respond swiftly to a government buy-back proposal and warning the administration may fund legal action by minibond investors.
“They cannot keep dragging on,” he said in a strongly worded message after delivering his policy address.
He said investors had waited for weeks and the Monetary Authority had found evidence of mis-selling by some banks.
“Considering this situation, I am now requiring that banks reply this week,” he said.
Financial Secretary John Tsang Chun-wah announced the proposal on Monday last week, and said banks had a week to respond.
His proposal is that banks which sold the minibonds buy them back at their current value.
Investors bought HK$12.7 billion of minibonds issued or guaranteed by Lehman Brothers. They face losing much or all of their investment. Many claim that banks and brokers mis-sold them as low-risk. In fact, minibonds are high- risk creditlinked derivatives.
A further HK$3 billion has been invested in similar, equity-linked Lehman derivatives.
Several banks have responded positively to the proposal, but none of the 16 banks that sold minibonds have publicly agreed to a buy-back. Many banks say they cannot respond until they have a valuation. A taskforce set up under the Hong Kong Association of Banks will assess the minibonds’ current value.
The Monetary Authority has received more than 9,200 complaints about the sale of complex derivatives. Mr Tsang said it would set up an independent panel to mediate with banks in cases where it finds evidence of mis-selling.
If mediation fails, the Consumer Council will help complainants apply to its consumer legal action fund, which provides help for joint lawsuits. Mr Tsang promised the government would inject money into the fund if necessary.
“It’s a positive step,” said one man who bought HK$10 million in minibonds. He would welcome a buyback as long as it left him free to pursue his bank for the rest of his money.
Mr Tsang also ordered the banks to communicate with the complainants yesterday.
One bank, DBS, has agreed to buy back similar complex derivatives once it has valued them. Citibank has agreed to full refunds if its inquiries prove mis-selling by any of its agents.
16 Oct 2008
South China Morning Post
Joyce Man
The chief executive appears to be losing his patience with banks over their handling of minibonds linked to bankrupt US bank Lehman Brothers – insisting they respond swiftly to a government buy-back proposal and warning the administration may fund legal action by minibond investors.
“They cannot keep dragging on,” he said in a strongly worded message after delivering his policy address.
He said investors had waited for weeks and the Monetary Authority had found evidence of mis-selling by some banks.
“Considering this situation, I am now requiring that banks reply this week,” he said.
Financial Secretary John Tsang Chun-wah announced the proposal on Monday last week, and said banks had a week to respond.
His proposal is that banks which sold the minibonds buy them back at their current value.
Investors bought HK$12.7 billion of minibonds issued or guaranteed by Lehman Brothers. They face losing much or all of their investment. Many claim that banks and brokers mis-sold them as low-risk. In fact, minibonds are high- risk creditlinked derivatives.
A further HK$3 billion has been invested in similar, equity-linked Lehman derivatives.
Several banks have responded positively to the proposal, but none of the 16 banks that sold minibonds have publicly agreed to a buy-back. Many banks say they cannot respond until they have a valuation. A taskforce set up under the Hong Kong Association of Banks will assess the minibonds’ current value.
The Monetary Authority has received more than 9,200 complaints about the sale of complex derivatives. Mr Tsang said it would set up an independent panel to mediate with banks in cases where it finds evidence of mis-selling.
If mediation fails, the Consumer Council will help complainants apply to its consumer legal action fund, which provides help for joint lawsuits. Mr Tsang promised the government would inject money into the fund if necessary.
“It’s a positive step,” said one man who bought HK$10 million in minibonds. He would welcome a buyback as long as it left him free to pursue his bank for the rest of his money.
Mr Tsang also ordered the banks to communicate with the complainants yesterday.
One bank, DBS, has agreed to buy back similar complex derivatives once it has valued them. Citibank has agreed to full refunds if its inquiries prove mis-selling by any of its agents.
Request for MAS to give an update on the Petition
I have sent this letter to Dr. Andrew Khoo, copied to Mr. Goh Chok Tong
Dear Dr. Khoo
Several signatories of the Petition have asked me for the response of MAS to the Petition. Can you give me a progress report, so that I can communicate with them? Does MAS find the issues raised in the Petition to have merit?
Dear Dr. Khoo
Several signatories of the Petition have asked me for the response of MAS to the Petition. Can you give me a progress report, so that I can communicate with them? Does MAS find the issues raised in the Petition to have merit?
Statement by DBS CEO
Posted in my blog
DBS CEO Richard Stanley says in his message dated 19 September 08 that
"While we do not know how long the turbulence will last, at DBS, we are committed to upholding the highest standards of integrity. Of that, you have our deepest assurance"
Refer to website :
http://www.dbs.com/dbsgroup/announcements/
Is this DBS rhetoric or do they really mean it ? I guess we will find out from the outcome of how they handle this situation
DBS CEO Richard Stanley says in his message dated 19 September 08 that
"While we do not know how long the turbulence will last, at DBS, we are committed to upholding the highest standards of integrity. Of that, you have our deepest assurance"
Refer to website :
http://www.dbs.com/dbsgroup/announcements/
Is this DBS rhetoric or do they really mean it ? I guess we will find out from the outcome of how they handle this situation
Negotiate with financial institutions
Several investors have sent an e-mailed to me, indicating that they are willing to accept 50% of their investments. They asked me to negotiate with the financial institution. They wish to cut their loss.
I am not able to act on their behalf at this time. None of the financial institutions have contacted me to take up my offer of mediation.
I will arrange another "petition" letter for the interested investors to authorise me to approach their financial instition. Please wait a few days.
I am not able to act on their behalf at this time. None of the financial institutions have contacted me to take up my offer of mediation.
I will arrange another "petition" letter for the interested investors to authorise me to approach their financial instition. Please wait a few days.
Hong Kong: Minibond fix may prove a risky business
Minibond fix may prove a risky business
StephenKwok
Thursday, October 16, 2008
The worldwide financial turbulence has triggered widespread public concern over the marketing of retail structured products - in particular, minibonds backed by toppled investment bank Lehman Brothers.
Distributors of the minibonds include local and foreign banks, as well as brokerages.
From the investors' perspective, the concerns right now are twofold. Firstly, investors are claiming they were misled into buying the minibonds - believing they actually had bought "bonds" that were low risk.
As such, they have been demanding action against the intermediaries that sold them the products. Secondly, many are also demanding back the full amount or a substantial portion of their investments.
The financial regulatory authorities in Hong Kong, including the Hong Kong Monetary Authority and the Securities and Futures Commission, have launched investigations into the possible mis-selling of the complex financial products backed by Lehman. Part of the focus is on allegations that the full risks of the instruments were not fully disclosed and explained to the investors.
The pressure is growing for the government to bail out the investors, who are not satisfied with a government proposal for the distribution banks to buy back the minibonds at prevailing market prices so investors quickly get back their money, although not in full. The banks are considering the proposal.
Regulators have been blamed for lax oversight and there are now demands for them to strengthen supervision of the marketing and selling of financial products. This has resulted in discussions as to whether a ban on banks selling complex financial products should be imposed to protect unsophisticated investors.
However, that is not an appropriate move. Firstly, access to capital is vital for financial institutions. This is why once formidable investment banks such as Goldman Sachs and Morgan Stanley are transforming themselves into commercial banks.
Secondly, many of the retail banks registered in Hong Kong are part of global and/or regional financial institutions. These institutions should be well-equipped to provide the necessary training for staff to undertake the selling process.
If we consider restricting the business of selling financial products to participants such as brokerages or independent financial advisers, I do not see how they will do better than the banks without improvements to existing regulation. The solution is to strengthen supervision of the distributors of such products, especially the selling process.
From the distributors' perspective, whether they have adequate guidelines for selling the products, have provided sales staff with adequate training and monitored staff performance should be investigated.
Parties found to have committed wrongdoings should be penalized. These investigation areas should also form the basis for new regulations.
From the staff perspective, the selling process should also be investigated to identify if it has been in accordance with the institutions' own guidelines and in compliance with regulations. Staff should be held responsible for any wrongdoings only if they are found to have not followed regulations.
As investigations are ongoing, it is premature for the government to recommend banks buy back the minibonds at prevailing market prices. Part or full compensation for losses for investors should only be considered if investigations show that investors were misled by the bank or its sales staff during the selling process.
Compensation for minibond investors before any evidence of misleading sales is found is not the way things are supposed to work in a free economy such as Hong Kong.
If intermediaries are required to buy back the products before any malpractice is confirmed and just because investments in the product suffer losses, this will have a significant and long-lasting impact on all kinds of intermediary businesses, including property agencies and brokerages.
http://www.thestandard.com.hk/news_detail.asp?pp_cat=20&art_id=72938&sid=21014657&con_type=1
StephenKwok
Thursday, October 16, 2008
The worldwide financial turbulence has triggered widespread public concern over the marketing of retail structured products - in particular, minibonds backed by toppled investment bank Lehman Brothers.
Distributors of the minibonds include local and foreign banks, as well as brokerages.
From the investors' perspective, the concerns right now are twofold. Firstly, investors are claiming they were misled into buying the minibonds - believing they actually had bought "bonds" that were low risk.
As such, they have been demanding action against the intermediaries that sold them the products. Secondly, many are also demanding back the full amount or a substantial portion of their investments.
The financial regulatory authorities in Hong Kong, including the Hong Kong Monetary Authority and the Securities and Futures Commission, have launched investigations into the possible mis-selling of the complex financial products backed by Lehman. Part of the focus is on allegations that the full risks of the instruments were not fully disclosed and explained to the investors.
The pressure is growing for the government to bail out the investors, who are not satisfied with a government proposal for the distribution banks to buy back the minibonds at prevailing market prices so investors quickly get back their money, although not in full. The banks are considering the proposal.
Regulators have been blamed for lax oversight and there are now demands for them to strengthen supervision of the marketing and selling of financial products. This has resulted in discussions as to whether a ban on banks selling complex financial products should be imposed to protect unsophisticated investors.
However, that is not an appropriate move. Firstly, access to capital is vital for financial institutions. This is why once formidable investment banks such as Goldman Sachs and Morgan Stanley are transforming themselves into commercial banks.
Secondly, many of the retail banks registered in Hong Kong are part of global and/or regional financial institutions. These institutions should be well-equipped to provide the necessary training for staff to undertake the selling process.
If we consider restricting the business of selling financial products to participants such as brokerages or independent financial advisers, I do not see how they will do better than the banks without improvements to existing regulation. The solution is to strengthen supervision of the distributors of such products, especially the selling process.
From the distributors' perspective, whether they have adequate guidelines for selling the products, have provided sales staff with adequate training and monitored staff performance should be investigated.
Parties found to have committed wrongdoings should be penalized. These investigation areas should also form the basis for new regulations.
From the staff perspective, the selling process should also be investigated to identify if it has been in accordance with the institutions' own guidelines and in compliance with regulations. Staff should be held responsible for any wrongdoings only if they are found to have not followed regulations.
As investigations are ongoing, it is premature for the government to recommend banks buy back the minibonds at prevailing market prices. Part or full compensation for losses for investors should only be considered if investigations show that investors were misled by the bank or its sales staff during the selling process.
Compensation for minibond investors before any evidence of misleading sales is found is not the way things are supposed to work in a free economy such as Hong Kong.
If intermediaries are required to buy back the products before any malpractice is confirmed and just because investments in the product suffer losses, this will have a significant and long-lasting impact on all kinds of intermediary businesses, including property agencies and brokerages.
http://www.thestandard.com.hk/news_detail.asp?pp_cat=20&art_id=72938&sid=21014657&con_type=1
Wednesday, October 15, 2008
New "petition" to collect particulars of investors
I have created a new "petition" to collect updated particulars of investors of the credit-linked securities.
I wish to invite investors who signed the Petition previously and new investors who missed the earlier Petition, to provide your particulars again. I am using this platform to collect particulars. I am NOT organising a new petition.
Click here:
http://www.petitiononline.com/PICLS4
I wish to invite investors who signed the Petition previously and new investors who missed the earlier Petition, to provide your particulars again. I am using this platform to collect particulars. I am NOT organising a new petition.
Click here:
http://www.petitiononline.com/PICLS4
Jubilee Series 3 LinkEarner Notes
At the request of an investor, I draft this letter for your use. You can sign and send it to the trustee. Please send it on your own, immediately. I am not organising a collective letter.
date
HSBC Trustee
(take the address or fax number from the letter that you received from them)
JUBILEE SERIES 3 LINKEARNER NOTES
I am an investor in the above Notes. I was informed by the distributor that the redemption value of my investment is nil.
My particulars are:
Name:
Account reference:
Amount invested: $
Distributor:
I wish to ask you, as the trustee, to provide the following information to me within 14 days:
a) A full statement of account showing the money invested by all the investors into the Notes, the charges that are taken out of the fund (showing the amount, payee, purpose of payment), the investment of the fund (showing the amount invested and realised value, and loss incurred) and other relevant information.
b) Why were the investors not informed earlier about the intention of the arranger to liquidate the underlying assets? What is the provision of the trust deed relating to this matter?
c) Why were the assets liquidated at this time, when the prices are at rock bottom, due to the lack of liquidity? Was it possible to wait for a better time to liquidate the assets? Which were the parties that bought the assets? How were the prices of these assets determined? Which broker handled the transactions?
d) Please provide details of the underlying assets that led to a total loss of the principal invested in these Notes.
I wish to register my protest at the disposal of the underlying assets at this bad time, and want to be assured that, as the trustee, you have dischrage your fiduciary duty in looking after my interest in the disposal of the assets.
(name of investor,
signature)
cc Monetary Authority of Singapore
date
HSBC Trustee
(take the address or fax number from the letter that you received from them)
JUBILEE SERIES 3 LINKEARNER NOTES
I am an investor in the above Notes. I was informed by the distributor that the redemption value of my investment is nil.
My particulars are:
Name:
Account reference:
Amount invested: $
Distributor:
I wish to ask you, as the trustee, to provide the following information to me within 14 days:
a) A full statement of account showing the money invested by all the investors into the Notes, the charges that are taken out of the fund (showing the amount, payee, purpose of payment), the investment of the fund (showing the amount invested and realised value, and loss incurred) and other relevant information.
b) Why were the investors not informed earlier about the intention of the arranger to liquidate the underlying assets? What is the provision of the trust deed relating to this matter?
c) Why were the assets liquidated at this time, when the prices are at rock bottom, due to the lack of liquidity? Was it possible to wait for a better time to liquidate the assets? Which were the parties that bought the assets? How were the prices of these assets determined? Which broker handled the transactions?
d) Please provide details of the underlying assets that led to a total loss of the principal invested in these Notes.
I wish to register my protest at the disposal of the underlying assets at this bad time, and want to be assured that, as the trustee, you have dischrage your fiduciary duty in looking after my interest in the disposal of the assets.
(name of investor,
signature)
cc Monetary Authority of Singapore
Facilities at Speaker's Corner
1. Can we use the stage, instead of the grass mound?
The stage belongs to the community center. I asked the manager, but he told me that it is not available for booking for the purpose of giving a speech.
2. What are the contingency plan in case of rain?
Bring an umbrella. Wait for the rain to stop.
3. Can we book an indoor auditorium or hall?
It is quite expensive. Can cost $2,000 or more. We do not have the budget.
4. Can we use a sound system?
The NParks does not allow a sound system.
The stage belongs to the community center. I asked the manager, but he told me that it is not available for booking for the purpose of giving a speech.
2. What are the contingency plan in case of rain?
Bring an umbrella. Wait for the rain to stop.
3. Can we book an indoor auditorium or hall?
It is quite expensive. Can cost $2,000 or more. We do not have the budget.
4. Can we use a sound system?
The NParks does not allow a sound system.
Strategy Committee for CLS
Latest: I have sufficient members for this committee for the time being. Thanks for responding.
I wish to ask for volunteers to serve in the Strategy Committee. This committee will meet once a week to discuss the strategy to be recommended for the retail investors. It should comprise of people who are knowledgeable about law or the financial market.
If you are willing to serve in this strategy committee, please send your particulars to kinlian@gmail.com.
Your name
Email
Telephone
Amount invested, product, distributor
Any special expertise?
I wish to ask for volunteers to serve in the Strategy Committee. This committee will meet once a week to discuss the strategy to be recommended for the retail investors. It should comprise of people who are knowledgeable about law or the financial market.
If you are willing to serve in this strategy committee, please send your particulars to kinlian@gmail.com.
Your name
Telephone
Amount invested, product, distributor
Any special expertise?
Statutory declaration - 2 lawyers
I have arranged with two lawyers to assist investors to write a statutory declaration (a statement made under oath) regarding the investment in the structured product.
This declaratoin can be used to support your complaint to the financial institution that sold the structured product to you, and also to take up your complaint to the next stage with the Financial Industry Dispute Resolution Center. As it is a statement made under oath, it is likely to have a stronger impact.
This declaration can be used at a later date, if the investors decide to take legal action against the financial institution.
To prepare this declaration, you have to provide the answers to the following questions:
1. Your name, NRIC, address, telephone
2. How did you get involved in the investment?
3. Which financial institution, branch, amount invested, date
4. What happened when you purchased the investment?
5. Were you alone or accompanied by another person? Who?
6. What did the representative (who sold the investment to you) tell you about investment?
7. Did the representative tell you about any guarantee on your investment?
8. 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?
9. Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
10. Do you have any other statements to make regarding this matter?
The lawyer fees include the fee payable to the Commissioner of Oath.
Fee $120 plus GST
Bernard & Rada Law Corporation
50 Robinson Road #08-00
VTB Building
Singapore 068882
Call Mr. Glenn Knight or his secretary, Ms Ivy Goh (Tel: 68999888)
Fee $150 plus GST plus disbursement (total $201.55)
Assomull & Partners
111 North Bridge Road
#22-04/05/06 Peninsula Plaza
Singapore 179098
Contact Person: Ms. Lauereth Loh, Tel: 63394466
Note: Previously, I called it an affidavit. A lawyer advised me that an affidavit is a sworn statement made after legal proceeding has commenced. Before that, it is called a "statutory declaration".
This declaratoin can be used to support your complaint to the financial institution that sold the structured product to you, and also to take up your complaint to the next stage with the Financial Industry Dispute Resolution Center. As it is a statement made under oath, it is likely to have a stronger impact.
This declaration can be used at a later date, if the investors decide to take legal action against the financial institution.
To prepare this declaration, you have to provide the answers to the following questions:
1. Your name, NRIC, address, telephone
2. How did you get involved in the investment?
3. Which financial institution, branch, amount invested, date
4. What happened when you purchased the investment?
5. Were you alone or accompanied by another person? Who?
6. What did the representative (who sold the investment to you) tell you about investment?
7. Did the representative tell you about any guarantee on your investment?
8. 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?
9. Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
10. Do you have any other statements to make regarding this matter?
The lawyer fees include the fee payable to the Commissioner of Oath.
Fee $120 plus GST
Bernard & Rada Law Corporation
50 Robinson Road #08-00
VTB Building
Singapore 068882
Call Mr. Glenn Knight or his secretary, Ms Ivy Goh (Tel: 68999888)
Fee $150 plus GST plus disbursement (total $201.55)
Assomull & Partners
111 North Bridge Road
#22-04/05/06 Peninsula Plaza
Singapore 179098
Contact Person: Ms. Lauereth Loh, Tel: 63394466
Note: Previously, I called it an affidavit. A lawyer advised me that an affidavit is a sworn statement made after legal proceeding has commenced. Before that, it is called a "statutory declaration".
Statutory declaration - FiDREC
Mr. Goh Joon Seng is the chairman of FiDREC. He said that there is no need to prepare a statutory declaration to lodge a complaint to FiDREC. This is correct.
The statutory declaration is optional. I recommended that the investors should spend $120 to prepare this declaration. My reasons are:
a) The lawyer helps to ensure that the key points are recorded in the declaration
b) A sworn statement will be taken more seriously
c) It is necessary to have this strong statement to overcome the statement in the forms that you have signed (which has not been properly explained to you).
As this sum of $120 is small, compared to the money that you have invested, it may be better to incur this expenditure.
The statutory declaration is optional. I recommended that the investors should spend $120 to prepare this declaration. My reasons are:
a) The lawyer helps to ensure that the key points are recorded in the declaration
b) A sworn statement will be taken more seriously
c) It is necessary to have this strong statement to overcome the statement in the forms that you have signed (which has not been properly explained to you).
As this sum of $120 is small, compared to the money that you have invested, it may be better to incur this expenditure.
Take collective legal action now?
Dear Kin Lian
I am writing this with a heavy heart because whilst I and my family may have escaped the misselling by banks of products I know of friends who have been less fortunate.
Firstly I see the attempts at the banks at mediation and the FRC as a dead end road designed primarily to absolve them of legal blame , responsibility and the consequences which it entails. The fact that the mediators are paid by the banks itself speaks volumes about their true intent. It is a blatant attempt at damage control and whilst a small percentage of investors might be ABLE to prove misselling the majority I feel will be unable. It is unclear to me whether if one choses the FRC route does that close the legal route to the courts ? Is arbitration and the solution reached is mandatory and binding.
1. With the mediation route, investors are unable to gain full disclosure and it will be the word of the individual investor versus the word of the management of the banks and the structures and regulations they will claim they have put in place to protect the investor. The cases will be viewed on an individual basis and each investor will thus be easier to pick of on their own
2. A collective legal case if put forth will allow lawyers as in the case of TT Durai to seek and build a case using the full weight of internal documents and emails from the banks with regards to the products they sold and the extent of knowledge they had when they sold it.
This is I believe the strongest case possible for a class action suit as all other roads are in my view an attempt at damage control and a shifting of blame to the individual investor. I hope you will highlight this to your readers.
MY
REPLY
So far, my strategy is to get MAS to act. It is their job. I will ask the investors to consider legal action only after MAS has failed to do "what is right" for the retail investors.
The decision of FiDREC is binding on the financial institution, but is not binding on the retail investor. If the retail investor does not accept the decision of FiDREC, they still have the right to take the legal action at a later date.
I am writing this with a heavy heart because whilst I and my family may have escaped the misselling by banks of products I know of friends who have been less fortunate.
Firstly I see the attempts at the banks at mediation and the FRC as a dead end road designed primarily to absolve them of legal blame , responsibility and the consequences which it entails. The fact that the mediators are paid by the banks itself speaks volumes about their true intent. It is a blatant attempt at damage control and whilst a small percentage of investors might be ABLE to prove misselling the majority I feel will be unable. It is unclear to me whether if one choses the FRC route does that close the legal route to the courts ? Is arbitration and the solution reached is mandatory and binding.
1. With the mediation route, investors are unable to gain full disclosure and it will be the word of the individual investor versus the word of the management of the banks and the structures and regulations they will claim they have put in place to protect the investor. The cases will be viewed on an individual basis and each investor will thus be easier to pick of on their own
2. A collective legal case if put forth will allow lawyers as in the case of TT Durai to seek and build a case using the full weight of internal documents and emails from the banks with regards to the products they sold and the extent of knowledge they had when they sold it.
This is I believe the strongest case possible for a class action suit as all other roads are in my view an attempt at damage control and a shifting of blame to the individual investor. I hope you will highlight this to your readers.
MY
REPLY
So far, my strategy is to get MAS to act. It is their job. I will ask the investors to consider legal action only after MAS has failed to do "what is right" for the retail investors.
The decision of FiDREC is binding on the financial institution, but is not binding on the retail investor. If the retail investor does not accept the decision of FiDREC, they still have the right to take the legal action at a later date.
To the victims - be strong
Dear Mr Tan
I am very encouraged by your courage, labour, love and compassion heart towards the victims who lose their saving due to the deceitfulness of the financial institutions.
I am praying daily for these victims to be strong, to have the strength and peace to go through this period of stress, anger and sorrow. I am very concerned now for those who are in need of money now for their basic needs such as health, children's education etc. I am wondering is there any need of setting up a donation fund to help them. I feel very sad for them.
Uncles and aunties, you must be strong and stand up like the mountain! Please take good care of your health. I am on your side.
Praying for you
JS
I am very encouraged by your courage, labour, love and compassion heart towards the victims who lose their saving due to the deceitfulness of the financial institutions.
I am praying daily for these victims to be strong, to have the strength and peace to go through this period of stress, anger and sorrow. I am very concerned now for those who are in need of money now for their basic needs such as health, children's education etc. I am wondering is there any need of setting up a donation fund to help them. I feel very sad for them.
Uncles and aunties, you must be strong and stand up like the mountain! Please take good care of your health. I am on your side.
Praying for you
JS
Caveat emptor: A licence to cheat
Definition by Tan Kin Lian: Caveat emptor (let the buyer's beware): A licence for the financial expert to cheat the unsavvy consumers.
Comment posted in my blog
Dear all ,
Please read this article ( published in BT dated 15 Oct ) titled 'Times to make sellers beware, not just buyers'.
I quote the followings : " ... Here we have essentially an insurance policy taken out by Lehman Brothers via its own special-purpose vehicle named Minibond to protect its exposure to six prominent banks known as 'reference entities' or REs. The money invested by the Singapore and Hong Kong public formed the insurance payout should any of the six have failed over the period in question, and in return for use of the public's money, Lehman paid the public an attractive annual coupon of 5 per cent which was, in effect, an insurance premium.
It was brilliant in its conception, simplicity and execution: Lehman transferred its risk of loss from any RE failure to the public but structured the deal and its sale documents to give the impression this was a desirable arrangement.
If caveat emptor is to be reasonably used as a defence (or a criticism of the retail investing public for not reading or understanding the offer documents), then the cover of the prospectus should have had a description of the exact nature of the product as an insurance policy, the fact that Minibond was Lehman, the financial standing of Lehman, Lehman's reasons for needing the insurance and that the risk of loss was not limited to one of six banks failing but, in fact, seven.
Since this was not the case, there must surely be grounds for claims that disclosure was poor, possibly even misleading and that a defence of caveat emptor is not good enough. If buyers were to beware, then there should have been full and proper disclosure of all essential elements in the proper fashion....."
Comment posted in my blog
Dear all ,
Please read this article ( published in BT dated 15 Oct ) titled 'Times to make sellers beware, not just buyers'.
I quote the followings : " ... Here we have essentially an insurance policy taken out by Lehman Brothers via its own special-purpose vehicle named Minibond to protect its exposure to six prominent banks known as 'reference entities' or REs. The money invested by the Singapore and Hong Kong public formed the insurance payout should any of the six have failed over the period in question, and in return for use of the public's money, Lehman paid the public an attractive annual coupon of 5 per cent which was, in effect, an insurance premium.
It was brilliant in its conception, simplicity and execution: Lehman transferred its risk of loss from any RE failure to the public but structured the deal and its sale documents to give the impression this was a desirable arrangement.
If caveat emptor is to be reasonably used as a defence (or a criticism of the retail investing public for not reading or understanding the offer documents), then the cover of the prospectus should have had a description of the exact nature of the product as an insurance policy, the fact that Minibond was Lehman, the financial standing of Lehman, Lehman's reasons for needing the insurance and that the risk of loss was not limited to one of six banks failing but, in fact, seven.
Since this was not the case, there must surely be grounds for claims that disclosure was poor, possibly even misleading and that a defence of caveat emptor is not good enough. If buyers were to beware, then there should have been full and proper disclosure of all essential elements in the proper fashion....."
Individual advice
Many people have written to ask for individual advice on the following matters:
a) How should they invest their savings?
b) Should they keep or sell their investments?
c) How should they lodge their complaints?
d) Should they sell their structured product at a loss?
e) What is the current price of their structured product? What do they contain?
I am not able to give individual advice. I receive 50 to 100 e-mails each day on these personal matters. It is not possible for me to spend the time to read and reply to these e-mails. You can get general advice from the following sources.
For general advice on investments and insurance:
www.tankinlian.com/faq
For assistance on how to lodge a complaint and take subsequent steps:
http://tankinlian.blogspot.com/2008/10/affidavit-statement-made-under-oath.html
http://tankinlian.blogspot.com/2008/10/lodge-your-complaint-with-distributor.html
Refer to the topics on the right under "Credit Linked Securities"
Contact persons:
http://tankinlian.blogspot.com/2008/10/contact-persons.html
For information about the details or price of the structured product:
> Refer to the distributor who sold the product to you. They have a duty to answer your questions completely.
For information about NTUC Income:
> Call the contact center about NTUC Income 6346 2663. They have a duty to answer your questions completely.
a) How should they invest their savings?
b) Should they keep or sell their investments?
c) How should they lodge their complaints?
d) Should they sell their structured product at a loss?
e) What is the current price of their structured product? What do they contain?
I am not able to give individual advice. I receive 50 to 100 e-mails each day on these personal matters. It is not possible for me to spend the time to read and reply to these e-mails. You can get general advice from the following sources.
For general advice on investments and insurance:
www.tankinlian.com/faq
For assistance on how to lodge a complaint and take subsequent steps:
http://tankinlian.blogspot.com/2008/10/affidavit-statement-made-under-oath.html
http://tankinlian.blogspot.com/2008/10/lodge-your-complaint-with-distributor.html
Refer to the topics on the right under "Credit Linked Securities"
Contact persons:
http://tankinlian.blogspot.com/2008/10/contact-persons.html
For information about the details or price of the structured product:
> Refer to the distributor who sold the product to you. They have a duty to answer your questions completely.
For information about NTUC Income:
> Call the contact center about NTUC Income 6346 2663. They have a duty to answer your questions completely.
Tuesday, October 14, 2008
Specific product or distributor
If you have any questions on a specific product or distributor, or you wish to discuss the with other investors in similar situation, you can post your views in this blog:
http://creditlinkedsecurities.blogspot.com/
You should choose the specific topic for your product or distributor
http://creditlinkedsecurities.blogspot.com/
You should choose the specific topic for your product or distributor
Effort to help the victims
Dear Mr. Tan
I am presently a NTUC income policy holder and I have held policies from income since 2001
I never got to know you cos the closest I ever got to know you was seeing your signature on every NTUC income statements that they send to me year after year.
I am indeed very touched by your effort to help these victims of financial structured products that turned into a total if not partial loss.
I observed how you gather the people at the speaker's corner. I saw how you calm their fears by offering them practically recourses, just like a loving father you assured them and gave them some hope. That speaks a lot about your character and more so you are indeed a good model for every financial professionals to emulate.
You have my full permission to publish my letter in your blog because all these words that was written about you is true.
God bless you , Kin Lian
Yours sincerely
Francis Lim
I am presently a NTUC income policy holder and I have held policies from income since 2001
I never got to know you cos the closest I ever got to know you was seeing your signature on every NTUC income statements that they send to me year after year.
I am indeed very touched by your effort to help these victims of financial structured products that turned into a total if not partial loss.
I observed how you gather the people at the speaker's corner. I saw how you calm their fears by offering them practically recourses, just like a loving father you assured them and gave them some hope. That speaks a lot about your character and more so you are indeed a good model for every financial professionals to emulate.
You have my full permission to publish my letter in your blog because all these words that was written about you is true.
God bless you , Kin Lian
Yours sincerely
Francis Lim
Meeting of High Notes investors
To investors of High Notes
The organisers have decided to call off the meeting at DBS headquarters tomorrow (Wednesday). They are arranging a meeting at Speaker's corner on Saturday from 5 - 7 p.m.
Investor of the High Notes will be asked to sign a Collective Letter to DBS Senior Management requesting a meeting to address:
1) To review the Statement of Account for each of the High Notes as to the total amount collected, the amount paid out as commission, the premium collected from the list Credit reference list and the Credit Debt Obligations and the expenses incurred.
2) To discuss how DBS propose to remedy our investments.
End of message
The organisers have decided to call off the meeting at DBS headquarters tomorrow (Wednesday). They are arranging a meeting at Speaker's corner on Saturday from 5 - 7 p.m.
Investor of the High Notes will be asked to sign a Collective Letter to DBS Senior Management requesting a meeting to address:
1) To review the Statement of Account for each of the High Notes as to the total amount collected, the amount paid out as commission, the premium collected from the list Credit reference list and the Credit Debt Obligations and the expenses incurred.
2) To discuss how DBS propose to remedy our investments.
End of message
The Online Citizen
Visit The Online Citizen for news about Singapore
http://theonlinecitizen.com
Coverage of the events at Speaker's Corner and interviews with investors:
http://theonlinecitizen.com/2008/10/more-than-1000-people-at-speakers-corner/
http://theonlinecitizen.com
Coverage of the events at Speaker's Corner and interviews with investors:
http://theonlinecitizen.com/2008/10/more-than-1000-people-at-speakers-corner/
Ignorance and greed
TodayOnline - Tuesday, October 14, 2008
AS HONG Kong investors took to the streets, seeking redress for the failed Mini-Bonds series structured by Lehman Brothers, about 1,000 Singapore investors gathered at Hong Lim Park over the weekend.
Their plight triggered memories of my previous job, and it dawned on me that I could have been responsible for their indignation, either directly or indirectly.
You see, I used to work for a bank, selling similar structured products, unit trusts and insurance to the bank’s customers. Among them were retirees, housewives and professionals — some with high risk appetites, others not at all. And it was my job to convince them of the benefits of the products the bank was promoting.
The remuneration package was structured such that sales performance received a significant weightage when my performance came up for review.
Also, there was a quota of financial products to be sold, so that I did not incur a huge penalty in commissions. For example, if there was enough revenue clocked from unit trusts, but not enough insurance or housing loans revenue,I would lose a sizeable sum.
There was always the pressure to meet any shortfalls in the designated monthly quota, so that both career and salary did not suffer.
There was also external pressure from management. I was hounded daily by my superiors on the shortfalls and sometimes, in order to fulfil the cluster’s overall target, I was told to concentrate on certain products that were not moving. Often, these were dangled with attractive incentives to ensure that I would be more willing to sell them over others.
But with the carrot also came the stick: There was a ranking-list flashed at meetings, with the names of staff who did not meet their sales targets. It was a public shaming routine, and to meet the targets, my weekends were usually spent at roadshows.
Operating in such a high-pressure environment meant that some sales staff resorted to employing strong sales techniques to get the customer to sign on the dotted line.
One senior manager even said that customers were only interested in benefits, so it was advisable to come up with a pitch that maximised these benefits and minimised the costs.
At times, scripts were handed to frontline workers. We were forced to memorise them for a flawless presentation.
Perhaps to avoid accusations of “mis-selling” in future, the time is ripe for financial institutions to review their procedures for assessing sales staff. They should tweak the promotion criteria, which relies heavily on sales results. Benchmarks like service attitude and turnaround time — such as attending to customers’ mundane requests promptly — could be given greater weightage. Customer feedback in the assessment of their relationship managers could be another criteria — after all, most banks covet customer loyalty.
On the other hand, consumers must be aware of what they are investing in. This could be done through more investor-education programmes. Proactive steps should be taken by financial institutions to work with MoneySense, a national investment education body, to acquaint customers with risk management, instead of just concentrating on product-pushing.
As the adage goes, it takes two to tango. If consumers are befuddled by the complex nature of some financial products, they should seek clarifications, or not invest at all.
After all, stable low returns beat sleepless nights, any day.
The author was a financial consultant for two years.
http://www.todayonline.com/articles/281339.asp
AS HONG Kong investors took to the streets, seeking redress for the failed Mini-Bonds series structured by Lehman Brothers, about 1,000 Singapore investors gathered at Hong Lim Park over the weekend.
Their plight triggered memories of my previous job, and it dawned on me that I could have been responsible for their indignation, either directly or indirectly.
You see, I used to work for a bank, selling similar structured products, unit trusts and insurance to the bank’s customers. Among them were retirees, housewives and professionals — some with high risk appetites, others not at all. And it was my job to convince them of the benefits of the products the bank was promoting.
The remuneration package was structured such that sales performance received a significant weightage when my performance came up for review.
Also, there was a quota of financial products to be sold, so that I did not incur a huge penalty in commissions. For example, if there was enough revenue clocked from unit trusts, but not enough insurance or housing loans revenue,I would lose a sizeable sum.
There was always the pressure to meet any shortfalls in the designated monthly quota, so that both career and salary did not suffer.
There was also external pressure from management. I was hounded daily by my superiors on the shortfalls and sometimes, in order to fulfil the cluster’s overall target, I was told to concentrate on certain products that were not moving. Often, these were dangled with attractive incentives to ensure that I would be more willing to sell them over others.
But with the carrot also came the stick: There was a ranking-list flashed at meetings, with the names of staff who did not meet their sales targets. It was a public shaming routine, and to meet the targets, my weekends were usually spent at roadshows.
Operating in such a high-pressure environment meant that some sales staff resorted to employing strong sales techniques to get the customer to sign on the dotted line.
One senior manager even said that customers were only interested in benefits, so it was advisable to come up with a pitch that maximised these benefits and minimised the costs.
At times, scripts were handed to frontline workers. We were forced to memorise them for a flawless presentation.
Perhaps to avoid accusations of “mis-selling” in future, the time is ripe for financial institutions to review their procedures for assessing sales staff. They should tweak the promotion criteria, which relies heavily on sales results. Benchmarks like service attitude and turnaround time — such as attending to customers’ mundane requests promptly — could be given greater weightage. Customer feedback in the assessment of their relationship managers could be another criteria — after all, most banks covet customer loyalty.
On the other hand, consumers must be aware of what they are investing in. This could be done through more investor-education programmes. Proactive steps should be taken by financial institutions to work with MoneySense, a national investment education body, to acquaint customers with risk management, instead of just concentrating on product-pushing.
As the adage goes, it takes two to tango. If consumers are befuddled by the complex nature of some financial products, they should seek clarifications, or not invest at all.
After all, stable low returns beat sleepless nights, any day.
The author was a financial consultant for two years.
http://www.todayonline.com/articles/281339.asp
Protest outside DBS headquarters
Posted in another Forum
Some people have been warned by the police against protesting outside DBS’s Shenton Way headquarters. For those who wish to take effective action, I urge that you first master your own emotions before fighting back. How would breaking the law help you? If even a small group of investors were arrested, it would terrorize the rest into sullen submission. Any attempts at trying to build a case or even to win public opinion would collapse. Do not allow yourself to be used by people with other motivations. There are groups that wish to expand their anarchical ranks and would happily urge you to break the law, but I ask that you stay within the law.
Even though the contracts that have been signed appear to be ironclad, a case of misrepresentation can still be made if it can show that the employees of the financial institutions deployed deceptive sales tactics. Misrepresentation is a criminal act and the investigation and legal prosecution of it would be undertaken by the state via the Commercial Affairs Department and Attorney General. It is not a civil representative lawsuit hence there are no legal liabilities which you need to pay. The penalty for misrepresentation is up to seven years jail.
But in order to motivate an investigation, it is necessary to first make a case that misrepresentation has occurred. To do so would require a concerted effort on the part of investors in gathering evidence that can be used to persuade the authorities and the public. The chances of success maybe slim, but if investors were to throw themselves against the rocks in the name of justice, then the chances of success would be zero. Do not do what many stupid and selfish politicians in Singapore have done and seek self destruction when an intelligent and courageous drive to uncover the truth is needed. More than ever, you need to endure and stand tall.
http://forum.channelnewsasia.com/viewtopic.php?p=2308570#2308570
Some people have been warned by the police against protesting outside DBS’s Shenton Way headquarters. For those who wish to take effective action, I urge that you first master your own emotions before fighting back. How would breaking the law help you? If even a small group of investors were arrested, it would terrorize the rest into sullen submission. Any attempts at trying to build a case or even to win public opinion would collapse. Do not allow yourself to be used by people with other motivations. There are groups that wish to expand their anarchical ranks and would happily urge you to break the law, but I ask that you stay within the law.
Even though the contracts that have been signed appear to be ironclad, a case of misrepresentation can still be made if it can show that the employees of the financial institutions deployed deceptive sales tactics. Misrepresentation is a criminal act and the investigation and legal prosecution of it would be undertaken by the state via the Commercial Affairs Department and Attorney General. It is not a civil representative lawsuit hence there are no legal liabilities which you need to pay. The penalty for misrepresentation is up to seven years jail.
But in order to motivate an investigation, it is necessary to first make a case that misrepresentation has occurred. To do so would require a concerted effort on the part of investors in gathering evidence that can be used to persuade the authorities and the public. The chances of success maybe slim, but if investors were to throw themselves against the rocks in the name of justice, then the chances of success would be zero. Do not do what many stupid and selfish politicians in Singapore have done and seek self destruction when an intelligent and courageous drive to uncover the truth is needed. More than ever, you need to endure and stand tall.
http://forum.channelnewsasia.com/viewtopic.php?p=2308570#2308570
Leveraging and greed
Businesses are greedy. They like to earn a ROE (return on equity ) of 15% to 20% per year. This can only be achieved by taking excessive risk, through leveraging (i.e. borrowing several times of their equity).
In a competitive market, a business can earn a return of say 8% per annum. If all the capital is funded by equity, the ROE is 8% and the risk is low.
If they issue a bond at 5% of the same amount as equity (i.e. leverage of 1 time), they hope to earn the difference of 3% on the bond. This will give a return of 8% + 3% on the equity, i.e. 11%. This is risky as the interest on the bond has to be paid first from the profit.
If they are greedy and are leveraged 2 times, they hope to earn 8% + 2 X 3% or a total of 14% on the equity. This is more risky compared to a leverage of 1 time.
Some investment banks were leveraged 20 times. This is madness.
To make matters worse, the borrowings were made on 30 or 90 days credit, instead of long term bonds. During good times, the cost of short term credit is lower than the cost of bonds. The businesses were greedy to make higher profits on the spread. This is extreme madness.
During the financial crisis, they were not able to get new borrowings to repay back the old borrowings. This lead to the collapse of the global financial system.
In the new financial system, there has to be regulatory control over the amount of leveraging. especially for financial companies, including hedge funds.
In a competitive market, a business can earn a return of say 8% per annum. If all the capital is funded by equity, the ROE is 8% and the risk is low.
If they issue a bond at 5% of the same amount as equity (i.e. leverage of 1 time), they hope to earn the difference of 3% on the bond. This will give a return of 8% + 3% on the equity, i.e. 11%. This is risky as the interest on the bond has to be paid first from the profit.
If they are greedy and are leveraged 2 times, they hope to earn 8% + 2 X 3% or a total of 14% on the equity. This is more risky compared to a leverage of 1 time.
Some investment banks were leveraged 20 times. This is madness.
To make matters worse, the borrowings were made on 30 or 90 days credit, instead of long term bonds. During good times, the cost of short term credit is lower than the cost of bonds. The businesses were greedy to make higher profits on the spread. This is extreme madness.
During the financial crisis, they were not able to get new borrowings to repay back the old borrowings. This lead to the collapse of the global financial system.
In the new financial system, there has to be regulatory control over the amount of leveraging. especially for financial companies, including hedge funds.
DBS will take responsibility, in some cases
TodayOnline
DBS Bank says it will take responsibility for some of the Lehman Brothers products sold through its network in Singapore and Hong Kong if there was mis-selling.
“In specific cases when evidence of mis-selling is established, DBS (Hong Kong) Limited and DBS Bank (Singapore) will take responsibility,” the bank said yesterday.
It issued the statement in reply to queries about a recent report in the South China Morning Post that said it would consider full compensation for losses on one of Lehman’s structured products sold in Hong Kong if its investigations showed that buyers had been misled by the bank’s sales staff.
DBS also pointed out in a separate statement last night that customers in Singapore who had bought High Notes 5, a structured product sold with Lehman as one of the reference entities, may not get a cent back.
The collapse of Lehman triggered the early redemption of High Notes 5 and the unwinding process has begun.
“We expect that the final valuation of the Notes, which is market determined,
will be completed on or around Oct 31. In the worst case scenario, customers could lose their entire investment,” it said.
The bank has since set up dedicated Investor Care Centres in Hong Kong and Singapore, manned by experienced staff specially trained to handle queries about the troubled structured products.
Mr Rajan Raju, DBS’ managing director and head of consumer banking, added: “More than 300 customers have approached our Investor Care Centre and we are addressing their concerns about their investments. As soon as each case is reviewed, DBS will inform the respective customers of the outcome.”
http://www.todayonline.com/articles/281348.asp
DBS Bank says it will take responsibility for some of the Lehman Brothers products sold through its network in Singapore and Hong Kong if there was mis-selling.
“In specific cases when evidence of mis-selling is established, DBS (Hong Kong) Limited and DBS Bank (Singapore) will take responsibility,” the bank said yesterday.
It issued the statement in reply to queries about a recent report in the South China Morning Post that said it would consider full compensation for losses on one of Lehman’s structured products sold in Hong Kong if its investigations showed that buyers had been misled by the bank’s sales staff.
DBS also pointed out in a separate statement last night that customers in Singapore who had bought High Notes 5, a structured product sold with Lehman as one of the reference entities, may not get a cent back.
The collapse of Lehman triggered the early redemption of High Notes 5 and the unwinding process has begun.
“We expect that the final valuation of the Notes, which is market determined,
will be completed on or around Oct 31. In the worst case scenario, customers could lose their entire investment,” it said.
The bank has since set up dedicated Investor Care Centres in Hong Kong and Singapore, manned by experienced staff specially trained to handle queries about the troubled structured products.
Mr Rajan Raju, DBS’ managing director and head of consumer banking, added: “More than 300 customers have approached our Investor Care Centre and we are addressing their concerns about their investments. As soon as each case is reviewed, DBS will inform the respective customers of the outcome.”
http://www.todayonline.com/articles/281348.asp
DBS to settle case by case: Rebecca Lee
I am Mrs Rebecca Lee. I wrote to Straits Time basically saying DBS is omnipotent since DBS defended all their relationship managers and that they have explained all the risks to us "investors". But that's not why I write this. What's important is for all to know:
In Today's news, DBS is saying it will settle case by case. This is obviously a reaction to the gathering that Mr Tan have brought all the victims of DBS HN2, 5 together with others. DBS high note victims have scheduled to go to DBS shenton way 10 am to demand a settlement and bring all documents along. DBS must have gotten wind of this and decided to do a divide and conquer. I just want to make sure that none of us is stupid enough to let this happen and that we will continue to find where the other 1400 investors are, gather friends and family to give us the support and get justice done this Wednesday 10 am as agreed. If not for this gathering, DBS would not have any response. The squeaky door gets the oil. Please get more people to support the DBS HN victims. For some it's their life long savings - for others, it's their children's future that got pawned away.
Look at what the HongKongers do and see what DBS's reaction to them. Don't be a door mat or we will get stepped all over by DBS.
Mrs Rebecca Lee
In Today's news, DBS is saying it will settle case by case. This is obviously a reaction to the gathering that Mr Tan have brought all the victims of DBS HN2, 5 together with others. DBS high note victims have scheduled to go to DBS shenton way 10 am to demand a settlement and bring all documents along. DBS must have gotten wind of this and decided to do a divide and conquer. I just want to make sure that none of us is stupid enough to let this happen and that we will continue to find where the other 1400 investors are, gather friends and family to give us the support and get justice done this Wednesday 10 am as agreed. If not for this gathering, DBS would not have any response. The squeaky door gets the oil. Please get more people to support the DBS HN victims. For some it's their life long savings - for others, it's their children's future that got pawned away.
Look at what the HongKongers do and see what DBS's reaction to them. Don't be a door mat or we will get stepped all over by DBS.
Mrs Rebecca Lee
Look at the Product Advice
Hi Mr Tan,
I am one of the investors in Minibond. I would like to share with the rest of the investors on what I have found out in the Product Advise Report.
In my Product Advice Report, under the section Recommendations and Acknowledgement, it was written that I want to invest in bonds (which was what I said to the Financial Planner) but the Financial Planner recommended minibond to me which invest in CDOs. As I bought 3 series of Minibond from 3 different financial planners, all told me that I was investing in bonds issued by the corporations listed in the brochures. I have since written my complaint to the distributor, FIDReC, one of the three well-respected individuals to oversee the relevant FIs’ complaints, my MP and HSBC Trustee.
Maybe, you can advise those investors who bought these structured products to take a look at the Product Advice Report and see whether there was any evidence of misrepresentation by the financial planners.
On a separate note, I noticed that the prospectus was only given to investors weeks (at least 3 weeks) after investors have bought the structured notes. Is this the correct and acceptable practice by MAS? Shouldn't the financial institutions give out the prospectus (like the case in IPOs although I know not many people read them) before investors invest in these structured products since MAS already approved their products and prospectus?
KK
REPLY
It is wrong for the financial institution to give the prospectus a few weeks after the product was sold. You can mention this point in the statutory declaration (affidavit).
I am one of the investors in Minibond. I would like to share with the rest of the investors on what I have found out in the Product Advise Report.
In my Product Advice Report, under the section Recommendations and Acknowledgement, it was written that I want to invest in bonds (which was what I said to the Financial Planner) but the Financial Planner recommended minibond to me which invest in CDOs. As I bought 3 series of Minibond from 3 different financial planners, all told me that I was investing in bonds issued by the corporations listed in the brochures. I have since written my complaint to the distributor, FIDReC, one of the three well-respected individuals to oversee the relevant FIs’ complaints, my MP and HSBC Trustee.
Maybe, you can advise those investors who bought these structured products to take a look at the Product Advice Report and see whether there was any evidence of misrepresentation by the financial planners.
On a separate note, I noticed that the prospectus was only given to investors weeks (at least 3 weeks) after investors have bought the structured notes. Is this the correct and acceptable practice by MAS? Shouldn't the financial institutions give out the prospectus (like the case in IPOs although I know not many people read them) before investors invest in these structured products since MAS already approved their products and prospectus?
KK
REPLY
It is wrong for the financial institution to give the prospectus a few weeks after the product was sold. You can mention this point in the statutory declaration (affidavit).
Sales representatives did not know - misrepresentation
Hi Mr Tan
I appeal you to highlight this. I feel that most wales representatives thought the credit securities products were "not High Risk" products. If they had known that it is a high risk product, they would not have recommended people to invest.
Therefore, it is definitely a misrepresentation by sales representatives - the way the credit linked products were marketed as relatively "Safe/Low Risk" products by Lehman, Merrill, Morgan to the banks & financial institutions which was in turn presentated to the investors.
It is common sense that if it was marketed as high risk - few people would have invested.
I appeal you to highlight this. I feel that most wales representatives thought the credit securities products were "not High Risk" products. If they had known that it is a high risk product, they would not have recommended people to invest.
Therefore, it is definitely a misrepresentation by sales representatives - the way the credit linked products were marketed as relatively "Safe/Low Risk" products by Lehman, Merrill, Morgan to the banks & financial institutions which was in turn presentated to the investors.
It is common sense that if it was marketed as high risk - few people would have invested.
Hong Kong Lawmakers Criticize Bks Over Lehman-Backed Mini-Bond Sales
October 13, 2008: 03:26 AM EST
HONG KONG -(Dow Jones)- Hong Kong banks came under fire Monday from lawmakers who accused them of playing down the risks of structured products backed by Lehman Brothers Holdings Inc. (LEH) that were sold to thousands of small investors.
The investors lost millions of dollars when Lehman declared bankruptcy last month and many have been protesting in the streets as officials look into the matter.
In an emergency hearing on the crisis, lawmaker Cyd Ho accused bank managers of pressuring staff to sell the products quickly, by playing down risks to customers.
BOC (Hong Kong) Ltd. (2388.HK) and DBS Bank (Hong Kong) Ltd. pledged Monday to compensate customers if they found any wrongdoing occurred, as the products, known as "mini-bonds," were sold to retail customers. "If we find there was any wrongdoing during the sales of structural products, we will be responsible and compensate the customers fully," DBS head of consumer banking Linda Wong told the lawmakers Monday.
BOC (Hong Kong) head of personal banking Lawrence Law said the bank was willing to compensate customers "but needs to look at the cases on an individual basis."
The Hong Hong Monetary Authority has received 9,281 complaints from investors and said last week it was investigating sales of the structured products by nine banks. HKMA officials said they might also consider whether retail banks should be stopped from selling such products.
http://money.cnn.com/news/newsfeeds/articles/djf500/200810130326DOWJONESDJONLINE000106_FORTUNE5.htm
HONG KONG -(Dow Jones)- Hong Kong banks came under fire Monday from lawmakers who accused them of playing down the risks of structured products backed by Lehman Brothers Holdings Inc. (LEH) that were sold to thousands of small investors.
The investors lost millions of dollars when Lehman declared bankruptcy last month and many have been protesting in the streets as officials look into the matter.
In an emergency hearing on the crisis, lawmaker Cyd Ho accused bank managers of pressuring staff to sell the products quickly, by playing down risks to customers.
BOC (Hong Kong) Ltd. (2388.HK) and DBS Bank (Hong Kong) Ltd. pledged Monday to compensate customers if they found any wrongdoing occurred, as the products, known as "mini-bonds," were sold to retail customers. "If we find there was any wrongdoing during the sales of structural products, we will be responsible and compensate the customers fully," DBS head of consumer banking Linda Wong told the lawmakers Monday.
BOC (Hong Kong) head of personal banking Lawrence Law said the bank was willing to compensate customers "but needs to look at the cases on an individual basis."
The Hong Hong Monetary Authority has received 9,281 complaints from investors and said last week it was investigating sales of the structured products by nine banks. HKMA officials said they might also consider whether retail banks should be stopped from selling such products.
http://money.cnn.com/news/newsfeeds/articles/djf500/200810130326DOWJONESDJONLINE000106_FORTUNE5.htm
FAQ from investors (1)
Here are some frequently asked questions. I shall speak on these points at Speaker's Corner on Saturday 18 October at 6 p.m.
1. Can I lodge a complaint?
Some investors ask if they can lodge a complaint, if they have signed certain forms, or if they had bought in a different mode (e.g. by responding to a mail). Each case has to be considered on its own merits. It is impossible for me to give this type of advice.
Generally, you can lodge a complaint if you have been misled into buying the product. This misleading sitaution could occur in various ways, e.g. from the advertisements, brochure, verbal statement and assurances and other forms. You must get the facts and write a sworn statement (i.e. statutory declaration or affidavit).
2. How to get advice
It is best that you get advice from your fellow investors in similar situation. You should join a group and keep in touch with them. You should also read my blog, www.tankinlian.blogspot.com.
I am not able to give individual advice. Each day, 20 people write to me, expecting me to understand their situation. It is impossible for me to perform this role. You are not the only person that needs help. I do not have the time to give proper advice.
3. Gather the facts
Many investors asked me, "Should I sell or hold on to this investment?". This type of question can only be answered, if you get the facts. You cannot expect anyone to give you the answer without the facts.
If the facts are not available, no one can answer them. If you ask about the future, no one knows the answer (except God).
4. To hold or sell?
Many people are uncertain and frightened. They ask for advice on whether to sell or hold to a certain structured product. They have to find out the facts about the product. What is the current price now. What are the quality of the underlying assets?
There are more than 50 different types of structured products in the market. Each product is complicated and different from the other products. Even the financial institutions marketing the product do not know what they are.
The best is for you to ask the financial institution and get the facts. Do not expect someone else to know the answer. If the facts are not available, you should not expect any outsider to be able to get the answers for you.
Here are my general advice:
a) If you sell any structured product now, you are likely to get a bad price. The market is very bad. It is generally better to keep the product and hope for the best.
b) Nobody knows if the situation will get worse. You cannot expect anyone to help you to know the future. You have to make the decision on your own. It is your own money.
c) If things are uncertain, I will wait and not sell now. I hold shares and are losing money. I decide to keep them and wait for things to recover.
5. Financial institution to pressure their sales representatives
Some investors said that the financial institutions are putting pressure on their sales representative to tell lies, so that they will protect the institution. This is unethical, but it cannot be helped. If the representatives tell lies, they are committing a crime of cheating. This can be serious.
6. DBS to compensate on case by case basis
Some investors said that DBS has agreed to compensate the investors on a case by case basis. This is the correct apporach.
Any claim for compensation has to be decided on a case by case basis. Some people are misled and need to be compensated. Other people are not misled and cannot claim for the same type of compensation.
7. Fair compensation
I hope that the financial institution will offer a fair compensation to investors who have been misled. A fair compensation is for the loss to be shared equally between the investor and the distributor.
Some investors expect 100% compensation. This is unreasonable. The distributor expects to get away with no compensation. This is unreasonable also.
Tan Kin Lian
1. Can I lodge a complaint?
Some investors ask if they can lodge a complaint, if they have signed certain forms, or if they had bought in a different mode (e.g. by responding to a mail). Each case has to be considered on its own merits. It is impossible for me to give this type of advice.
Generally, you can lodge a complaint if you have been misled into buying the product. This misleading sitaution could occur in various ways, e.g. from the advertisements, brochure, verbal statement and assurances and other forms. You must get the facts and write a sworn statement (i.e. statutory declaration or affidavit).
2. How to get advice
It is best that you get advice from your fellow investors in similar situation. You should join a group and keep in touch with them. You should also read my blog, www.tankinlian.blogspot.com.
I am not able to give individual advice. Each day, 20 people write to me, expecting me to understand their situation. It is impossible for me to perform this role. You are not the only person that needs help. I do not have the time to give proper advice.
3. Gather the facts
Many investors asked me, "Should I sell or hold on to this investment?". This type of question can only be answered, if you get the facts. You cannot expect anyone to give you the answer without the facts.
If the facts are not available, no one can answer them. If you ask about the future, no one knows the answer (except God).
4. To hold or sell?
Many people are uncertain and frightened. They ask for advice on whether to sell or hold to a certain structured product. They have to find out the facts about the product. What is the current price now. What are the quality of the underlying assets?
There are more than 50 different types of structured products in the market. Each product is complicated and different from the other products. Even the financial institutions marketing the product do not know what they are.
The best is for you to ask the financial institution and get the facts. Do not expect someone else to know the answer. If the facts are not available, you should not expect any outsider to be able to get the answers for you.
Here are my general advice:
a) If you sell any structured product now, you are likely to get a bad price. The market is very bad. It is generally better to keep the product and hope for the best.
b) Nobody knows if the situation will get worse. You cannot expect anyone to help you to know the future. You have to make the decision on your own. It is your own money.
c) If things are uncertain, I will wait and not sell now. I hold shares and are losing money. I decide to keep them and wait for things to recover.
5. Financial institution to pressure their sales representatives
Some investors said that the financial institutions are putting pressure on their sales representative to tell lies, so that they will protect the institution. This is unethical, but it cannot be helped. If the representatives tell lies, they are committing a crime of cheating. This can be serious.
6. DBS to compensate on case by case basis
Some investors said that DBS has agreed to compensate the investors on a case by case basis. This is the correct apporach.
Any claim for compensation has to be decided on a case by case basis. Some people are misled and need to be compensated. Other people are not misled and cannot claim for the same type of compensation.
7. Fair compensation
I hope that the financial institution will offer a fair compensation to investors who have been misled. A fair compensation is for the loss to be shared equally between the investor and the distributor.
Some investors expect 100% compensation. This is unreasonable. The distributor expects to get away with no compensation. This is unreasonable also.
Tan Kin Lian
Monday, October 13, 2008
Concern about disorderly behaviour
Dear Mr Tan,
I appreciate that you are trying to help those people who were at Hong Lim Park on Saturday. As a great amount of money is involved, and from what I gathered at the park, there were many people who had possibly lost their life savings, emotions will indeed run high as some people will inevitably be in desperate positions.
I do want to caution you as a concerned citizen that I am indeed worried about some of the group leaders encouraging the people to gather at the banks at a scheduled day and time. I had no intention of prying into the matter but I cannot help overhearing the plan to crowd the banks. I am not so sure that it is safe for the public to have a big group of unhappy investors gathered in a public place at the same time. The people were even advised to pretend not to know each other.
I am not so sure that the group leaders will be able to keep order if the group of unhappy people do not get what they want and react emotionally that could lead to disorder.
I respect that you are a former CEO of a big company like NTUC Income and that with your in-depth knowledge of the financial matters, you might be able to provide some guidance to many people who are apparently feeling very helpless. May God bless you.
I had wanted to speak to you about this on Saturday but I did not get the chance. I just feel that there must be other ways of addressing this problem. As you mentioned that you are in communication with SM Goh, perhaps you can ask him to arrange a proper venue and get all the banks involved in addressing this matter.
I wish you God’s speed and wisdom.
I appreciate that you are trying to help those people who were at Hong Lim Park on Saturday. As a great amount of money is involved, and from what I gathered at the park, there were many people who had possibly lost their life savings, emotions will indeed run high as some people will inevitably be in desperate positions.
I do want to caution you as a concerned citizen that I am indeed worried about some of the group leaders encouraging the people to gather at the banks at a scheduled day and time. I had no intention of prying into the matter but I cannot help overhearing the plan to crowd the banks. I am not so sure that it is safe for the public to have a big group of unhappy investors gathered in a public place at the same time. The people were even advised to pretend not to know each other.
I am not so sure that the group leaders will be able to keep order if the group of unhappy people do not get what they want and react emotionally that could lead to disorder.
I respect that you are a former CEO of a big company like NTUC Income and that with your in-depth knowledge of the financial matters, you might be able to provide some guidance to many people who are apparently feeling very helpless. May God bless you.
I had wanted to speak to you about this on Saturday but I did not get the chance. I just feel that there must be other ways of addressing this problem. As you mentioned that you are in communication with SM Goh, perhaps you can ask him to arrange a proper venue and get all the banks involved in addressing this matter.
I wish you God’s speed and wisdom.
Sales representatives should tell the truth and admit mistakes
Dear Mr. Tan
I have spoken to my financial advisor who sold me the Notes. My financial advisor mentioned that it seems like the banks & financial institutions are trying to protect their interests and have pushed all responsibilities of misrepresentation to the sales persons selling the Notes products to investors.
I need to highlight this because if the sales person is the one who misrepresented, the banks and financial instituations can claim they are not in the postition to refund or attend to our complaints.
Apparently, my financial advisor mentioned that last week, his company has gotten all their sales staff to sign some documents that in the event of misrepresentation to investors, the sales persons will have to bear the compensation to investors themselves.
REPLY
The responsibility lies with the financial institution, as they have not provided the correct information and training to the sales representatives.
The sales representatives should tell the truth and not be intimidated into telling lies. If they lie, they are commiting a crime. If they make a mistake and gave the wrong information, they should admit it, as it is a genuine mistake.
It is better for the sales representative to tell the truth.
I have spoken to my financial advisor who sold me the Notes. My financial advisor mentioned that it seems like the banks & financial institutions are trying to protect their interests and have pushed all responsibilities of misrepresentation to the sales persons selling the Notes products to investors.
I need to highlight this because if the sales person is the one who misrepresented, the banks and financial instituations can claim they are not in the postition to refund or attend to our complaints.
Apparently, my financial advisor mentioned that last week, his company has gotten all their sales staff to sign some documents that in the event of misrepresentation to investors, the sales persons will have to bear the compensation to investors themselves.
REPLY
The responsibility lies with the financial institution, as they have not provided the correct information and training to the sales representatives.
The sales representatives should tell the truth and not be intimidated into telling lies. If they lie, they are commiting a crime. If they make a mistake and gave the wrong information, they should admit it, as it is a genuine mistake.
It is better for the sales representative to tell the truth.
HK legislators criticize regulators over bonds
Monday October 13, 2:51 am ET
By Min Lee, Associated Press Writer
Hong Kong legislators criticize regulators over Lehman-backed bond fiasco
HONG KONG (AP) -- Hong Kong legislators on Monday accused regulators of failing to monitor banks that sold Lehman Brothers-backed bonds that have put hundreds of millions of dollars in doubt after the U.S. investment bank failed amid the global financial crisis.
Hong Kong's Securities and Futures Commission estimates outstanding value of Lehman-related investment products in the city at about $2 billion. Hundreds of Hong Kongers are worried about the state of their Lehman-related bonds after the company's collapse, and have held protests and demanded compensation.
Billions of dollars in souring debt forced Lehman Brothers Holdings Inc., once the fourth-largest investment bank in the U.S., to file for bankruptcy last month amid the world's worst financial crisis in decades.
In a full-day hearing on the issue Monday, Hong Kong lawmakers questioned if officials had made sure banks properly explained the risks the bonds carried. Investors -- among them retirees who invested their life savings -- have complained that bank salespeople were misleading.
The chief executive of Hong Kong's de facto central bank, Joseph Yam, said the Hong Kong Monetary Authority had asked banks to classify as high-risk bonds that involved complex collateralized debt obligations, or CDOs, after the U.S. sub-prime crisis broke out last year.
CDOs are securities backed by underlying bonds and other fixed-income assets.
Pro-government legislator Lau Kong-wah questioned if the move came too late.
"Many people had already bought the bonds. Some citizens shifted their life savings, all their timed deposits to these bonds. You only told people these are high-risk products at the end of last year. Isn't that belated awareness of the problem?"
Yam responded that risk levels change, noting the bonds were not considered high-risk before the sub-prime crisis occurred. He said he repeatedly warned the public about the risk of financial investments.
Opposition legislator Lee Wing-tat asked if the bonds should be called bonds at all, giving the false impression that they are safe investments.
Securities and Futures Commission Chief Executive Martin Wheatley disagreed, saying it is incumbent upon investors -- and bank staff -- to explain the risk of the bonds.
"I would be shocked if anybody bought a product based on the name of the product. The requirement is to understand the features of the product," Wheatley said.
"Anybody who is offered via bank staff a product that pays 6 percent rather than half a percent on deposit, they should be asking, 'why?'" he said.
Last Monday, the Hong Kong government announced a scheme under which local banks and distributors of Lehman-backed bonds would buy back the products at a value to be decided on.
He Guangbei, chief executive of Bank of China (Hong Kong) Ltd. and chairman of the Hong Kong Association of Banks, said the banks welcome the proposal and are studying how it can be implemented.
Financial Secretary John Tsang, however, said the government will not reimburse investors. "It's not fair to the taxpayers," he said.
http://biz.yahoo.com/ap/081013/as_hong_kong_lehman_bonds.html
By Min Lee, Associated Press Writer
Hong Kong legislators criticize regulators over Lehman-backed bond fiasco
HONG KONG (AP) -- Hong Kong legislators on Monday accused regulators of failing to monitor banks that sold Lehman Brothers-backed bonds that have put hundreds of millions of dollars in doubt after the U.S. investment bank failed amid the global financial crisis.
Hong Kong's Securities and Futures Commission estimates outstanding value of Lehman-related investment products in the city at about $2 billion. Hundreds of Hong Kongers are worried about the state of their Lehman-related bonds after the company's collapse, and have held protests and demanded compensation.
Billions of dollars in souring debt forced Lehman Brothers Holdings Inc., once the fourth-largest investment bank in the U.S., to file for bankruptcy last month amid the world's worst financial crisis in decades.
In a full-day hearing on the issue Monday, Hong Kong lawmakers questioned if officials had made sure banks properly explained the risks the bonds carried. Investors -- among them retirees who invested their life savings -- have complained that bank salespeople were misleading.
The chief executive of Hong Kong's de facto central bank, Joseph Yam, said the Hong Kong Monetary Authority had asked banks to classify as high-risk bonds that involved complex collateralized debt obligations, or CDOs, after the U.S. sub-prime crisis broke out last year.
CDOs are securities backed by underlying bonds and other fixed-income assets.
Pro-government legislator Lau Kong-wah questioned if the move came too late.
"Many people had already bought the bonds. Some citizens shifted their life savings, all their timed deposits to these bonds. You only told people these are high-risk products at the end of last year. Isn't that belated awareness of the problem?"
Yam responded that risk levels change, noting the bonds were not considered high-risk before the sub-prime crisis occurred. He said he repeatedly warned the public about the risk of financial investments.
Opposition legislator Lee Wing-tat asked if the bonds should be called bonds at all, giving the false impression that they are safe investments.
Securities and Futures Commission Chief Executive Martin Wheatley disagreed, saying it is incumbent upon investors -- and bank staff -- to explain the risk of the bonds.
"I would be shocked if anybody bought a product based on the name of the product. The requirement is to understand the features of the product," Wheatley said.
"Anybody who is offered via bank staff a product that pays 6 percent rather than half a percent on deposit, they should be asking, 'why?'" he said.
Last Monday, the Hong Kong government announced a scheme under which local banks and distributors of Lehman-backed bonds would buy back the products at a value to be decided on.
He Guangbei, chief executive of Bank of China (Hong Kong) Ltd. and chairman of the Hong Kong Association of Banks, said the banks welcome the proposal and are studying how it can be implemented.
Financial Secretary John Tsang, however, said the government will not reimburse investors. "It's not fair to the taxpayers," he said.
http://biz.yahoo.com/ap/081013/as_hong_kong_lehman_bonds.html
Credit linked securities were highly risky, even in good times
Mr. Tan,
Many of the investors here bought the the Mini Bonds before the sub-prime crisis surfaced in the 2H of 2007. At that time, the bonds didn't look high risk, did it?
Given its rating at that time, people knew there was a small chance the issuer would default. Even banks and other companies could fail at any time--there is a small chance. But in good times, people were willing to take the risk.
There are many banks and insurance companies currently having the same rating as Lehman had before it failed. Would you call them "high risk" too?
REPLY
You appear to be speaking for the financial institution that sold the products.
The credit linked securities are high risk. It is not just the risk of Lehman Brothers. The risk is muliplied at least 10 times due to the way that the product is structured. Even in good times, this product should never be approved and should never be sold.
Read this explanation:
http://tankinlian.blogspot.com/2008/10/possibel-wrong-doings-in-structured.html
I have written about it more one year ago, when times are good, to ask investors to avoid this type of product. (At that time, I was not aware about the extent of the risk - due to its complicated structure and lack of tranparency. I am now horrified to learn about the extent of the risk.
Many of the investors here bought the the Mini Bonds before the sub-prime crisis surfaced in the 2H of 2007. At that time, the bonds didn't look high risk, did it?
Given its rating at that time, people knew there was a small chance the issuer would default. Even banks and other companies could fail at any time--there is a small chance. But in good times, people were willing to take the risk.
There are many banks and insurance companies currently having the same rating as Lehman had before it failed. Would you call them "high risk" too?
REPLY
You appear to be speaking for the financial institution that sold the products.
The credit linked securities are high risk. It is not just the risk of Lehman Brothers. The risk is muliplied at least 10 times due to the way that the product is structured. Even in good times, this product should never be approved and should never be sold.
Read this explanation:
http://tankinlian.blogspot.com/2008/10/possibel-wrong-doings-in-structured.html
I have written about it more one year ago, when times are good, to ask investors to avoid this type of product. (At that time, I was not aware about the extent of the risk - due to its complicated structure and lack of tranparency. I am now horrified to learn about the extent of the risk.
Low cost investment funds
Many retirees lost their life time savings through bad investment products sold by the trusted financial institutions. These institutions sold products that earned a high profit margin, but were highly risky to the retirees.
There is a need for a new institution, similar to the Central Provident Fund, to serve our retirees. This institution should operate as follows:
1. Be non-profit driven
2. Offer a few large, well diversified funds of Government bonds, corporate bonds, equities and property REITS.
3. The funds should have low fees, just sufficient to cover the operating expenses
4. The operating expenses should be kept low through streamlined, efficient systems
5. No commission should be paid for the marketing of these funds.
This is similar to the concept of the "private pension plans" that was considered by the Central Provident Fund a few years ago, but was shelved. It is time to revive this plan and offer it to both existing CPF members and also to retirees.
It is also desirable for the fund to enjoy some tax benefits, so as to encourage people to invest their savings in these funds.
There is a need for a new institution, similar to the Central Provident Fund, to serve our retirees. This institution should operate as follows:
1. Be non-profit driven
2. Offer a few large, well diversified funds of Government bonds, corporate bonds, equities and property REITS.
3. The funds should have low fees, just sufficient to cover the operating expenses
4. The operating expenses should be kept low through streamlined, efficient systems
5. No commission should be paid for the marketing of these funds.
This is similar to the concept of the "private pension plans" that was considered by the Central Provident Fund a few years ago, but was shelved. It is time to revive this plan and offer it to both existing CPF members and also to retirees.
It is also desirable for the fund to enjoy some tax benefits, so as to encourage people to invest their savings in these funds.
Elected President of Singapore
Dear Mr. Tan,
Several people have called you to stand for elected President of Singapore. The country needs a person of integrity and courage to speak for the ordinary people and act as a check and balance against the current Government. You can play this role effectively and will get the support of the people. Will you consider?
Several people have called you to stand for elected President of Singapore. The country needs a person of integrity and courage to speak for the ordinary people and act as a check and balance against the current Government. You can play this role effectively and will get the support of the people. Will you consider?
Hit by Forex Losses
Are you hit for forex losses?
Do you wish to meet other investors in the same situation?
http://www.petitiononline.com/PCFXT1/petition.html
Do you wish to meet other investors in the same situation?
http://www.petitiononline.com/PCFXT1/petition.html
Dual Currency Deposit (DCD)
From a journalist:
In Europe the DCD (dual currency deposit) product is generally only marketed to High-net-worth individuals through private banks and is rarely seen in any retail networks, probably because many retail investors in Europe don't speculate in currencies. But in Asia the DCD is a very popular instrument among retail investors.
The product is relatively simple but, as is emerging now, dangerous too. There is no protection on the product and when steep currency movements occur the deposit can be hit badly.
I'm looking into number of products that are denominated in either SG$ or HK$ against the Aus$. About a month ago a lot of investors got burned, and i believe the same has happened over the past week. I will probably also incorporate FX accumulator and decumulator products in the story as there has been some movement there too.
Action: If you have invested in these products and had suffered large losses, and wish to shrae your story (maybe not using your real name), you can send your story to kinlian@gmail.com
In Europe the DCD (dual currency deposit) product is generally only marketed to High-net-worth individuals through private banks and is rarely seen in any retail networks, probably because many retail investors in Europe don't speculate in currencies. But in Asia the DCD is a very popular instrument among retail investors.
The product is relatively simple but, as is emerging now, dangerous too. There is no protection on the product and when steep currency movements occur the deposit can be hit badly.
I'm looking into number of products that are denominated in either SG$ or HK$ against the Aus$. About a month ago a lot of investors got burned, and i believe the same has happened over the past week. I will probably also incorporate FX accumulator and decumulator products in the story as there has been some movement there too.
Action: If you have invested in these products and had suffered large losses, and wish to shrae your story (maybe not using your real name), you can send your story to kinlian@gmail.com
Weekly Speeches at Speaker's Corner
I have registered to speak at Speaker's Corner, Hong Lim Green as follows:
Date: Sat 25 Oct, 5 to 7 pm
Date: Sat 1 Nov, 5 to 7 pm
Date: Sat 8 Nov (cancelled)
Date: Sat 15 Nov 5 to 7 pm
My speech will be short, for about 10 mins.
After hearing my speech, the investors can gather in groups (according to distributor, product or postal district) to exchange views and discuss collective action.
All the best.
Date: Sat 25 Oct, 5 to 7 pm
Date: Sat 1 Nov, 5 to 7 pm
Date: Sat 8 Nov (cancelled)
Date: Sat 15 Nov 5 to 7 pm
My speech will be short, for about 10 mins.
After hearing my speech, the investors can gather in groups (according to distributor, product or postal district) to exchange views and discuss collective action.
All the best.
Tan Kin Lian's speech at Speaker's Corner
Mr. Tan,
Here is the YouTube Video Clip link of your speech at Hong Lim. I broke it into 2 parts because unedited file too large:
http://www.youtube.com/watch?v=rQ3xTRnd8J8 (PART 1)
http://www.youtube.com/watch?v=WCfpgMinQvI (PART 2)
Thomas Choy
Here is the YouTube Video Clip link of your speech at Hong Lim. I broke it into 2 parts because unedited file too large:
http://www.youtube.com/watch?v=rQ3xTRnd8J8 (PART 1)
http://www.youtube.com/watch?v=WCfpgMinQvI (PART 2)
Thomas Choy
Minibond invetors are not risk takers
Dear Mr. Tan
I think there is a way to prove that the investors are not risk takers. If an investor is interested to get a higher rate than those offered by FD, they would have invested in NZ FD as the rate was more than 7%.
As the investors are not willing to take currency risk, they are not willing to put their money into foreign currency FD. If that is the case, the investors are not risk takers and there is no reason why the investors are willing to invest in a high risk product like mini bond that offer only 5% with the risk of losing the whole investment if things go wrong. This argument has proven that it is obvious that the investors were not told of such risk in mini-bond investments by the RM.
I believe if the investors put up their cases in the above manner, their cases are stronger. Hope that the info is useful for the investor.
V
I think there is a way to prove that the investors are not risk takers. If an investor is interested to get a higher rate than those offered by FD, they would have invested in NZ FD as the rate was more than 7%.
As the investors are not willing to take currency risk, they are not willing to put their money into foreign currency FD. If that is the case, the investors are not risk takers and there is no reason why the investors are willing to invest in a high risk product like mini bond that offer only 5% with the risk of losing the whole investment if things go wrong. This argument has proven that it is obvious that the investors were not told of such risk in mini-bond investments by the RM.
I believe if the investors put up their cases in the above manner, their cases are stronger. Hope that the info is useful for the investor.
V
Sunday, October 12, 2008
Big loss on dual currency investment
Dear Mr Tan,
My mother told me that she invested in a dual currency investment ( USD, New zealand dollar, yen) for about USD $500K from her retirement saving, and suddenly the bank told her that she lost all her money, and if she want to stay and get her money back she need to inject another $500k.
So what should we do, I'm not familiar with dual currency investment, and neither does she. Does it means that she lost all her retirement money? Is it true if we inject the money $500k will cover the lost for the other 500k?
I really appreciate your advice.
REPLY
Please ask your mother to get a detailed statement and explanation from the bank. You can send it to me.
You can register the particulars of your mother in this Petition:
http://www.PetitionOnline.com/PCFXT1/petition.html
My mother told me that she invested in a dual currency investment ( USD, New zealand dollar, yen) for about USD $500K from her retirement saving, and suddenly the bank told her that she lost all her money, and if she want to stay and get her money back she need to inject another $500k.
So what should we do, I'm not familiar with dual currency investment, and neither does she. Does it means that she lost all her retirement money? Is it true if we inject the money $500k will cover the lost for the other 500k?
I really appreciate your advice.
REPLY
Please ask your mother to get a detailed statement and explanation from the bank. You can send it to me.
You can register the particulars of your mother in this Petition:
http://www.PetitionOnline.com/PCFXT1/petition.html
Forex or dual currency transactions
Dear Mr. Tan,
After reading your blog, I am really impressed by your untiring effort to help us, the poor retail investors who are 'cheated' by our financial institutions.
In my case it is not the structured products, but in forex trading by a foreign bank. Please advise how I could form a group of interested parties who may have suffered the same problem as me in taking a class action against this particular bank which I will not name.
REPLY
I have created this Petition for customers in similar situation to give their particulars.
http://www.petitiononline.com/PCFXT1/petition.html
After reading your blog, I am really impressed by your untiring effort to help us, the poor retail investors who are 'cheated' by our financial institutions.
In my case it is not the structured products, but in forex trading by a foreign bank. Please advise how I could form a group of interested parties who may have suffered the same problem as me in taking a class action against this particular bank which I will not name.
REPLY
I have created this Petition for customers in similar situation to give their particulars.
http://www.petitiononline.com/PCFXT1/petition.html
SCMP: Banks risked reputations, watchdog says
South China Morning Post (Hong Kong) - October 12, 2008
Author: Loretta Fong, Celine Sun and Eva Wu
The controversy over the sale of minibonds to small investors held a lesson for banks, the Hong Kong Monetary Authority's executive director said yesterday.
"A bank's reputation can easily be jeopardised when it sells high-risk derivative products to small investors. I think we need to review this practice in future," said Raymond Li Ling-cheung.
The authority has received 8,300 complaints from investors in minibonds issued or guaranteed by bankrupt US bank Lehman Brothers.
Hongkongers bought HK$15.7 billion of minibonds and related complex derivatives from banks and brokerages and stand to lose much or all their money. Many claim banks mis-sold the products as low-risk.
Of the complaints it has received, the authority has so far assessed 600 and found 71 require investigation.
Banks or their staff found to have misled customers may be fined or censured or may have their business licences suspended.
Minibond buyers seeking to recover their investments held fresh talks yesterday with some of the banks that sold them. HKMA deputy chief executive Choi Yiu-kwan said the government's proposal that banks buy back minibonds at current value was the best way for them to recover some of their losses.
The authority is preparing a report for the government on the sale of minibonds.
Meanwhile, Hong Kong Exchanges and Clearing chairman Ronald Arculli admitted its board of directors did not study an internal report drafted five years ago that warned of a lack of oversight of the sale of complex derivatives such as minibonds.
"Colleagues passed the report to the management. But it was found that the worries exposed by the report would not affect much the operations of HKEx. Thus there was no follow-up afterwards," he said.
Author: Loretta Fong, Celine Sun and Eva Wu
The controversy over the sale of minibonds to small investors held a lesson for banks, the Hong Kong Monetary Authority's executive director said yesterday.
"A bank's reputation can easily be jeopardised when it sells high-risk derivative products to small investors. I think we need to review this practice in future," said Raymond Li Ling-cheung.
The authority has received 8,300 complaints from investors in minibonds issued or guaranteed by bankrupt US bank Lehman Brothers.
Hongkongers bought HK$15.7 billion of minibonds and related complex derivatives from banks and brokerages and stand to lose much or all their money. Many claim banks mis-sold the products as low-risk.
Of the complaints it has received, the authority has so far assessed 600 and found 71 require investigation.
Banks or their staff found to have misled customers may be fined or censured or may have their business licences suspended.
Minibond buyers seeking to recover their investments held fresh talks yesterday with some of the banks that sold them. HKMA deputy chief executive Choi Yiu-kwan said the government's proposal that banks buy back minibonds at current value was the best way for them to recover some of their losses.
The authority is preparing a report for the government on the sale of minibonds.
Meanwhile, Hong Kong Exchanges and Clearing chairman Ronald Arculli admitted its board of directors did not study an internal report drafted five years ago that warned of a lack of oversight of the sale of complex derivatives such as minibonds.
"Colleagues passed the report to the management. But it was found that the worries exposed by the report would not affect much the operations of HKEx. Thus there was no follow-up afterwards," he said.
Nadya "Speaker" Zagarodnova
My second grand-daugher Nadya was borne at 6 p.m. on Saturday 11 October. I will nickname her as "Speaker" as this was the same time that I was giving the speech to 1,000 people at Speaker's Corner.
She was 4.5 kg (10 lbs) at birth. This makes her the biggest baby that was borne within my family. She is also the biggest baby delivered by the gynaecologist looking after my daughter Su Ling.
My son-in-law Vitali came from Russia. He teaches in Nanyang Technological University.
She was 4.5 kg (10 lbs) at birth. This makes her the biggest baby that was borne within my family. She is also the biggest baby delivered by the gynaecologist looking after my daughter Su Ling.
My son-in-law Vitali came from Russia. He teaches in Nanyang Technological University.
Send this message to your Member of Parliament
Dear (Member of Parliament)
We are a group of residents in you constituencey who are affected by the recent default of the structured products. Our names are shown below (provide a list of affected residents).
We wish to meet you tell you about our grievances. Please click on the link below to hear a recording of the grievance of the investors at yesterday Speaker Corner.
http://www.youtube.com/watch?v=ZzpYO2NunEY
We are a group of residents in you constituencey who are affected by the recent default of the structured products. Our names are shown below (provide a list of affected residents).
We wish to meet you tell you about our grievances. Please click on the link below to hear a recording of the grievance of the investors at yesterday Speaker Corner.
http://www.youtube.com/watch?v=ZzpYO2NunEY
Weekly meetings at Hong Lim Green?
An investor suggested that Hong Lim Green is a suitable place for investors to meet each week on Saturday at 6 to 7 pm.
It is big enough for many several group meetings (by distributor or product) to be held. It is also useful for the investors to exchange notes. It is quite convenient as it is within walking distance of the Clarke Quay and Raffles Place MRT stations.
The meeting can be with, or without, speeches.
Do you think that this is a good idea?
It is big enough for many several group meetings (by distributor or product) to be held. It is also useful for the investors to exchange notes. It is quite convenient as it is within walking distance of the Clarke Quay and Raffles Place MRT stations.
The meeting can be with, or without, speeches.
Do you think that this is a good idea?
Why the credit linked notes are highly risky
Some anonymous postings claimed that the structured products are linked to six entities that are rated A or higher at the time of issue, and are therefore safe. Nobody could have forseen that these companies could get into bankrupcy.
This argument is not correct. These structured products are highly risky for the following reasons:
1. The structured products take a bet on the six reference entities. The failure (or credit event) on any one entity could cause the loss of the entire capital. The presence of six entities (i.e. swaps) increases the risk six-fold.
2. The money received under the structure is invested in lower quality assets, such as collateralised debt obligations (CDO) to earn a high rate of return. Additional bets (i.e. swaps) could be taken on the failures of these underlying assets.
I estimate that the income stream of the structure could be 10% or more each year. If so, this will classify the structure as a junk bond, which is highly risky. However, it seems that only 5% is given to the investors for the high risk that they are shouldering.
These figures are just my guess. I hope that the Monetary Authority of Singapore will carry out the investigation, as asked by the Petition, to will look into the actual accounts of the structure, i.e. the income stream, the expenses and profits that are taken out, and if the parties had observed their fiduciary duty to the investors.
This argument is not correct. These structured products are highly risky for the following reasons:
1. The structured products take a bet on the six reference entities. The failure (or credit event) on any one entity could cause the loss of the entire capital. The presence of six entities (i.e. swaps) increases the risk six-fold.
2. The money received under the structure is invested in lower quality assets, such as collateralised debt obligations (CDO) to earn a high rate of return. Additional bets (i.e. swaps) could be taken on the failures of these underlying assets.
I estimate that the income stream of the structure could be 10% or more each year. If so, this will classify the structure as a junk bond, which is highly risky. However, it seems that only 5% is given to the investors for the high risk that they are shouldering.
These figures are just my guess. I hope that the Monetary Authority of Singapore will carry out the investigation, as asked by the Petition, to will look into the actual accounts of the structure, i.e. the income stream, the expenses and profits that are taken out, and if the parties had observed their fiduciary duty to the investors.
Speaker's Corner - 11 October 2008
Coverage in The Online Citizen, including special video interviews and comments by readers:
http://theonlinecitizen.com/2008/10/more-than-1000-people-at-speakers-corner/#comments
http://theonlinecitizen.com/2008/10/more-than-1000-people-at-speakers-corner/#comments
Panic of AIA policyholders
Dear Mr. Tan Kin Lian:
I'm a journalist. We read your blog and see many AIA policyholders seeking your advice. We are very interested. How big a problem is AIA facing? How are policyholders reacting to the problem? Do you find their worries reasonable or unreasonable?
REPLY
The policyholders of AIA (American International Assurance) were worried about the safety of their insurance savings when they heard about the financial trouble facing AIA's parent company, AIG (American International Group). At that time, they learned that AIG had to be find additional capital of USD 80 billion (not sure about the exact figure), failing which AIG had to declare bankrupcy. They were worried that their savings would be locked up during the bankrupcy or worse still, disappeared entirely.
Many policyholders queued up to terminate their policies and receive the cash values. They are willing to take a loss, as the cash value is less than the premiums that they have paid, and the penalty is quite high for policies that are terminted during the early years of the insurance policy.
A total of 5,000 policies were reported to be surrendered during the first two years. Many of these policyholders formed large queues outside of the office of AIA. This caused other policyholders to be alarmed.
Some of the AIA policyholders sent e-mails to seek my advice. I advised them not to panic and not to surrender their policies. My reasons were given in this blog:
http://tankinlian.blogspot.com/2008/09/is-your-money-safe-with-aia.html
On the following days, the regulator, i.e. Monetary Authority of Singapore, and AIA issued similar statements to assure the policyholders.
There was no need for the policyholders to panic, as their insurance savings are kept in a separate fund for Singapore policies. This fundwas, to my knowledge, solvent and in good financial state. Even if there is financial difficulty facing AIA (and there was none at that time), there is provision in the Insurance Act for the regulator to activate the Policyowners Protection Fund. This fund would guarantee 90 percent of the liability under a life insurance policy. This is much better than taking the cash value, as the penalty is higher for a surrendered policy.
I do my best to educate the public about the actual situation and to help them avoid taking the wrong action that will result in making a loss on their savings.
I'm a journalist. We read your blog and see many AIA policyholders seeking your advice. We are very interested. How big a problem is AIA facing? How are policyholders reacting to the problem? Do you find their worries reasonable or unreasonable?
REPLY
The policyholders of AIA (American International Assurance) were worried about the safety of their insurance savings when they heard about the financial trouble facing AIA's parent company, AIG (American International Group). At that time, they learned that AIG had to be find additional capital of USD 80 billion (not sure about the exact figure), failing which AIG had to declare bankrupcy. They were worried that their savings would be locked up during the bankrupcy or worse still, disappeared entirely.
Many policyholders queued up to terminate their policies and receive the cash values. They are willing to take a loss, as the cash value is less than the premiums that they have paid, and the penalty is quite high for policies that are terminted during the early years of the insurance policy.
A total of 5,000 policies were reported to be surrendered during the first two years. Many of these policyholders formed large queues outside of the office of AIA. This caused other policyholders to be alarmed.
Some of the AIA policyholders sent e-mails to seek my advice. I advised them not to panic and not to surrender their policies. My reasons were given in this blog:
http://tankinlian.blogspot.com/2008/09/is-your-money-safe-with-aia.html
On the following days, the regulator, i.e. Monetary Authority of Singapore, and AIA issued similar statements to assure the policyholders.
There was no need for the policyholders to panic, as their insurance savings are kept in a separate fund for Singapore policies. This fundwas, to my knowledge, solvent and in good financial state. Even if there is financial difficulty facing AIA (and there was none at that time), there is provision in the Insurance Act for the regulator to activate the Policyowners Protection Fund. This fund would guarantee 90 percent of the liability under a life insurance policy. This is much better than taking the cash value, as the penalty is higher for a surrendered policy.
I do my best to educate the public about the actual situation and to help them avoid taking the wrong action that will result in making a loss on their savings.
New blog for investors of Credit Linked Securities
This blog allows investors to get in touch with each other. Separate sections have been created according to distributor and products.
http://creditlinkedsecurities.blogspot.com/
http://creditlinkedsecurities.blogspot.com/
STI Exchange Traded Fund
The STi Exchange Traded Fund is a fund, like a unit trust. It is an indexed fund, and is invested in the top 30 shares of the ST Index. It is NOT a derivative.
More details can be found here:
http://www.streettracks.com.sg/ssga/jsp/en/pressRelease-article2.jsp
If you wish to buy the this Fund, you have to consult your stockbroker.
More details can be found here:
http://www.streettracks.com.sg/ssga/jsp/en/pressRelease-article2.jsp
If you wish to buy the this Fund, you have to consult your stockbroker.
Investing in difficult times
Dear Mr. Tan,
Is it safe to put money in the bank anymore? If not, where can I invest my money? I am scared even to leave the money in the bank as the banks are no longer safe, and they may ask me to invest in the minibonds and other risky products, without my knowledge.
REPLY
My wife asked me the same question. I advised her to buy the STI Exchange Traded Fund. It is a fund comprise of the top 30 shares in Singapore. My reasons are:
1. These are the 30 largest companies listed in Singapore
2. The dividends paid average about 5%, based on the current price. It is paid in two installments every 6 months.
3. If this is for a long term investment, it does not matter if the share prices comes down further. It will eventually recover (maybe in a few years' time and make a good capital gain)
4. If the recession continues for one or two years and the profits of the companies drop by 50%, these shares will still give a dividend of 2.5% (which is better than bank deposit or government bonds).
5. Invest for the long term. Be bold.
Another alternative is to invest in a few RIETs. Many of them have a dividend payout of 10% now. Even if the rentals fall by 50%, the dividend payout is 5%. Make sure that these REITS do not have high leverage.
Is it safe to put money in the bank anymore? If not, where can I invest my money? I am scared even to leave the money in the bank as the banks are no longer safe, and they may ask me to invest in the minibonds and other risky products, without my knowledge.
REPLY
My wife asked me the same question. I advised her to buy the STI Exchange Traded Fund. It is a fund comprise of the top 30 shares in Singapore. My reasons are:
1. These are the 30 largest companies listed in Singapore
2. The dividends paid average about 5%, based on the current price. It is paid in two installments every 6 months.
3. If this is for a long term investment, it does not matter if the share prices comes down further. It will eventually recover (maybe in a few years' time and make a good capital gain)
4. If the recession continues for one or two years and the profits of the companies drop by 50%, these shares will still give a dividend of 2.5% (which is better than bank deposit or government bonds).
5. Invest for the long term. Be bold.
Another alternative is to invest in a few RIETs. Many of them have a dividend payout of 10% now. Even if the rentals fall by 50%, the dividend payout is 5%. Make sure that these REITS do not have high leverage.
Speech at Speaker's Corner: 11 Oct 2008
Courtesy of The Online Citizen:
Part 1:
http://www.youtube.com/watch?v=xskGbufFUAM
Part 2:
http://www.youtube.com/watch?v=14Ln_gtm3KI
Part 3:
http://www.youtube.com/watch?v=1kobyOql3EE
Part 1:
http://www.youtube.com/watch?v=xskGbufFUAM
Part 2:
http://www.youtube.com/watch?v=14Ln_gtm3KI
Part 3:
http://www.youtube.com/watch?v=1kobyOql3EE
Hong Kong: DBS first bank to repay bonds
DBS first bank to repay bonds
By Lillian Liu - China Daily(HK Edition)
Updated: 2008-10-10 07:36
DBS said it will redeem 70 investors' Lehman Brothers-related products sold by the bank, making it the first financial institution in Hong Kong to compensate investors in response to the government's pledge to help the bond holders recover some losses quickly.
Some 21 banks in Hong Kong, according to the Hong Kong Monetary Authority (HKMA), have sold minibonds and similar products backed by Lehman Brothers, which was the fourth-largest investment bank in the US until its collapse last month.
A spokeswoman at DBS said the bank is only responsible for the structural bonds, while other bonds related to Lehman Brothers were issued by another firm.
She said the bank has designated accounting firm KPMG to revalue the products to be bought back and did not rule out the possibility that some bond buyers will be totally refunded.
Analysts said DBS set a good example for other banks having issued Lehman Brothers-related products, but noted that it may be a while before investors actually receive their compensation.
Tens of thousands of Hong Kong people invested a total of HK$15.6 billion in the Lehman Brothers-backed derivatives, and they all face substantial losses.
The number of complaints concerning Lehman Brothers-related products has increased sharply to 7,730 from 5,500, and will grow further, the HKMA said yesterday. The authority has opened an investigation into whether the banks misled investors into buying them, it said.
"But we cannot comment on how long it will take to investigate the problems, because it depends on the capacity of the investigation team and availability of information provided," HKMA Executive Director Raymond Li told reporters at a press conference yesterday.
Y K Choi, deputy chief executive of the HKMA, said that to avoid similar cases in the future, the HKMA - the city's de facto central bank - is studying which risky financial products can be sold to retail investors and which should not be.
Among the total complaints received by HKMA, 6,012 cases are in the initial processing phase, while 1,476 cases require verification, and 242 complaints have been put in assessment for further action.
Li said investors complained they were misled into thinking they were buying a form of corporate bonds and were unaware until recently that the bonds were guaranteed by troubled Lehman Brothers.
They accused the banks of not fully disclosing the risks involved.
Some minibonds consist of high-risk derivatives such as synthetic collateralized debt obligations and credit default swaps.
http://www.chinadaily.com.cn/hkedition/2008-10/10/content_7092404.htm
By Lillian Liu - China Daily(HK Edition)
Updated: 2008-10-10 07:36
DBS said it will redeem 70 investors' Lehman Brothers-related products sold by the bank, making it the first financial institution in Hong Kong to compensate investors in response to the government's pledge to help the bond holders recover some losses quickly.
Some 21 banks in Hong Kong, according to the Hong Kong Monetary Authority (HKMA), have sold minibonds and similar products backed by Lehman Brothers, which was the fourth-largest investment bank in the US until its collapse last month.
A spokeswoman at DBS said the bank is only responsible for the structural bonds, while other bonds related to Lehman Brothers were issued by another firm.
She said the bank has designated accounting firm KPMG to revalue the products to be bought back and did not rule out the possibility that some bond buyers will be totally refunded.
Analysts said DBS set a good example for other banks having issued Lehman Brothers-related products, but noted that it may be a while before investors actually receive their compensation.
Tens of thousands of Hong Kong people invested a total of HK$15.6 billion in the Lehman Brothers-backed derivatives, and they all face substantial losses.
The number of complaints concerning Lehman Brothers-related products has increased sharply to 7,730 from 5,500, and will grow further, the HKMA said yesterday. The authority has opened an investigation into whether the banks misled investors into buying them, it said.
"But we cannot comment on how long it will take to investigate the problems, because it depends on the capacity of the investigation team and availability of information provided," HKMA Executive Director Raymond Li told reporters at a press conference yesterday.
Y K Choi, deputy chief executive of the HKMA, said that to avoid similar cases in the future, the HKMA - the city's de facto central bank - is studying which risky financial products can be sold to retail investors and which should not be.
Among the total complaints received by HKMA, 6,012 cases are in the initial processing phase, while 1,476 cases require verification, and 242 complaints have been put in assessment for further action.
Li said investors complained they were misled into thinking they were buying a form of corporate bonds and were unaware until recently that the bonds were guaranteed by troubled Lehman Brothers.
They accused the banks of not fully disclosing the risks involved.
Some minibonds consist of high-risk derivatives such as synthetic collateralized debt obligations and credit default swaps.
http://www.chinadaily.com.cn/hkedition/2008-10/10/content_7092404.htm
UOB Structured Notes
Mr. Paul Ly <paul_ly_sg@yahoo.com> wishes to contact other investors who have involved in the UOB Structured Notes. Please contact him directly by e-mail.
Structured products are not sold in the UK
Donaldson Tan posted this comment in my blog:
Retail investors in UK can only buy mutual funds. I don´t understand how come banks can market products riskier than mutual funds to retail investors in Singapore in the first place.
REPLY
Singapore's regulatory approach is modelled along the UK system, i.e.
1. Financial institutions are given freedom to design and market their product
2. The financial institutions have to behave responsibily towards the consumers.
Retail investors in UK can only buy mutual funds. I don´t understand how come banks can market products riskier than mutual funds to retail investors in Singapore in the first place.
REPLY
Singapore's regulatory approach is modelled along the UK system, i.e.
1. Financial institutions are given freedom to design and market their product
2. The financial institutions have to behave responsibily towards the consumers.
3. If they fail in their duty, the Financial Services Authority will impose heavy fines on the institutions and get them to compensate the consumers for their losses
If MAS in Singapore adopt the same approach and impose heavy penalties on the institutions for wrong doing, you will find that the risky structured products will not be sold in Singapore.
MAS has the power to bring the institutions to court for breaking the provisions of the Financial Services Act, Securities and Futures Act and the Trustees Act. I hope that they will carry out their duty to enforce the law.
If MAS in Singapore adopt the same approach and impose heavy penalties on the institutions for wrong doing, you will find that the risky structured products will not be sold in Singapore.
MAS has the power to bring the institutions to court for breaking the provisions of the Financial Services Act, Securities and Futures Act and the Trustees Act. I hope that they will carry out their duty to enforce the law.
Blogs for investors
Some investors want to create blogs targeted at certain groups of investors, such as type of product or distributor.
You can create a blog in www.blogger.com. If you provide the URL of the blog to me, I will help to publicise it in my blog. Be aware that your blog can be read by the public, including the non-investors and the financial institutions.
All the best.
You can create a blog in www.blogger.com. If you provide the URL of the blog to me, I will help to publicise it in my blog. Be aware that your blog can be read by the public, including the non-investors and the financial institutions.
All the best.
Volunteers to lead groups of investors
If you wish to volunteer to lead groups of investors in the credit linked securities, please give your particulars in this blog:
1. Your name, e-mail, telephone number
2. Postal code
3. Type of product invested in
4. Financial institution and branch.
Your information can be seen in this blog. Thsi will allow other investors may contact you.
1. Your name, e-mail, telephone number
2. Postal code
3. Type of product invested in
4. Financial institution and branch.
Your information can be seen in this blog. Thsi will allow other investors may contact you.
Fight for the weak
Some journalists asked, "Mr. Tan, what is your motivation to help the investors?"
I wonder why it is necesary for the journalists to ask this question. Should any action be subject to this type of suspicion? Are we such a selfish society that everyone can only work for their self interest and for personal gains?
I replied, "I see so many people who have lost their hard earned savings, and their life savings, in financial products that are not suitable for them. The financial institution who recommended and sold these products should come forward and bear some of the loss. They cannot keep the gains that they have made, and just said, 'Let's move on'.
I hope that, in the future, more Singaporeans will come forward and fight for the weak, and for people who are the victims of wrong doing. We cannot just stand back and watch idly, while other people suffer. We should not be so selfish, that we can only think of our personal interest. "
A reader of my blog, posting under the name of SiewKhim, even asked this question in an insulting way, implying that I am acting dishonourably. I refused to publish his comment due to its defamatory nature. Anyway, SiewKhim has been creating trouble for me many times before.
I wonder why it is necesary for the journalists to ask this question. Should any action be subject to this type of suspicion? Are we such a selfish society that everyone can only work for their self interest and for personal gains?
I replied, "I see so many people who have lost their hard earned savings, and their life savings, in financial products that are not suitable for them. The financial institution who recommended and sold these products should come forward and bear some of the loss. They cannot keep the gains that they have made, and just said, 'Let's move on'.
I hope that, in the future, more Singaporeans will come forward and fight for the weak, and for people who are the victims of wrong doing. We cannot just stand back and watch idly, while other people suffer. We should not be so selfish, that we can only think of our personal interest. "
A reader of my blog, posting under the name of SiewKhim, even asked this question in an insulting way, implying that I am acting dishonourably. I refused to publish his comment due to its defamatory nature. Anyway, SiewKhim has been creating trouble for me many times before.
You have to take the risk and bear the loss
Dear Mr. Tan,
I lived for several years in a third world country. Every day, burglars ransacked the homes of the people. When the owners complained to the Police, there was no investigation.
They saw the Government leader who told them, "if you wish to live in this country, you have to take the risk and bear the loss. Let's move on".
Does this sound familiar with the minibond issue?
I lived for several years in a third world country. Every day, burglars ransacked the homes of the people. When the owners complained to the Police, there was no investigation.
They saw the Government leader who told them, "if you wish to live in this country, you have to take the risk and bear the loss. Let's move on".
Does this sound familiar with the minibond issue?
Upset investors turn up at Speakers' Corner
Upset investors turn up at Speakers' Corner
By Imelda Saad, Channel NewsAsia
SINGAPORE: More than 1,000 people, who lost hard-earned savings investing in structured products like Lehman Minibonds and DBS High Notes, turned up at the Speakers' Corner on Saturday evening.
They were there to listen to former CEO of NTUC Income, Mr Tan Kin Lian, who has submitted a petition to the Monetary Authority of Singapore (MAS) to request for an investigation into the sale of credit-linked securities.
Many in attendance were upset investors who claimed they had lost their retirement savings through failed investments.
Mr Tan is asking the authorities to investigate if these products were sold according to the law, and to help investors claim compensation for losses caused by misconduct.
He said: "It's an opportunity for the investors of the Minibonds and the High Notes to get together and meet other investors. I hope they would be able to get together to see their Member of Parliament or even to appoint a lawyer, and see how to complain about the bank or investor who had sold them this product."
By Imelda Saad, Channel NewsAsia
SINGAPORE: More than 1,000 people, who lost hard-earned savings investing in structured products like Lehman Minibonds and DBS High Notes, turned up at the Speakers' Corner on Saturday evening.
They were there to listen to former CEO of NTUC Income, Mr Tan Kin Lian, who has submitted a petition to the Monetary Authority of Singapore (MAS) to request for an investigation into the sale of credit-linked securities.
Many in attendance were upset investors who claimed they had lost their retirement savings through failed investments.
Mr Tan is asking the authorities to investigate if these products were sold according to the law, and to help investors claim compensation for losses caused by misconduct.
He said: "It's an opportunity for the investors of the Minibonds and the High Notes to get together and meet other investors. I hope they would be able to get together to see their Member of Parliament or even to appoint a lawyer, and see how to complain about the bank or investor who had sold them this product."
Greedy for profits
Financial institutions should recommend Government bonds to risk adverse investors. However, the distributor earns only a commission of 0.5% when they sell the bond.
The distributor preferred to push the credit linked securities because they can earn a commission of 3% to 5%. Their representative were not properly trained on the product. They did not explain the product properly and caused the investors to invest in a high risk product that caused the loss of a substantial portion or nearly all of their hard earned savings.
Surely, the financial institution should understand why the issuer gave a high commission of 3% to 5% to market the product. By being greedy for a bigger profit, these financial institutions have caused big loss to the customers that trusted them.
The distributor preferred to push the credit linked securities because they can earn a commission of 3% to 5%. Their representative were not properly trained on the product. They did not explain the product properly and caused the investors to invest in a high risk product that caused the loss of a substantial portion or nearly all of their hard earned savings.
Surely, the financial institution should understand why the issuer gave a high commission of 3% to 5% to market the product. By being greedy for a bigger profit, these financial institutions have caused big loss to the customers that trusted them.
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