Two sources of loss on your investment

Hi Mr. Tan,

I was surfing the internet and came across your website. Recently, I feel very depressed becuase I realised I was conned by my own advisor who is also a friend of mine. I trusted her too much. I bought a few policies with her. Due to the bad market situation, I lost $X (my hard-earned money) for investing in unit trusts.

I would like to check with you on what I should do. The following is what i bought from her in 2006/2007:

(details deleted)

For the whole life policy, I have to pay 18 months of premiums to pay for her service. I really didn't know that till I clicked on the Askdrmoney link on your website.

For the pure unit trust with no insurance. I put in $1800 to try to average out the prices of my unit prices due to recession. I'm paying 3% for the comission. Now my unit trusts dropped from $Y to $Z. I feel stupid for paying 3% commission. So I terminated the monthly contribution of $1,800. Have i done the right thing?

After reading your website, i realised my agent really earning a lot. She can go for holiday every year. e.g. she just came back from California. As for me, I saved every single cent of my money...

I feel so frustrated that I really feel like terminating every single policy that i bought fr her. Should I do that?

D

REPLY

The loss that you have incurred come from the following sources:

a) Paper loss on your investments, due to the fall in the market
b) Loss due to the expenses charges deducted from your life insurance policies.

For (a), you will recover the paper loss when the market recovers in a few years' time. As a long term investor, you can wait for a better time to realise your investment.

For (b), you have already incurred the expense charges in the past. You should consider if the future expense charges compared to the alternative types of investments. If most of the charges have already been deducted, it is better to keep the investments and look towards the future. If there are still heavy charges to be deducted from the future, you can terminate the policies.

You should make your decision after getting the relevant facts.

If you need independent financial advice and is willing to pay a modest fee, you can consult the following:
http://tankinlian.blogspot.com/2008/12/financial-advice-for-fee.html

HK: Minibond investors to sue HSBC

http://www.thestandard.com.hk/breaking_news_detail.asp?id=10620

Lehman Brothers minibond investors plan to sue the minibond trustee, US-incorporated HSBC (0005), after Hong Kong banks postponed buying back the structured products.

Peter Chan Kwong-yue, chairman of investors action group Allied Victims of Lehman Products, said the action group has been approached by US legal firm offering to represent minibond investors in Hong Kong filing the lawsuit.

Meanwhile, the Hong Kong Monetary Authority has received 19,196 complaints concerning minibonds as at Thurday. HKMA today referred 21 complaints of alleged misconduct tied to Lehman Brothers financial products to the Securities and Futures Commission for possible action.

SCMP:Class- action lawsuit over minibonds to start soon

http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=TPKF3AERZ3I8&linkid=0b57f4e1-cc3d-4a34-9d09-8612bf7d989c&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d

6 Dec 2008
Dennis Eng and Albert Wong

A US class-action lawsuit by local investors in soured minibonds is expected to start by the end of next month, paving the way for a protracted legal battle that could drag on for two years, a spokesman for the investors said.

“We really don’t want to do this but we have no other option. We’re not going to give up,” Peter Chan Kwong-yue, chairman of investor action group Alliance of Lehman Brothers Victims, said. Investors bought minibonds, issued or guaranteed by Lehman Brothers, from one or more of 16 local banks.

The move is seen as a last-ditch effort by angry investors to recover almost HK$13 billion from the bankrupt Wall Street giant after a proposed buy-back of the minibonds suffered a setback. Secretary for Financial

Services and the Treasury Chan Ka-keung said a legal challenge by lawyers representing Lehman’s liquidators would inevitably delay the buy-back timetable.

Details of the buy-back were supposed to be announced last week. “I think what the liquidators were doing was to ask the trustee to stop any actions regarding the collaterals,” he said, referring to the minibonds’ underlying assets.

Minibonds consist of high-risk, credit-linked derivatives that are marketed as a proxy investment in well-known companies.

“This, of course, will throw some challenges into the process of the buy-back, and the banks have to address these before they can proceed.”

Hong Kong Association of Banks chairman He Guangbei said the priority now was to try to clarify the legality of the buy-back and resolve the legal challenge. The buy-back was conceived under British law but the trustee, HSBC Bank USA, was incorporated under United States law, complicating the matter.

“There is a conflict in legal opinion from the US and UK,” Mr He said. “ According to UK law, there’s certainly a priority in terms of payments but there is this challenge from the US bankruptcy law. Which one is going to stand is very hard to say.”

The government said it had considered the legal risks when it proposed the buy-back to banks in October. It said the taskforce formed by the banks on the issue had clearly stated it was seeking legal advice and “we hope [it] will continue to follow up with the trustees of the Lehman minibonds in taking necessary actions to get back the market value of the minibonds”.

The class-action lawsuit will automatically cover the roughly 33,000 Lehman minibond investors in Hong Kong although they can opt out. US lawyers contacted Peter Chan as well as the Democratic Party about the possibility of a US class-action lawsuit. An agreement is still pending.

Peter Chan declined to identify the US lawyers but said they were involved in helping investors affected by the collapse of energy trader Enron in late 2001. Law firm Coughlin Stoia Geller Rudman & Robbins helped Enron investors settle for US$ 7.2 billion and negotiated a record US$688 million in fees.

The prospect of a drawn-out lawsuit is increasingly likely after banking sector legislator David Li Kwokpo, the chairman of Bank of East Asia, said lawyers advised against the buyback.

But Democratic Party legislator James To Kun-sun said he hoped the government would not give up on the buy-back proposal.

Since October 17, the Hong Kong Monetary Authority has referred 207 Lehman-related cases to the Securities and Futures Commission.

MAS seeks advice from senior counsel

By: FRANCIS CHAN, Straits Times

THE Monetary Authority of Singapore (MAS) has enlisted senior counsel Davinder Singh to advise it on the latest legal issues faced by the ill-fated Minibonds structured notes.

The central bank said last night that it had called on Mr Singh, the chief executive of Drew & Napier, "to advise MAS on the implications of the legal issues raised by the lawyers acting in the Chapter 11 proceedings for Lehman Brothers".

This follows Tuesday's warning by the Minibonds trustee – HSBC Institutional Trust Services Singapore – that the unwinding of the notes may be challenged by lawyers involved in bankruptcy proceedings over Lehman in the United States.

Minibonds series 1 and 5 to 10 of the notes have defaulted and will be unwound by three appointed receivers of the defaulted notes from PricewaterhouseCoopers (PwC) Singapore.

On Tuesday, the receivers said investors might have to wait at least two years or more for any resolution, given the legal complexities introduced by the notice from Lehman's lawyers.

MAS last month also called on Deloitte & Touche Corporate Finance to advise the central bank on the

Minibonds fiasco. Deloitte & Touche's services have also now been extended.

While the MAS has Mr Singh and the resources of Deloitte & Touche, the receivers from PwC are separately being advised by their own legal counsel.

Last night, the MAS also reiterated the trustee and receivers' warning that it may not be possible for any resolution to be reached within a short span of time.

"Nevertheless, MAS expects the trustee and receivers to pursue all appropriate avenues to protect noteholders' interests," it added.

About 8,000 retail investors sank $375 million in Minibonds – only to see Lehman collapse on Sept 15.

Three other independent parties have been roped in by the MAS to ensure that the plight of these investors is not ignored amid potential cross-border legal battles.

On Oct 2, Mr Gerard Ee, Mr Hwang Soo Jin and Mr Law Song Keng were appointed by distributors of structured products such as Minibonds, Merrill Lynch Jubilee Series 3LinkEarner Notes and DBS High Notes 5 to oversee their complaints handling processes.

All three said they were working closely with the financial institutions to ensure fair and prompt resolution of complaints by investors.

REPLY
I hope that MAS will also ask Mr. Davinder Singh to see if there were any wrong doing committed by Lehman Brothers in the creation of these products. Did they breach the requirements of the Securities & Futures Act to provide relevant information on the product for the investors to make a proper assessment, or were any material information omitted?

Auction Rate Securities

Extract from New York Times:
http://www.nytimes.com/2008/11/30/business/30gret.html?_r=1&pagewanted=print

Auction-rate securities are preferred shares or debt instruments with rates that reset regularly, usually every week, in auctions overseen by the brokerage firms that originally sold them. They have long-term maturities or, in the case of the preferred shares, no maturity dates at all. The securities are issued by municipalities, student-loan companies, closed-end funds and tax-exempt institutions like hospitals and museums.

Brokers that peddled these securities told buyers that they were cash equivalents, easy to get out of and relatively safe. But the promises of liquidity turned false last February when buyers for the securities disappeared and the auctions began failing. The $300 billion market for auction-rates ground to a halt, entrapping thousands of investors both large and small, sophisticated and novice.

Officials in Massachusetts, New York and other states came to the rescue earlier this year, striking settlements with some of the bigger brokerage firms in the arena.

But while some of the larger firms agreed to redeem the securities, not everyone is covered by those agreements. A group of people, size unknown, has fallen through the cracks in the settlements, and for several quirky reasons. They remain frozen in the securities and understandably upset.

China stimulates its economy

China's inland provinces need infrastructure, and Beijing has announced a stimulus package of four trillion yuan (S$889 billion) by 2010. China is extending its railway network, rebuilding earthquake-damaged areas in Sichuan, increasing export tax rebates, lending more to small and medium-sized enterprises and spending more on social welfare systems.

To revive the housing market, it is reducing taxes on housing transactions and unwinding property- tightening measures introduced earlier to counter speculation. For first-time home buyers, the minimum down payment has been reduced from 30 per cent to 20 per cent, and banks are allowed to offer interest rates as low as 70 per cent of the standard lending rates for such mortgages. The demand for residential housing remains strong, and China's construction companies are capable of meeting it.

Personal consumption in China should be encouraged; it is only 35 per cent of gross domestic product (GDP), compared with America's 70 per cent. Beijing is introducing rural land reforms, increasing government funding for low-price housing and basic medical services, and reducing interest rates in order to boost domestic consumption. China is determined to grow by at least 8 per cent, to create enough jobs to sidestep large-scale unemployment and social unrest.

Class action - update as at 4 Dec 2008

I wish to give an update to the notebolders (i.e. the investors of the credit linked notes).

1. About 200 notebolders have appointed a specific lawyer to act in the class action. I am meeting this lawyer to discuss his approach and the possibility of involving an experienced senior lawyer to fight the case in the high court.

2. A separate group of noteholders have approached several lawyers. They advised that a "test case" be used to take a case in high court. This group is likely to recommend a lawyer and to present the proposal to the noteholders in January 2009.

3. I have approached two senior lawyers to study the possible defects in the prospectus and pricing statement and to obtain an opinion from a Queens Counsel from the UK. A recommendation is likely to be made in January.

http://tankinlian.blogspot.com/2008/12/legal-action-against-issuers-and.html

I hope that the investors will wait until February to decide on the strategy for the class action. It may be possible for two or three class actions to be pursued separately for the differtent types of notes.

SCMP:Illiterate minibond investor files writ

http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=GBJR3WVK97T5&linkid=c62f11e3-4682-4992-b33c-9bc37feea64e&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d

4 Dec 2008
Yvonne Tsui, Eva Wu and Dennis Eng

A fisherman is suing the Bank of China for the return of HK$800,000 he invested with Lehman Brothers, alleging he was deceived because he is illiterate.

Lai Kam-fook, who filed a writ in the District Court on Tuesday, is taking legal action after he was told in September that his money was affected by the collapse of the American bank.

The writ alleges he and his wife were advised by a staff member at the bank’s Aberdeen branch in August 2004 to make a risk-free, five-year deposit with a higher interest rate. It says he had deposited HK$800,000.

It alleges Mr Lai had never received or read any documentation from the bank.

“Because the staff member, surnamed Leung, told me it was a fiveyear deposit, I believed her. I did not read anything. It is useless to have read anything because I am illiterate anyway,” Mr Lai stated in the writ.

“To conclude, the total sum I had invested is HK$800,000. My allegation is: the bank cheated me because I am illiterate.”

However, HSBC Hong Kong received a cease-and-desist order last week from Weil, Gotshal & Manges, Lehman’s bankruptcy counsel. This notice means the minibonds cannot be liquidated, which would be necessary to go ahead with a buy-back. Democrat Kam Nai-wai, however, said the best option remained the banks buying back the bonds.

As an alternative, six lawmakers suggested that a redemption fund of HK$20 billion, including HK$10 billion from the government, be established.

However, the Secretary for Financial Services and the Treasury, Chan Ka-keung, said public funds should not be used to compensate investors’ losses.

Minibonds are not corporate bonds, but consist of high-risk, credit-linked derivatives that were marketed as proxy investments in well-known companies.

Persist in our efforts

The officials in MAS spent the past month to find a new swap counterparty to replace Lehman Brothers. They are not able to find a new arrangement, in spite of the highly qualified, well paid people and regulatory power available in their hands.

I work with a handful of volunteers to help the noteholders (i.e. the "investors" who bought the credit linked notes) to get a fair compensation. These volunteers have to work on their full time job, and find some free time to devote to this task. Our request for information and meetings from the financial insitutions and with the regulator are usually ignored.

In spite of the great obstacles, we will persist in our fight for justice and fairness. I hope that, one day, our efforts will be rewarded.

http://forums.delphiforums.com/n/mb/message.asp?webtag=3in1kopitiam&msg=2907.1

Hong Kong: Can the SFC avoid a knee-jerk response?

http://www.asianinvestor.net/article.aspx?CIaNID=90380

By Jame DiBiasio 4 December 2008

CEO Martin Wheatley explains the Hong Kong securities regulator’s strategy for dealing with the Lehman Minibond fallout.

Martin Wheatley, CEO of the Hong Kong Securities and Futures Commission, says the SFC and other securities regulators around the world are trying to understand how so many retail investors became exposed to complex financial products, to the extent that blow-ups of Icelandic banks could cause serious losses to moms and pops in Hong Kong.

He spoke yesterday at a conference organised by AsianInvestor on the future of fund management, on a panel session regarding regulation that also included a fund management regulatory lobbyist and a tax specialist. James Walker, a partner at Clifford Chance, moderated the discussion.

Wheatley says investors around the world have lost money on complex structured products backed by Lehman Brothers (of which the Minibonds are a branded product line) or through other credit-derivative exposures. Since the investment bank went under in September, the entire spectrum of financial products has been tarnished.

This has led the SFC to realise the extent to which investors have been sold such complex instruments; and the extent to which selling agents didn’t understand the risks in these products. Things like counterparty and credit risks must be explained, he concludes.

Right now the SFC is investigating the process that has taken the industry to this point, to understand whether issuers and distributors are guilty of mis-selling, and whether they are competent at understanding and explaining the risks of such products.

Second, the SFC is trying to determine what the financial-products regime must look like. This includes macro structural issues, such as which government agencies are responsible for approving and overseeing such products or sales; as well as micro ideas such as a cooling-off period for prospective buyers, or the process used by sales channels to appraise product suitability.

The SFC is consulting with other securities regulators to develop a response to issues such as short selling, regulating credit-default swaps and oversight of unregulated entities. But market players recognise the difficulty in getting a standard response.

Catherine Simmons, vice-president for regulatory and government relations at State Street Bank and Trust, says local political agendas will shape each market’s response.

Asian governments lack a centralised policy coordination platform, let alone a single monetary policy structure, unlike Europe. Its financial systems vary. So while they all face the issue of fallout from investor exposure to complex credit products, their responses are not uniform.

For example, many regional governments have guaranteed bank deposits, but these measures vary by time horizon, and what assets are covered – those of foreign depositors or just locals; individuals or corporations; local currency or foreign exchange; and whether such protection incurs a fee.

“Businesses must continue to monitor regulatory change – and to engage with regulators,” Simmons says.

Accounting issues are also in flux, particularly as more investors and fund managers question the wisdom of marking assets to market. But Florence Yip, partner for tax services at PricewaterhouseCooper, says the Lehman bankruptcy will accelerate global moves to accept International Financial Reporting Standards. This will impact tax laws, which in turn will affect revenues on investments and fund products.

“Fund management companies need to understand the impact of uncertainty in tax rules on their businesses,” she says.

The SFC will submit its ideas to the Hong Kong government by the end of the year, and the financial secretary’s office is expected to recommend specific actions by mid-2009. “I hope by that time the finance industry has returned to something close to normal,” Wheatley says.

Wheatley’s overriding philosophy is to avoid knee-jerk reactions, mainly by focusing on the necessary information to be disclosed to investors, rather than micromanaging questions of product suitability. “Markets hate sudden change,” he says, citing moves by other governments to ban short selling. “We’ve tried to stay on an even keel.”

He says the focus of the SFC’s investigation will be on disclosure of structured products, particularly when they offer capital protection. Product structure determines under which regulator it is manufactured and sold, and the SFC is aware of the problems of this uneven playing field. It is also aware that current standards of disclosure have created documentation so dense that clients don’t bother to read it, and are overly reliant on tips from distributors.

SCMP:Lehman investors turn to US government

http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=Q4YPBJJ055D7&linkid=dedc89da-260c-411d-85be-9ca8bc4b31e3&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d

3 December 2008
Paggie Leung

About 50 investors who bought Lehman Brothers-related products through Citibank marched to the American consulate yesterday to request an investigation into alleged mis-selling by the American bank.

The investors, who lost money after Lehman collapsed, petitioned the consulate, asking the American government to investigate Citibank's sales procedures.

"The US government recently injected so much money into Citi and has become the bank's key shareholder. Therefore, it should look into the matter," said Hui Shun-ngai, a representative of the group. The American government last week guaranteed US$306 billion of Citigroup's troubled assets and extended it US$20 billion in cash.

"The US government must also inquire into Citibank's authorised representatives responsible for the incident, including the tolerance of Citibank's mis-selling practices and lack of governance resulting in financial losses to Citibank's victims," the petition said.

Mr Hui said each protester had bought at least HK$500,000 in Lehman Brothers credit-linked derivatives from Citibank and they had not been informed of the high risk.

Meanwhile, 10 more investors filed lawsuits with the Small Claims Tribunal against six banks yesterday: Bank of China, Bank of Communications, Bank of East Asia, DBS, Wing Hang and Nanyang Commercial Bank. Their cases will be heard on January 29.

Financial Advice for a Fee

The following financial adviser firm is willing to give advice for a fee, based on an hourly rate of $100 or $150 per hour. They will also give an estimate in advance for a particular type of advice.
An outline of their approach is stated here:
http://www.tankinlian.com/forms/providend.pdf

I have listed Providend as they agreed to offer their service at a modest rate, and also to provide an estimate in advance. I do not have any financial interest in Providend.

There are a few financial advisory firms willing to offer their service for a fee, but their charges are rather high. If they are willing to operate on my preferred fee structure, I shall list them as well.

Read this:
http://tankinlian.blogspot.com/2008/11/end-of-free-financial-advice.html

Minibond investor keen to take class action

Dear Mr. Tan,
Our hopes are dashed by the most recent announcement on the minibond issue. I guess most of the investors are devastated now.

Unfortunately, there is no way out now except for the class action. I believe that is the most effective and most direct way in approaching this issue. We consumers need to know the truth, whatever the outcome is. Please lead us into this!

RZ

REPLY
Please read my blog about the progress of the class action. It will take some time to get organised. I expect to give a recommendation towards end January on the course of action to take.

http://tankinlian.blogspot.com/2008/12/legal-action-against-issuers-and.html

Speaker's Corner 6 December, 5 - 7 pm

Speakers' Corner: 6 December, 5-7 pm.

Social Justice and Fairness
First World Country in the 21st Century
How are our poor faring?

Speeches:
Tan Kin Lian
1. Our society should be more egalitarian
2, Elected leaders should represent the people
Leong Sze Hian:
1. HDB – how the poor are faring and affected by HDB policies
Ravi Philemon
1. Distributive justice; especially about how our education system does not equip people to be self-reliant, but to be workers.
Others:
1. Tan Kin Lian – Update on investors' situation (if any)
2. Andrew Loh – Update on town councils' replies to residents' query

Mr. Brown show on TC investments

http://www.mrbrownshow.com/2008/12/01/the-mrbrown-show-town-council-investment-bank-of-singapore/

Washing dirty linen in public

"The convention which framed the Constitution of the United States was composed of fifty-five members. A majority were lawyers not one farmer, mechanic or laborer. Forty owned Revolutionary Scrip. Fourteen were land speculators. Twenty-four were money-lenders. Eleven were merchants. Fifteen were slave-holders. They made a Constitution to protect the rights of property and not the rights of man": Senator Richard Pettigrew - Triumphant Plutocracy (1922)

Contributed by Ho Cheow Seng

Why we need to educate the people

"Enlighten the people generally, and tyranny and oppressions of body and mind will vanish like the evil spirits at the dawn of day." -- Thomas Jefferson, letter to Pierre S. du Pont de Nemours, 24 April 1816

Contributed by Ho Cheow Seng

David Marshall in 1994

Dear Mr. Tan,
Please post this story. Thanks.
tkh

DAVID MARSHALL SAID IN 1994
I've got nothing against money. I'd like to have money myself! I'd like to have a house and a garden and dogs and a car and a chauffeur but, look, I've got a flat. I've got a swimming pool attached to the flat. I've not even got a car but I use taxis. I have a dignified way of life without being wealthy.

I don't see the necessity of owning a Mercedes-Benz and a swimming pool and a couple of mistresses. I think we've got our values all wrong.

You know $96,000 a month for a Prime Minister and $60,000 a month for a minister. What the hell do you do with all that money? You can't eat it! What do you do with it? Your children don't need all that money.

My children have had the best of education. In fact, I'm very proud of them. One of them is a senior registrar to two major hospitals in Oxford. Another of them is a consultant in European law to the Securities and Investment Board in the United Kingdom. They've had their education. There are no complaints.

I never earned $60,000 a month or $90,000 a month. When I was Chief Minister, I earned $8,000 a month. Look, what is happening today is we are encouraged to and are becoming worshippers of the Golden Calf.

We have lost sight of the joy and excitement of public service, helping our fellow men. The joy and excitement of seeking and understanding of the joy of the miracle of the living the duty and the grandeur. We have lost taste for heroic action in the service of our people.

We have become good bourgeois seeking comfort, security. It's like seeking a crystal coffin and being fed by intravenous injections through pipes in the crystal coffin; crystal coffins stuck with certificates of your pragmatic abilities.

Suffering from depression and mental illness

Mr. Tan.

First of all, I would like to thank you for helping all the helpless victims to voice up. Till now, no MPs have really initiated to try to help. I believe majority of the MPs also knew that this is a clear cut misled case but dare not bring up in the Parliament because they afraid that their rice bowl may get broken.

“Yes” man is “Safe” man. Do we want to have such leaders? I was at the Speakers corner yesterday. I spoke to some of the victims who had seen their MPs. They told me that they were again lectured by their MPs “you went in with your eyes open”.

My dear MPs and Minister, you are leaders with high profile. Please go through the brochure and prospectus and honestly tell the public whether you understand such complicated product with hidden toxic ingredients for every item. Oh! Sorry, maybe, you don’t have to read it since you are rich enough to get your lawyer to go through for you.

Please also do a survey. Get the graduates who have never invested to look at the brochure and prospectus whether they understand every single item. I suggest that our government should also get the RC members to go through and get them to feedback whether if they understand.

All the while, I have full faith in our Singapore government. Just like the China milk products case where it contains melamine that killed many lives, immediate action was taken. However, for such case, our government may think that immediate action is not required because it will not cause live and death and can take their time to resolve the issue. They have oversight the consequences and seriousness.

Many Singaporeans were already suffering from depression and mental illnesses due to sleepless night as all their life (coffin) saving is already gone. Mind them, waiting to die is worse then immediate death.

Even the financial experts already said the products are too complicated and it should not be sold. The toxins are all hidden in the ingredients. I believe MAS should also agree with it now. To my conclusion, I believe MAS is also under pressure and have not guts to admit their overlooking and allowing of such complicated toxic product to be sold in by the FIs in Singapore.

T

Investors compensated in Belgium?

Hi Kin Lian,

I'm a former lawyer from Singapore now residing in Brussels. I have closely followed the activities with regards to the Lehman Brothers saga in Singapore. I have attached an article from a news site in Belgium with regards to this matter to demonstrate how this matter is being handled over here. Keep up the good work.

Video link:
http://www.deredactie.be/cm/de.redactie.english/mediatheek_en/1.425647

Sat 29/11/08
Angry clients of Citibank and Deutsche Bank demonstrated in Brussels this afternoon. They first marched to the headquarters of Deutsche Bank in Brussels, and then to Citibank. The demonstrators are demanding compensation for the money they lost due to the bankruptcy of the American Lehman Brothers.

According to the Citibank and Deutsche Bank clients they had not been aware that there was a risk for their money as well when Lehman Brothers went bust. Apparently Citibank and Deutsche bank sold investments to their clients that were managed by Lehman Brothers. The clients say they were not informed of the risk. When the American bank went bankrupt, Belgian clients also lost their money. They want Deutsche Bank and Citibank to reimburse their loss in full. The pressure on Deutsche Bank and Citibank is rising especially because a number of other banks who had sold their clients Lehman Brothers investments such as Fortis, Ethias and Swiss Life have guaranteed the capital of their clients. In the meantime Deutsche Bank has said that there will be compensation for clients whose portfolios were composed largely of investments with Lehman Brothers.

A delegation of the demonstrators was received by Economy Minister Vincent Van Quickenborne. His inspection team also suspects deceit. Minister Van Quixkznborne: "Misleading advertising violates legislation on trade practices. The question is whether the people, when they bought these products, if they were properly informed about the possible risks.

There was talk of capital guarantee- 100% and it then it turned out that
1) it was a product that was not from the same bank they bought it from; and
2) afterwards it also turned out to be a bank that was vulnerable to problems."

Seek help from embassies

Dear Mr. Tan KL,

You have been advising the victims to seek the help of their respective MPs, but this is more suitable for citizens only. I doubt these MPs would bother about PRs/non-citizens when they are so indifferent towards their own citizens. Perhaps the non-citizens could try to seek the help from their respective embassy.

I'm really disappointed with the way X bank is handling the claims, very unfair, indifferent and high handed.

Things would be very different if it happens in M'sia. The press and the MPs, particularly the opposition will be assisting the helpless victims. The Malaysians just like the HK, Thais and Indonesia or even Filipino will fight for their rights and will not allow banks to cheat them of even RM$1 k not to mention S$100k!

Two months have passed and the banks and MAS are still so indifferent and ignore the plight and traumatic experience of the victims who have lost their hard-earned savings. It is sad that there is no compassion shown and instead abuses have been hurled at the helpless victims.

Notwithstanding the indifference shown by the relevant parties concerned and despite criticism and sarcastic remarks, you have out of compassion come out to do the right thing in helping the helpless victims, a true hero indeed.

I notice that some of the victims have lost faith, stamina after the heartless standard rejection letters. Please tell them not to give up and be more resilient and fight for your rights until they do the right thing i.e. compensate the victims their hard-earned savings of which they have been cheated!

tkh

Consumer speak against Opt Out Sales Tactics

Dear Mr. Tan,

I like to tell you about my personal experience concerning the practice of opt-out Sales Tactics.

Recently, I upgraded my mobile hand-phone with a leading local telecommunication provider.
I have been a loyal customer of this provider for more than 12 years and have been upgrading my phones at each regular cycle of 2 years.

This time round, I noticed that since the upgrading I have been receiving a barrage of SMS such as Gaming results, CNA news flash , ringtones etc.

After this recent financial fiasco, of which I am a victim of the MiniBond mis-selling, I am more wiser and call up the Service Provider hotline representative.

I was told these SMS messages form part of the upgrading contractual package and will be charged at $xxx after the 30th day from purchased date, unless I opt-out during this period.

Further, I was told by this representative that the Provider shop sales person has made this fact known to me during the sales. It was not made known to me ! Of course like the MInibond, I was made to sign some documents, which was quit routine like the previous upgrading I had.

I like to draw some parallel in this episode to the MiniBond selling procedure. Sales people did not disclosed all hidden costs and risks to their customer but only emphasis the unique selling point.

Mr Tan, I Fully support your efforts in educating the public and getting the authorities to review and investigate into the current selling procedures of these Institutions. These Institutions have become more profit focus and lose touch with their loyal customers (we placed too much trust in them) over the years.

In the name of efficiency, Institutions seems to heading this path of “Express Sales “ with fine prints embedded in the contract. Some Day our Life may also be opt-out !

Martho2008

REPLY
I suggest that you bring this matter to the Consumer Association of Singapore , www.case.org.sg. They will be able to act on this matter more effecitively than me.

Thoughts for the Day - Ho Cheow Seng

The form of law which I propose would be as follows: In a state which is desirous of being saved from the greatest of all plagues -- not faction, but rather distraction -- there should exist among the citizens neither extreme poverty nor, again, excessive wealth, for both are productive of great evil . . . Now the legislator should determine what is to be the limit of poverty or of wealth.": Plato (427-347 B.C.):

By 'distraction' Plato means that the 'citizens' are seduced by matters of no real importance so as to lose focus on issues that are crucial to their real well-being.

Appeal to the President of Singapore

Dear Mr. Tan,

The government is also not supportive to the investors, even sacrifice the Town Councils $16 millions. Shall we appeal to The President of Singapore?

We conduct another petition which include the age of the investors, the amount invested and also the % of the investment compare to all their saving. To include the age is to let every Singaporeans and especially the government knows that those who are above age of 45 may not have another 20 or 30 years to accumulate the same amount of saving again. The % is to show every Singaporeans and especially the government that how important these amount of money is to us.

The few ten thousands that we have invested, though this maybe some people 1 or 2 months salary or the few hundred thousands that we have invested, though this maybe just a peanut to some people, BUT they are all accumulated by us, cents by cents, over many years of hard work and sweats.

The situation now is seems to be only the top down instruction from MAS/Govt will make FIs to compensate. These CDOs related credit –linked investments amounted to billions, it is definitely very difficult for the FIs to settle the compensation by themselves. (There may be more products bust.)

The MAS should hold some responsibility (approving these products) and thus the government should step in.

LK

REPLY
I wish to invite volunteers to step forward and lead this project. I need volunteers who are convinced that this is worth the effort.

I will not be able to handle this additional project, as I already have too many things to do.

Legal action against the Issuers and Distributors

If the noteholders take legal action against the issuers and/or distributors of the credit linked notes and win the case, it is possible to get the contracts rescinded and the noteholders will receive a full refund of the invested money.

I heve spoken to several lawyers. They advised that the noteholders have a good case against the issuers and/or distributors on the following grounds:

1) There are possible misrepresentations, omissions and inconsistencies in the prospectus and pricing documents. Under the principle of "contract of adhesion", these inconsistencies will be interpreted against the financial institutions as they provided the legal wordings to the contracts.
2) The documents require more than 1 day to read and understand, even for an educated and financially savvy person. How is it possible for the securities to be sold over the counter to an ordinary layman withon one hour?

3) The actual risks of these securities clearly do not fit the risk profile of the people that are marketed to. This is sufficient grounds for the contracts to be rescinded.

I will be talking to two or three senior lawyers to go through the legal documents and the above arguments. If we find sufficient evidence, we can get the written opionion from a Queens Counsel or other suitable experts. This will strengthen the case and help to get the noteholders to join a class action.

I will find someone to fund the cost of the expert legal opinion, so that the noteholders do not need to wrry about this matter now. If the case proceed, those joining the class action can reimburse this cost.

I am still keen to avoid a costly legal battle and have a negotiated settlement with the financial institutions. I hope that they will come forward to offer a fair compensation to the notebolders, so that this matter does not need to be taken to the courts.

Clash of events at Speakers Corner on 29 November

Dear Mr. Tan,

Do you think that the Indian cultural event held on 29 November at Hong Lim Park was arranged to make it difficult for you to use Speaker's Corner?

REPLY

I do not think so. This type of event probably takes a few months to organise. If anyone is suspicious, perhaps you can check the facts for me.

It appears that Hong Lim Park is not used exclusively for Speaker's Corner. In the future, I will check if there are competing events on Saturdays. I am also considering to move my regular meeting at Speaker's Corner to Wednesday at 6 p.m. There is less likelihood of a clash of events during the weekdays.

Speech at Speaker's Corner on 29 Nov - video

http://theonlinecitizen.com/2008/11/%e2%80%9cthis-thing-cannot-just-die%e2%80%a6%e2%80%9d/

Speech at Speaker's Corner, 29 Nov 2008

Speaker’s Corner – 29 November 2008

Speech by Tan Kin Lian

1. Investors should see their Member of Parliament
I suggest that you should see your Member of Parliament, together with other investors living in your area. If you aleady saw your MP before, you can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you. You can ask your MP to ask MAS:

1. What is the outcome of petition #1 which ask MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? Did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act?
2. How many investors had their cases resolved by the financial institutions? How many cases were rejected by the financial institutions or have made offers that were rejected by the investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?

3. How many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?

It is the duty of the MP to ask these questions on your behalf. Your MP can also raise them in Parliament.

2. Material facts should be disclosed in Prospectus
Investors have been told that they the prospectus contained a warning ‘you could lose all or a substantial part of your investment’ in bold print, on the page 1 or 2”. But what if the prospectus did not disclose material facts?

The New Paper’s Doctor Money wrote on 4 November 2008:

“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.

They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.

Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”

You can ask a lawyer whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act. This section reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).

Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”

3. Ask for information in writing
The investors had approached the relationship manager who sold the notes to them. The RM was not able to give them a satisfactory answer. These investors then approached me for the answer.

I am not able to give you the answer. I do not have the answers, as there are many series and each series is different from the other series.

You should send the questions in writing (by letter or e-mail) and ask the relationship manager to give you the reply in writing. If you do not get a satisfactory reply, you should lodge a written complaint with MAS. If the RM does not know, it is the RM’s duty to get from the product issuer.

As an investor, you have the right to get relevant information on the product that you were sold. You are also entitled to be informed by the trustee or arranger, whenever they are significant changes that affect your product.

Act to safeguard your interest. Do not accept slipshod answers. Lodge your complaint.

4. Experience with FIDREC
If you have gone through FIDREC, please send the outcome to me, so that your experience can be shared with other investors.

Although you are covered under a confidentiality agreement, it should be all right to give general information – did you accept the adjudication, how many interviews did you attend, how long did it take you to present your case, how long does FIDREC take to give an answer.

This information will be helpful to other investors who are waiting for FIDREC adjudication.

I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.

So far, the replies given were discouraging. Many complaints have been lodged to FIDREC. It takes a long time to settle a case.

5. Mental health concerns during difficult times
I wish to read to you a letter sent by an investor, with the initial FO:

Dear Mr. Tan,
First of all, thank you for all the help and information that you provided in your blog and in Hong Lim Park.

With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.

Sad to say, I am also exposed to one of the products and have to go through emotional “struggle” everyday.

On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money …

I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.

> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …

It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.

BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”

This list will go on and on and on and on … …

My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.

This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.

FO

6. Class action
The various groups are still talking to several lawyers to find out about their approach towards a class action. They are still not clear about the estimated legal fees and the chance of success.

I am now talking to a few senior lawyers to see if there are any misrepresentations in the prospectus, pricing statements, sales brochures and advertisements.

If necessary, we will arrange for a Queens Council in the UK to give a written opinion. We will find out the cost and how to finance it.

7. Special meeting for next Saturday, 6 December, 5 p.m.
This will be a special day to commemorate the second anniversary of The Online Citizen. I will be speaking at this event. I shall be talking on a matter that is relevant to the investors of the credit linked notes.

If you are free, do come to this special event and give your support.

Tan Kin Lian

Speaker's Corner 5 pm on 29 Nov - change of plan

There will be an Indian Cultural event at Hong Lim park tomorrow at the same time as my speech. The tents occupy most of the open spaces. I like to ask those who read this message to skip the meeting tomorrow. I will post my speech here.

There is space in a corner of the park for a small crowd For those who miss this announcement and turn up at Hong Lim park tomorrow, I will distribute a hard copy of my speech on the spot.

The Standard : Legco first on Lehman fizzles out

Standard, The (Hong Kong) - Wednesday, November 26, 2008
Author: Diana Lee

The first open meeting of the Legislative Council subcommittee probing the Lehman minibonds saga got bogged down in party bickering yesterday and failed to reach agreement on confidentiality.

Civic Party legislator Ronny Tong Ka-wah said meetings should be transparent and documents made available unless witnesses request confidentiality. This demand must be justified with evidence submitted to subcommittee members and the legal adviser, he said.

``In principle we should not accept a general request. I would not accept, for example, a bank claiming each and every document is confidential,'' Tong said.

However Democratic Alliance for the Betterment and Progress of Hong Kong legislator Chan Kam-lam disagreed, saying mutual respect and mutual trust should exist between witnesses and subcommittee members.

``Even individual people have their privacy, so why not companies?'' Chan asked.

The Democratic Party's James To Kun-sun said mutual trust has nothing to do with the probe.

``We are here to find out the truth,'' To argued. ``What if the banks claim the staff training manual [for selling structured financial products] is classified material? ``What's the point of a public hearing if everything could be treated as classified so easily? We talk about mutual trust among legislators, not between witnesses and legislators.'' Lawmakers also failed to compromise on whether legislators should sign a confidentiality agreement.

The pan-democrats said they did not object but raised doubts about the effect such a pledge would have on lawmakers.

Philip Wong Yu-hong, subcommittee vice chairman and a commercial sector lawmaker, said ensuring lawmakers will keep the confidential submissions confidential is more important. Classifying what is confidential is another issue.

The Legco Secretariat will host a briefing on December 4 to inform lawmakers on matters they should know about the Lehman probe, including the general principles of what information should be treated as classified and confidential.

Meanwhile, Emily Lau Wai-hing of the Frontier, again failed to persuade members to support the pan-democrats' demand for a smaller subcommittee, which currently has 24 members.

Subcommittee chairman Raymond Ho Chung-tai said he hoped the discussion on the subcommittee's size is finally over and that members may unite to face the challenges ahead.

When the subcommittee meets will be decided on Friday. It is expected to host meetings every Tuesday and Friday morning starting early next year.

To each his own

TO EACH HIS OWN
Author Unknown
Nov 27 2008

I cannot change the way I am,
I never really try,
God made me different and unique,
I never ask him why.

If I appear peculiar,
There's nothing I can do,
You must accept me as I am,
As I've accepted you.

God made a casting of each life,
Then threw the mold away,
Each child is different from the rest,
Unlike as night from day.

So often we will criticize,
The things that others do,
But, do you know, they do not think,
The same as me and you.

So God in all his wisdom,
Who knows us all by name,
He didn't want us to be bored,
That's why we're not the same

The Online Citizen interview an investor

Listen to this interview of the experience of an investor in the minibonds:

http://theonlinecitizen.com/2008/11/toc-exclusive-interview-with-investor-who-lost-150000/#comments

The Online Citizen wishes to have other investors to come forward to share their experience. I hope that more can come forward. We need the authority to hear about how they have been misled into the wrong investment that cause a total loss of their savings.

If you are willing to be interviewed, send an e-mail to kinlian@gmail.com.

Speaker's Corner 5 p.m. Sat 29 Nov

There will be a meeting of investors of the credit linked notes at Speaker's Corner at 5 p.m. on Sat 29 Nov.

Agenda
1. See your MP
2. Misrepresenation in prospectus
3. Ask for information in writing
4. Experience with FIDREC
5. Mental health concerns
6. Class action
7. Special meeting on Sat 6 Dec

100,000 signatures so that more people will step forward

http://theonlinecitizen.com/2008/11/100000-signatures-so-more-people-will-step-forward/#comment-36251

Bonus is likely to remain low

I organised a collective protest against the bonus cut made by NTUC Income earlier this year. I reached a settlement as follows:
http://tankinlian.blogspot.com/search?q=collective+protest+settlement

I promised policyholders that I would monitor the situation and give an update.

Recently, I decided to surrender my Living policy, which was affected by the bonus cut. I received a surrender value that included the special bonus to compensate for the bonus cut. In this case, I was slightly better off (with the special bonus included).

During the past six months, there has been turmoil in the financial market resulting in a large markdown of asset prices. I do not know whether the "compensating" special bonus will be withdrawn or reduced in the next few years of the global financial crisis.

Earlier, I wanted to press for the bonus cuts in past years to be restored due to the good financial results up to 2007. With the large drop in asset price in 2008, it will now be difficult to press for this measure. It is also likely that future bonus will remain at a low level, until after the global economy has recovered.

On the bright side, the cash value of a life insurance policy remain largely protection (although the yield is low) during a bad period. It does not suffer the capital loss that comes from shares and other investments.

Lost the sense of bonding and togetherness

http://tankinlian.blogspot.com/2008/10/lost-sense-of-bonding-and-togetherness.html

An apology to Chee Soon Juan and his sister

I refer to this posting:
http://tankinlian.blogspot.com/2008/10/protest-outside-dbs-headquarters.html

The posting in my blog was written by somebody else in CNA forum. I reproduced the mesaage in my blog but overlooked to mention the author. It gave the wrong impression that the message was written by me.

I wish to apologise to Chee Soon Juan and his sister for the damage that is caused to them by the statement, “what many stupid and selfish politicians in Singapore have done and seek self destruction.” This statement came from the original posting (by someone else).

I do not personally share this sentiment and wish to acknowledge their personal sacrifice in fighting for what they believe in.

A sense of responsibility: Obama

http://www.channelnewsasia.com/stories/afp_world/view/392333/1/.html

WASHINGTON: President-elect Barack Obama has chastised US auto executives for being "tone deaf" for flying on corporate jets to Washington to beg for bailout money, and said he believed bank executives should forgo their end-of-year bonuses.

In the advanced excerpt of an interview to be broadcast Wednesday and released by ABC News late Tuesday, the president elect focused on responsibility.

Bank executives forgoing bonuses is "an example of taking responsibility," Obama said.

"If you are already worth tens of millions of dollars, and you are having to lay off workers, the least you can do is say, 'I'm willing to make some sacrifice as well', because I recognize that there are people who are a lot less well off, who are going through some pretty tough times ," Obama told ABC News.

As for the incident in which the heads of Ford, Chrysler and General Motors flew their private jets to Washington last week to ask Congress for bailout money, Obama said: "I thought maybe they're a little tone deaf to what's happening in America right now."

He described it as "a chronic problem, not just for the auto industry ... (but) for the captains of industry generally.

"When people are pulling down hundred million dollar bonuses on Wall Street, and taking enormous risks with other people's money, that indicates a sense that you don't have any perspective on what's happening to ordinary Americans," Obama said.

And when the "auto makers are getting paid far more than their counterparts at Toyota, or at Honda, and yet they're losing money a lot faster than Japanese auto makers are, that tells me that they're not seeing what's going on out there."

Obama said he hoped his presidency will help "usher in ... a return to an ethic of responsibility. That if you're placed in a position of power, then you've got responsibilities to your workers. You've got a responsibility to your community. Your shareholders."

He added: "And that's true ... for members of Congress, that's true for the president, that's true for cabinet members, that's true for parents.

"I want all of us to start thinking a little bit more, not just about what's good for me, but let's start thinking about what's good for our children, what's good for our country. The more we do that, the better off we're going to be," he said.

No reply from financial institution after four weeks

Hi Mr. Tan,

I think you should bring attention to the investers that under Step 3 outlined by MAS, the financial institution is required to give a reply within 4 weeks:
http://www.mas.gov.sg/consumer/structured_products/fidrec_3_step_process.html has

I have not received a reply after 4 weeks. Why doesn't MAS take action against the FI?

REPLY
I suggest that you should lodge a complaint directly with MAS on this matter.

End of Free Financial Advice

The FSA of UK (equivalent to MAS) is introducing this new measure in 2012. It will have great impact on how financial products are sold. Our approach in Singapore is modelled on the UK - so I expect that similar measures will be introduced here. It will prevent the sale of financial products that are bad for customers.

From the Telegraph in UK, 25 Nov 2008
The days of consumers getting "free" financial advice look numbered under new regulatory guidelines which are aimed at improving the way financial products are sold.

The Financial Services Authority (FSA) has outlined new guidelines that effectively outlaw commission payments, which have been seen by many consumers as a way of getting "free" advice.

The FSA has made it clear that it is concerned that these payments are used to disguise the cost of financial products, and may create bias in an adviser's recommendations.

A spokesman for the FSA said it hoped its proposals would restore consumers' trust in the financial services industry at a time when many "need real help and advice with their retirement and savings planning". The changes are due to come into force in 2012.

The regulator's review contains three key proposals. Probably the biggest change is to the way advisers are remunerated.

For the first time all advisers, whether they are independent financial advisers or sales agents, will have to declare and agree with the customer in advance exactly what the advice costs. Consumers will then have the option of paying for it in advance or opting for the cost to be taken from their savings over a period of time.

A spokesman for the FSA said: "Commission as we know it will disappear for ever. We want to sever the providers' involvement with the advisers' fees." The FSA has not ruled out banning commission completely at a later date.

Another major change is that all advisers will now have to take advanced qualifications, equivalent to the first year of a degree course, if they are offering full advice to consumers. At present 80pc of advisers do not have these qualifications.

Andrew Fisher, the chief executive of Towry Law, a firm of financial advisers, said: "This is brilliant news for consumers. The smoke and mirrors, lies and obfuscation that have been used to disguise consumer fees will be stopped.

"Individuals thought that commission meant 'free' advice but it was always paid for, either by raising product charges or by reducing the value of a consumer's investment. For the first time, any commission charge will now explicitly be linked to consumers' savings and will have to be agreed upfront."

The FSA said its framework would provide a mix of services, so "less sophisticated" investors who could not afford to pay for full advice were not excluded. Many companies are expected to offer "guided sales", where consumers are given basic financial information.

If this led to a recommendation to buy a certain product, however, the sales person would still be required to have the appropriate professional qualifications and be upfront about any product charges. The FSA said: "It must always be made clear at the outset whether consumers are paying for independent advice or a sales service."

Trevor Matthews, the president of the Chartered Insurance Institute said these proposals should "kick-start" the process "of moving to higher levels of competence and and professionalism". He added: "The biggest challenge for the long term future of this industry is to restore trust in financial services, which has been dented for too long." He said today's proposals go some way to addressing this issue.

David Elms, the chief executive of IFA Promotion, said he welcomed the proposals but was awaiting details on how they would be implemented.

He added: "We want to see the same standards applied to all advisers, whether they are recommending products from across the spectrum of providers or selling just one company's products.

"This should enable consumers to understand the choices available to them."

Singapore Dance Theatre performs Nutcracker

Dear Friend,

Singapore Dance Theatre performs Nutcracker
I hope that, in spite of the stress from the credit linked notes, your family is still in the mood to celebrate the December holidays.

I suggest bringing your family to watch the performance of the Nutcracker by the Singapore Dance Theatre. More details (i.e. ticket price, performance dates, booking instructions) are shown in this video clip:
http://www.youtube.com/watch?v=5WSo2D-nMjY

Performing nights: Dec 12, 13, 17, 18, 19, 29.

I am the deputy chairman of the SDT. If you can support the SDT, it will be much appreciated.

Tan Kin Lian

Suggestion: how to approach legal action

Dear Mr. Tan

I would like to suggest the followings:

1) Use the online petition, one for each product (Minibond, High notes ....), to gather all investors who are in favor in legal action

2) Call a meeting for all interested investors to have a preliminary discussion and to select a committee to conduct a feasibility study.

3) The meeting will identify the scope for the feasibility study.

4) The feasibility study may include :
a) study the sales brochures/newspaper advertisements/prospectus to identify common grounds for the law suit (consult financial experts/lawyers if necessary)
b) cost and return analysis
c) study other similar class action cases (US, Hong Kong, Taiwan …)
d) identify the parties for the law suit (Lehman Brothers, FIs, MAS…)
e) identify where to file the law suit (local or US)
f) work out an action plan

Pang

REPLY
I agree with you. I shall organise the survey (using online petiton) to gather the investors willing to take action.

Singapore Kopitiam Forum

You can visit this forum to have discusison about your specific topic on credit linked notes or other investments.

http://forums.delphiforums.com/n/mb/list.asp?webtag=sunkopitiam&ctx=32768&cacheTag=x10-28

Swiss petition for national referendum to end "corporate rip off"

We can learn from the Swiss.

Mr Minder has embarked on a truly Swiss course of action to prevent such excesses in the future. Using Switzerland's system of direct democracy, he has collected the required 100,000 signatures to hold a nationwide referendum to end, as he puts it, "the corporate rip off."

http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/7741561.stm

Investors should see their Member of Parliament

I sent another e-mail to the investors to see their Member of Parliament in groups. I know that some investors had already seen their MP and the MP asked them to see the MAS or the financial institution or argued that they should have "their eyes open".

You can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you: The MP should:

1. Ask MAS what is the outcome of petition #1, asking MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act? What is the outcome of the investigation?

2. Ask how many investors had their cases resolved at the first leve, i.e. the financial institutions? How many cases were rejected by the financial instituions or made offers that were not accepted by investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?

3. Ask MAS how many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?

It is the duty of your MP to ask these questions, on your behalf, to MAS or to ask them in Parliament.

Why I wanted 100,000 signatures

Discussion in www.theonlinecitizen.com
http://theonlinecitizen.com/2008/11/help-get-100000-signatures-for-tan-kin-lian-to-run/

smallvoice585 on November 25th, 2008 2.31 am

Dear Tan Kin Lian,
With due respect, sir, I believe that you are not ready for politics yet. Though you have been a PAP member for 30 years, you have not been engaged in any grassroots work in the last 20 years. You also have no experience in electioneering. You do not have a dedicated or well-organised support structure around you.

People know you to be a long-time CEO of NTUC Income for 30 years; recently as an on-line protester against insurance bonus cuts; and lately, as a champion of burnt financial product investors. I’m afraid that’s not enough to gain credibility as the next big thing in alternative politics. People need to know your stand, views and ideas on a full spectrum of political issues articulated consistently over a significant period of time. They need to see proof of a wider range of leadership qualities required in political office.

Of course, please do not misconstrue that I’m trying to discourage you.

But the 100,000 signatures that this article is calling for is in my view totally irrelevant. True politicians do not ask for a show of hands before entering the fray - they offer themselves as instruments for their beliefs and willingly submit themselves to the caprice of public opinion. That is, you do not ask for support before you commit, but you should commit first and see if you’re getting any support. If you are not ready for this uncertainty, then it speaks volumes about your dedication to your political cause.

Tan Kin Lian on November 25th, 2008 5.19 am

Hi smallvoice585
You are correct. I am not “ready” for politics …. in the conventional way. There are many examples of more capable people who came into politics during the past 20 years. Most of them did not survive. Only two did, and they have a lot of difficulty in building up their base of support.

You are also correct about the lack of a political machinery. It takes more than this political machinery for an alternative party to succeed- as it has to compete with the incumbent that has more resources beyond its own political machinery..

I wanted to take a different approach - to create awareness, to educate the public. The recent event involving the 10,700 investors of the credit linked notes show how bad things can be - that the government can just ignore the call to do the right thing and enforce the law.

If more people come forward to voice their views, it may wake up the current leaders and create the change that is desriable and good for the country. An important change is to recognise that the elected leaders should represent the people, and that a free contest is for the good of the country.

Many people said that an alternative party needs more than one person. How do you expect other people to come forward? They are not willing to sacrifice their career. They will be subject to discrimination. Maybe 100,000 signatures will change their mind.

Will my approach work? Some people think so. Others are sceptical. I am willing to give it a try. If it does not, I can go back and retire.

Buyer beware

Letter by Adrian Tan

Much has been said and written about “Buyer beware”, investing “with their eyes open” and “I think the prospectus says ‘you could lose all or a substantial part of your investment in the Notes’ in bold print, on page 1 or 2”.

But what if the prospectus did not disclose material facts?

The New Paper’s Doctor Money ( Larry Haverkamp) wrote on 4 November 2008 that

“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.

They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.

Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”

Investors in Minibonds and HN5, Jubilee and Pinnacle Notes should be asking lawyers whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act which reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).

And if they are, what are the remedies and against whom. As Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”

Breaches of section 243(1)(a) are something MAS is surely investigating because we have been assured, MAS is looking, “thoroughly into every possible breach of regulation, poor internal regulation or sales practices. And it will take action where necessary”.

Adrian Tan

Singapore's investments in global banks

I received a report from an analyst.

Temasek and GIC invested a total of SGD 36.7 billion in the global banks, namely Barclays, UBS, Merrill Lynch and Citigroup. The invstment in Barclays was made 18 months ago. The others was made nearly 12 months ago.

The value of these investments dropped by slightly more than 50%, or about SGD 18.5 billion. During the same period, the global stockmarket dropped by about the same extent. (Earlier, I thought that the global banks performed worse that the market, but it does not seem to be the case).

Ask for information in writing

Dear Mr. Tan,

I hve invested into Jubilee Series 8 Notes which will mature in 2.5 yrs time in Jan 2011. A fix rate of 3.15% per year is paid. The arranger of the Notes is Merrill Lynch who has since taken over by BOA. The trustee is HSBC Institutional Trust Services (S) Ltd. Currently the value of the Notes is 84% of the purchase price.

I have asked the RM many times but he is also not sure where the money is invested in and whether the Notes will default since more and more bad news are disclosed nowadays. I asked for the prospectus from the RM and took pain to go thru' the 100 pages but just not understand at all. I has no choice but to visit one of the branch and one of the RM verbally told me that it is invested in Merrill Lynch's bond.

I hope you can assist by enlightening me the following:-
a. where the money is invested in?
b. I understand that BOA is taking over Merrill Lynch. Could BOA just take over Merrill Lynch's assets but not its liabilities? If this is possible, then I think most likely the Notes will terminate and worthless.

REPLY
I am at a lost. There are so many series and each series is different from the other series.

I suggest that you should ask the issuer (Merill Lynch) to give you the reply to your questions in writing. If they do not, you should lodge a complaint with MAS.

Pinnacle Notes Series 9 and 10

Pinnacle Notes series 9 and 10 was sold in November 2007 - just a year ago. At that time, the subprime and CDO market was already in trouble. The issuer put in 150 underlying assets and sold them to the retail investors.

The issuer did state, in the adverstisement, that the money would be invested in the CDOs. However, the are required under the Security and Futures Act to disclose all relevant information to help the investors make an informed decision. Did they meet this standard?

It is extremely difficult for the investors to ask for information to see if the Securities and Futures Act have been breached. I hope that the MAS will investigate this matter separately. Morgan Stanley is still around, and they should be able to provide the information for the investigation.

I hope that this investigation is carried out openly, so that the investors are satisfied that they have been treated fairly and have not been "cheated".

Here are some relevant information:
http://tankinlian.blogspot.com/2007/11/pinnacle-notes-series-9-10.html
http://tankinlian.blogspot.com/2008/11/credit-default-of-pinnacle-notes-series.html

I hope that some lawyers can advice if it is possible for the investors to take a mandamus case to compel the MAS to invstigate this matter?

I hope that the investors of series 9 and 10 get together (for each series) and study if there were gaps in the prospectus that failed to described the risk of this product. You can meet with an experienced lawyer to discuss this matter. The lawyer can get a written expert opinion from overseas. If there was material misrepresentation of the securities, it may be possible to get the court to declare the transaction as void and for the investors to get a full refund.

Experience with FIDREC

I wish to ask investors, who have gone through FIDREC, to share your experience.

While you are covered under some confidentiality agreement, it should be all right to give some public information about whethere you accepted or rejected the adjuication, or the number of interviews and length of time taken to present your case.

This information will be helpful to other investors who are waiting for FIDREC adjudication.

I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.

Guide on FIDREC process

MAS has put out a good guide on the FIDREC process. Please read it:

http://www.mas.gov.sg/consumer/structured_products/fidrec_faqs.html

Key Things to Note About the FIDReC Fast-Track Dispute Resolution Processes for Disputes relating to the Lehman Minibond Programme, DBS High Notes 5, Merrill Lynch Jubilee Series 3 LinkEarner Notes and Morgan Stanley Pinnacle Series 9 and 10 Notes

Morgan Stanley website on Pinnacle Notes

Dear Mr. Tan,

I was trying to find out more about Pinnacle Notes by entering the Morgan Stanley website. Lo and behold, we need to sign in agreeing to all the terms before I can view any information at the FRONT PAGE.

Can you ask MAS
[1] Is this the right practice?
[2] Is this morally right practice?
[3] Is this trying to reduce information flow to investor?
[4] I thought the Pinnacle is selling to "public" through retail network, but information sudden becomes only to privy. Is this infringing the basis of sale of Pinnacle Notes?
[5] Can MAS conduct an investigation on this type of practice to restrict information to investors?

This has been the darkest moment for my wife and myself. Frankly, the hopelessness is not due to the loss of money (altough it is a lot of money) but the loss of confidence in the system.

LKH

REPLY
Please write directly to ask MAS. I will post your e-mail in my blog also.

Risk analysis form - wrong statements

You should ask the distributor to send you a copy of the risk analysis form. See here:
http://tankinlian.blogspot.com/2008/11/risk-analysis-form.html

If you find any wrong statements in the form, you should write a letter formally to the distributor to correct the statements. If possible, try to find evidence that the statements were wrong - e..g regarding your risk appetide, etc.

If the wrong statements were fraudalent, you can lodge a police report against the sales representative.

One investor found that a statement was entered into the form without his knowledge, and he is able to prove it. He has decided to lodge a police report about the fraudalent act. This will strengthen his case to ask for a full refund.

Gathering 100,000 signatures

Several people have written e-mails to encourage me to represent the views of the people through the political arena. I have sent these e-mails to The Online Citizen (after removing their names) for publication.

You can read them at http://www.theonlinecitizen.com/.

I will keep this blog largely focused on financial and insurance matters, especially the credit linked notes. There will be some mention about the "gathering 100,000 signatures" but it will be somewhat subdued. It will take a few months to gather the signatures, so this matter will quieten down after a few days.

Most investors have been badly affected by the credit linked notes. Your loss could have been reduced or avoided, if there were greater accountability by the authority. I suggest that you should print out the petition form and get 20 signatures or more.

Strategy on credit linked notes

My next step is to help the investors to identify suitable lawyers to take up a legal case on the misrepresentation in the advertisements and prospectus on the credit linked notes.

It is possible to identify a group of investors who have been misled by these materials and to claim for a full refund, based on the misrepresentation of the product.

The investors will have to identity the grounds of misrepresentation and to discuss it with the lawyer.

I hope that this will encourage the distributor to offer a fair settlement out of court. A fair settlement in my view should be 50% of the amount lost by the investor, i.e. both parties share the loss equally.

Low compensation offered by HLF

Dear Mr Tan,

I have received some updates from HLF regarding the Minibonds.

Both of my elderly aunts (one is mid 70s, the other is 59) have both received the calls from HLF last week regarding the "compensation" regarding to their MiniBonds investment. The total sum invested was $90,000, and HLF actually proposed to return them $250 each to compensate for their losses. This is outright ridiculous! HLF had clearly taken their money thru mis-selling, and now they are offering $250 each as good-will! Both of my aunts rejected this compensation and seeks to bring this case up to FIReC.

Thank u for everything u hv done for us!

Anne

Tan Kin Lian eyes elected presidency

This is the headline of an article in the Sunday Times.

The front page has the following message: "Im game to be elected president or member of parliament if people wants me" Tan Kin Lian now opens up on his political ambition.

My "political ambition" has been summarised in this posting in my blog on 2 November 2008:
http://tankinlian.blogspot.com/2008/11/political-ambitions.html

It is also reflected in the article written by Nur Dianah Suhaimi. It reflects my views quite fairly. The headline is an exaggeration and gives a distorted angle.

My friend said that the article may backfire on me. My supporters may not be able to get 100,000 signatures. Why not ask for 50,000?

I told my friend, "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea." I am willing to leave this to the voice of the people.

Issuers of toxic notes should take more of the blame

Dear Mr Tan

I have been tracking news of Minbonds, Pinnacles and Jubilee Notes (MPJ) series actively. Some points I have observed and wished to highlight

1. Distributors with advisory roles distributing the MPJ series have recieved alot of flak for their sale, esp DBS Bank. I am not sure how much revenue these distributors are paid for each $1000 invested but a educated guess would be not more than 5-10%, Its pretty amazing how so much flak is diverted on them as opposed to the issuer (manufacturer) of these products. Lehman is insolvent now, yet, Morgan Stanley (Pinnacle issuer) and Merrill Lynch (Jubilee) have offices in Singapore and they have recieved less attention as opposed to DBS bank. As issuers of the notes, margains are definitely higher than distributors like DBS, yet I see Morgan Stanley/ Merrill Lynch relatively unscathed by all these. Surely there are no protests and investor wanting justice. I am not sure if some of the investors are even aware that Merrill Lynch/ Morgan Stanley are the issuers for them and not the local banks.

2. The main issue here are the bankrupty of the underlying asserts that causes the credit events leading to the default of the notes, I have gone through the prospectus and none of the underlying assert was mentioned. In fact alot of, esp less savvy investors, believed that the funds are invested in the 6/7 major reputable and not the underlying 150 firms. Since the underlying sercurities were not in the prospectus except that at point of printing all are rated double AA rating. If the distributors are not informed of this, is it fair to blame them wholly ?Further with a margain spread of 10-15%, does investor really expect the banks to pay them 100% of their investments? Can the banks then blame MAS as these MPJ investments were approved by MAS for sale.

3. My point here is to let lay the blame on the right parties who are primarily responsible for all these. Local Banks/distributors may have some smaller responsibilities but Morgan stanley and Merril lynch should rightly be held responsible for all misleading marketing info (since all marketing brochures pertaining to the product is issued by these 2 investment banks). Charges of continous issuance of series for pinnacle series continued despite the dismal performance of series 1/2 , yet the series were allowed to launch till series 15...

I hope you can post my comments as despite all the emtions about investments, I think we should be going after the parties who are PRIMARILY responsible for all these saga then the local distributors. In some ways, they may be victims as well since I believe noen of them knows abt the details of the investments as well.

DRAW

Plea to MAS - investors of Pinnacle Notes

Managing Director,
Monetary Authority of Singapore

82 individual holders of Pinnacle Notes arranged by Morgan Stanley Asia (S) Pte Ltd have co-signed a self-explanatory Plea to MAS on their plight in their investment in the said Notes. On their behalf, I am handing over herewith the Plea together with their signature sheets and details as stated therein.

We hope that MAS will respond positively to our Plea as we are at our wit’s end as to how to protect whatever good values that remain in our investments. We have also enclosed Morgan Stanley’s latest indicative valuation of various Pinnacle Notes which one of us had obtained through his broker. As you can see, many of these have devalued down to barest values. We understand that these devaluations had occurred rapidly in recent weeks. On top of that, we are in the dark as to the timing and exact root causes of the devaluation. Morgan Stanley is also not providing such information to us even though some of us had asked for them through our brokers.

We will be most happy to take your response in any form you deem appropriate, be it directly to me on their behalf, through a press statement or any other means.

As a matter of courtesy, I wish to advise you that I will shortly be posting a copy of the Plea, in a website which the signors have agreed, to enable them to access a copy for their records as most of them did not get one for keeps at the time of the signing at Hong Lim Park due to lack of photo-copying facilities at the site.
Thank you.

signed
sb

www.tankinlian.com/forms/PleaToMAS.pdf

Manifesto - the future of Singapore

KC asked me to write a manifesto of what I want to do, if I get into public office. My views are already reflected in several postings in my blog. They cover moral values, economic and social issues, etc.

I like to invite other readers to post your views about what you like to see regarding the future of Singapore.

Battle of the mind and the heart

Dear Sir,

I am writing this e-mail in response to the statement: "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea. I am willing to leave this to the voice of the people...."

Frankly, I do not agree with some of the things you have said and the way you have said them, and some of the things you did and the way you do them, but I believe what you are doing is for the sake of the Republic and her people and not for any personal gain or ambition.

From your statements, I can somehow sense that your mind is constantly asking you to opt out while your heart is begging you to take this course.

This further cement my views that you are doing this for the right reason and you strongly believe in serving the people of the Republic.

By giving you my support and my signature, I am also taking away your option (1/100,000) to opt out and to take your views and strengths to a bigger stage and platform where you have the power to do more for the people you care so much for.

I would like to further suggest that you consider writing a Manifesto to set out your strategic direction and outlines of any prospective legislation changes you would like to bring about if you are elected to public office and why you would like to change them.

Best Regards

KC

Reveal your identity

Somebody asked me to "be fair" and allow his critical comment to be posted. I agreed to his request.

Normally, I expect a person to use his real name, if he wish to post a comment to criticise any person or view. If you do not wish to reveal your identity, you should post your view neutrally and do not attack or pass judgement on another person.

Useful role for financial advisers

I believe that financial advisers (i.e. insurance agents and sales representatives) have the responsibility to give appropriate advice to the consumers and they should be fairly paid for their time and effort.

The commission system and sales targets are the source of the malpractice. If a distributor or adviser can earn $6,000 (3% of $200,000) to sell a credit linked note within 30 minutes, something must be wrong. Of course, the adviser will say that the product is good, safe, approved by MAS, etc.

I encourage financial advisers to give independent and good advice for a fee of $100 or $150 an hour and to keep the advice within 1 or 2 hours. A doctor is also paid for the time that is spent to treat a patient, and does not receive a commission for the medicine that is prescribed.

Moral values and ethics

I posted a blog on my moral values and ethics, as follow:
http://tankinlian.blogspot.com/2008/11/personal-values-and-characters.html

Many people agree that it is important to have good values, as they drive our conduct and relations with other people.

A retired teacher lamented to me that in recent years, our young students are taught technical and work skills, but are lacking in moral values and ethics. Nowadays, it seems to be all right to "cheat" people to increase profits. Just say, "caveat emptor".

I hope that some of the moral values will wake our government leaders to do the right thing - the values of honesty, courage, fairness, looking after the interest of others - to name just a few.

A few readers were uncomfortable about my statement of values. They felt that I should not be "preaching" these values. I think that it is the duty of all members of society to articulate the values that should guide the future of our society. I hope that more people can come forward to express their views on this matter.