Twenty years ago, we can trust banks, insurance companies, doctors, lawyers and professionals to be honest and to look after the interest of ordinary people. This is called ethics.
In recent years, many people have become greedy and want to earn a lot of money, very fast. They are willing to exploit ordinary people to make more profit, so long as they do not break the letter of the law. Ethics and morals have deteriorated.
Regulators have also taken the approach of "buyer's beware". They think that it is all right for the smart and powerful peopl, to exploit the weak and the poor.
We are now in an unethical, dishonest world. It is quite sad.
Saturday, October 04, 2008
How to play Pro-Trader
1. Log into the following:
http://tankinlian.com/trader/
2. Register to create an account.
3. Login into your account. Click on "Play Now".
4. Select the "Single Player" mode. Choose a random scenario and period (10 days). This game will take 20 mins. This is a practice game.
5. Select the "Multi Player" mode. Select a 10 day or 20 day game. Wait 15 minutes for other players to join in. (If someone created the game earlier, you can join in the game which will start before 15 minutes). You can compete with other players. At the end of the game, your score will be used to compute your Ranking.
6. If you play the Multi Player game several times, your ranking will improve from Trainee, to Apprentice and to higher levels.
7. You will learn the dynamics of trading (investing) in the markets. You can practice many times to get the feel of trading.
http://tankinlian.com/trader/
2. Register to create an account.
3. Login into your account. Click on "Play Now".
4. Select the "Single Player" mode. Choose a random scenario and period (10 days). This game will take 20 mins. This is a practice game.
5. Select the "Multi Player" mode. Select a 10 day or 20 day game. Wait 15 minutes for other players to join in. (If someone created the game earlier, you can join in the game which will start before 15 minutes). You can compete with other players. At the end of the game, your score will be used to compute your Ranking.
6. If you play the Multi Player game several times, your ranking will improve from Trainee, to Apprentice and to higher levels.
7. You will learn the dynamics of trading (investing) in the markets. You can practice many times to get the feel of trading.
Pro-Trader Simulation Game
I develop Pro-Trader as a simulation game to teach students in wealth management about trading in the real world environment. I hope that it is also suitable for investors who wish to develop the skill of making the right timing in their investments.
Pro-Trader show the prices of four financial products, e.g. stock, bond, currency, gold. The prices move in respond to economic and political events. The prices are made as realistic as possible, to follow the trends in past years. This allows the player to develop an insight into how the events affect the prices of certain products.
The investor in the financial trading world knows that the market prices do not follow any definite pattern. The actual prices depend on the perception of the players at any point of time. If there are more buyers, the price moves up. If there are more sellers, the price moves down.
Generally, the players will react according to their past experience. For example, if interest rate for a currency goes up, the currency should also move up. Generally, higher interest rate leads to lower stock prices.
At any point of time, the prices are influenced by several events that occur simultaneously. Some market participants take a few hours or a day to react to a market event. These behaviors are factored into the simulated prices.
Each contract represents an investment of $100,000 X price in the financial product. The trader is allowed to enter a long or short position, similar to a trade in the futures market.
The key lessons to be learnt are:
> Study the price trends to understand how the market is reacting to the news
> Be ready to move quickly into your trading position
> Be ready to change quickly, if the trends change or your positions are wrong
> Practice many times, to get a feel of the market behavior
> Learn about the market through this game, before investing your real money
Try this game:
http://www.tankinlian.com/trader
Players registered as at 4 October: 377 players
Pro-Trader show the prices of four financial products, e.g. stock, bond, currency, gold. The prices move in respond to economic and political events. The prices are made as realistic as possible, to follow the trends in past years. This allows the player to develop an insight into how the events affect the prices of certain products.
The investor in the financial trading world knows that the market prices do not follow any definite pattern. The actual prices depend on the perception of the players at any point of time. If there are more buyers, the price moves up. If there are more sellers, the price moves down.
Generally, the players will react according to their past experience. For example, if interest rate for a currency goes up, the currency should also move up. Generally, higher interest rate leads to lower stock prices.
At any point of time, the prices are influenced by several events that occur simultaneously. Some market participants take a few hours or a day to react to a market event. These behaviors are factored into the simulated prices.
Each contract represents an investment of $100,000 X price in the financial product. The trader is allowed to enter a long or short position, similar to a trade in the futures market.
The key lessons to be learnt are:
> Study the price trends to understand how the market is reacting to the news
> Be ready to move quickly into your trading position
> Be ready to change quickly, if the trends change or your positions are wrong
> Practice many times, to get a feel of the market behavior
> Learn about the market through this game, before investing your real money
Try this game:
http://www.tankinlian.com/trader
Players registered as at 4 October: 377 players
In honour of J B Jeyaretnam
An open letter has been sent to the Prime Minister and his Cabinet to honour Mr. J B Jeyaretnam for his sacrifices and beliefs in serving the people of Singapore.
http://theonlinecitizen.com/2008/10/letter-to-pm-lee-to-honour-mr-jbj/
I respect Mr. Jeyaretnam for what he has done for the people of Singapore. I have added my signature to this letter. If you wish to join me, you can sign here:
http://www.petitiononline.com/IHOJBJ2/
http://theonlinecitizen.com/2008/10/letter-to-pm-lee-to-honour-mr-jbj/
I respect Mr. Jeyaretnam for what he has done for the people of Singapore. I have added my signature to this letter. If you wish to join me, you can sign here:
http://www.petitiononline.com/IHOJBJ2/
Talk at NUS on 17 Oct 2008
This talk is open to the public:
Organised by NUS CSR Student Movement: Investments, Society and You :
Smart Financial Planning by former CEO of NTUC Income Mr. Tan Kin Lian.
Friday 17th October 2008, 600-830pm.
Venue: NUS Business School LT17.
To register, go to http:// www.CSRSM.org.
For more information, please email nus.csrsm@gmail.com
Minibond in Hong Kong
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=VC2M107ZJWT&preview=magnifier&linkid=02c219dc-b579-454f-964c-01b06cf17d58&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
4 Oct 2008
South China Morning Post
Joyce Man and Dennis Eng
Minibond issuers were told by the securities watchdog yesterday to “exercise their duty more diligently” in explaining the risk to investors.
The call came from Securities and Futures Commission chief executive Martin Wheatley, as interest payments ceased on two minibond series linked to bankrupt US investment bank Lehman Brothers, putting them at risk of liquidation.
HSBC, which is the trustee of the minibonds, is sending letters requesting distributors to determine whether clients who invested in the minibonds want to opt for early redemption, sources said.
“Recent events show that investors need to be presented with a clearer picture of product risks – they need to understand better how products will operate in extreme market conditions or in the face of bankruptcy,” Mr Wheatley said in a circular.
Issuers “must exercise their duty more diligently”, he said. Marketing materials must be clear, fair and present a balanced picture with adequate and prominent risk disclosure.
The two HSBC minibond series linked to Lehman Brothers have failed to make interest payments in an “event of default”, putting them at risk of being liquidated.
At least 20 per cent by value of the investors of the minibonds – reportedly series 21 and 27 – must agree in order for the liquidation to go ahead. Proceeds that can be distributed to investors depend on the value of the underlying assets less the cost of terminating Lehman’s involvement and other legal costs.
Although there are widespread fears other minibonds will succumb to Lehman’s troubles, action to liquidate them cannot be taken as long as interest payments continue.
Minibonds are not corporate bonds, but consist of high-risk creditlinked derivatives. They are marketed as a proxy investment in well-known companies.
Hundreds of investors in minibonds and other complex derivatives issued or backed by Lehman Brothers have been demanding refunds and accusing the banks that sold them the products of not fully disclosing the risk involved.
A Hong Kong Association of Banks taskforce met for the first time yesterday and decided to form subgroups to analyse each kind of investment product.
The taskforce will help banks handle issues related to the products, collect information from Lehman’s liquidators and trustees to pass on to investors, and communicate with regulators, the association said.
The Civic Party said the taskforce would not solve the problem and had no timetable.
“ You need a tiger with teeth,” Civic Party legislator-elect Margaret Ng Ngoi-yee. “The Hong Kong Monetary Authority has teeth.”
Audrey Eu Yuet- mee, another party legislator-elect, said the Legislative Council might form a select committee when it reopens for session if the Monetary Authority does not react faster and more forcefully.
The authority should instruct banks to fast- track their investigations and appoint independent parties that act as a one-stop service for complaints, Ms Eu and Ms Ng said.
The authority should conduct disciplinary proceedings where complaints are justified and undertake a reform based on the independent parties’ investigations, they said.
Investors who purchased minibonds from the Bank of China (Hong Kong), Mevas Bank, and Dah Sing Bank will rally again today.
4 Oct 2008
South China Morning Post
Joyce Man and Dennis Eng
Minibond issuers were told by the securities watchdog yesterday to “exercise their duty more diligently” in explaining the risk to investors.
The call came from Securities and Futures Commission chief executive Martin Wheatley, as interest payments ceased on two minibond series linked to bankrupt US investment bank Lehman Brothers, putting them at risk of liquidation.
HSBC, which is the trustee of the minibonds, is sending letters requesting distributors to determine whether clients who invested in the minibonds want to opt for early redemption, sources said.
“Recent events show that investors need to be presented with a clearer picture of product risks – they need to understand better how products will operate in extreme market conditions or in the face of bankruptcy,” Mr Wheatley said in a circular.
Issuers “must exercise their duty more diligently”, he said. Marketing materials must be clear, fair and present a balanced picture with adequate and prominent risk disclosure.
The two HSBC minibond series linked to Lehman Brothers have failed to make interest payments in an “event of default”, putting them at risk of being liquidated.
At least 20 per cent by value of the investors of the minibonds – reportedly series 21 and 27 – must agree in order for the liquidation to go ahead. Proceeds that can be distributed to investors depend on the value of the underlying assets less the cost of terminating Lehman’s involvement and other legal costs.
Although there are widespread fears other minibonds will succumb to Lehman’s troubles, action to liquidate them cannot be taken as long as interest payments continue.
Minibonds are not corporate bonds, but consist of high-risk creditlinked derivatives. They are marketed as a proxy investment in well-known companies.
Hundreds of investors in minibonds and other complex derivatives issued or backed by Lehman Brothers have been demanding refunds and accusing the banks that sold them the products of not fully disclosing the risk involved.
A Hong Kong Association of Banks taskforce met for the first time yesterday and decided to form subgroups to analyse each kind of investment product.
The taskforce will help banks handle issues related to the products, collect information from Lehman’s liquidators and trustees to pass on to investors, and communicate with regulators, the association said.
The Civic Party said the taskforce would not solve the problem and had no timetable.
“ You need a tiger with teeth,” Civic Party legislator-elect Margaret Ng Ngoi-yee. “The Hong Kong Monetary Authority has teeth.”
Audrey Eu Yuet- mee, another party legislator-elect, said the Legislative Council might form a select committee when it reopens for session if the Monetary Authority does not react faster and more forcefully.
The authority should instruct banks to fast- track their investigations and appoint independent parties that act as a one-stop service for complaints, Ms Eu and Ms Ng said.
The authority should conduct disciplinary proceedings where complaints are justified and undertake a reform based on the independent parties’ investigations, they said.
Investors who purchased minibonds from the Bank of China (Hong Kong), Mevas Bank, and Dah Sing Bank will rally again today.
Capital protection is not "capital guaranteed"
Dear Mr Tan,
I have invest in DBS Note 10 by Capitaland recently. The consultant told me this note are like bond type which are low risk and principal protected unless Capitaland file for bankruptcy.
I am worried now with all these events like DBS note 5 and minibonds. Is it true this note 10 is principal protected? Please advise.
I call my DBS consultant to check if i sell how much will I get back. She replied I can only take back 90% of the amount that i invested. Can you advise me what should I do as I have little knowledge on investment. Should I sell or hold?
REPLY
I am not able to give advice on whether to hold or sell. You have to make your own decision, as it is your money.
Capital protected means that they will "try" to protect your capital and is not the same as "capital guaranteed".
I have invest in DBS Note 10 by Capitaland recently. The consultant told me this note are like bond type which are low risk and principal protected unless Capitaland file for bankruptcy.
I am worried now with all these events like DBS note 5 and minibonds. Is it true this note 10 is principal protected? Please advise.
I call my DBS consultant to check if i sell how much will I get back. She replied I can only take back 90% of the amount that i invested. Can you advise me what should I do as I have little knowledge on investment. Should I sell or hold?
REPLY
I am not able to give advice on whether to hold or sell. You have to make your own decision, as it is your money.
Capital protected means that they will "try" to protect your capital and is not the same as "capital guaranteed".
Review internal complaints handling and resolution process
Dear Mr. Tan,
Do the three "well-regarded individuals" MAS has identified have sufficient resources especially manpower to do what MAS requires them to do
"review the internal complaints handling and resolution processes of the financial institutions (FIs) concerned to determine whether these processes are independent, fair and transparent. While these independent parties will not be involved in handling individual customer complaints, they will update MAS regularly on the progress of the complaints review.": and
" as part of the terms of reference of their appointment, the independent parties will highlight to MAS any shortcoming in the FIs’ processes as well as any issues that require regulatory follow up."?
If not, do they have to rely on the FIs they are overseeing to provide them manpower and other resources to ?
Will their terms of reference be made public?
Do the three "well-regarded individuals" MAS has identified have sufficient resources especially manpower to do what MAS requires them to do
"review the internal complaints handling and resolution processes of the financial institutions (FIs) concerned to determine whether these processes are independent, fair and transparent. While these independent parties will not be involved in handling individual customer complaints, they will update MAS regularly on the progress of the complaints review.": and
" as part of the terms of reference of their appointment, the independent parties will highlight to MAS any shortcoming in the FIs’ processes as well as any issues that require regulatory follow up."?
If not, do they have to rely on the FIs they are overseeing to provide them manpower and other resources to ?
Will their terms of reference be made public?
Securities and Futures Act
Does the financial institute break any of the provisions below, in their marketing of the structured products?
http://statutes.agc.gov.sg/non_version/cgi-bin/cgi_retrieve.pl?actno=REVED-289&doctitle=SECURITIES%20AND%20FUTURES%20ACT&date=latest&method=part
SFA's Section 199 (False or misleading statements, etc.) reads:
No person shall make a statement, or disseminate information, that is false or misleading in a material particular and is likely —
(a) to induce other persons to subscribe for securities;
(b) to induce the sale or purchase of securities by other persons; or
(c) to have the effect of raising, lowering, maintaining or stabilising the market price of securities,
if, when he makes the statement or disseminates the information —
(i) he does not care whether the statement or information is true or false; or
(ii) he knows or ought reasonably to have known that the statement or information is false or misleading in a material particular.
[SIA, s. 99; Aust. Corporations 2001, s. 999]
SFA's Section 200 (Fraudulently inducing persons to deal in securities) reads:
(1) No person shall —
(a) by making or publishing any statement, promise or forecast that he knows or ought reasonably to have known to be misleading, false or deceptive;
(b) by any dishonest concealment of material facts;
(c) by the reckless making or publishing of any statement, promise or forecast that is misleading, false or deceptive; or
(d) by recording or storing in, or by means of, any mechanical, electronic or other device information that he knows to be false or misleading in a material particular,
induce or attempt to induce another person to deal in securities.
(2) In any proceedings against a person for a contravention of subsection (1) constituted by recording or storing information as mentioned in subsection (1) (d), it is a defence if it is established that, at the time when the defendant so recorded or stored the information, he had no reasonable grounds for expecting that the information would be available to any other person.
(3) In any proceedings against a person for a contravention of subsection (1), the opinion of any registered or public accountant as to the financial position of any company at any time or during any period in respect of which he has made an audit or examination of the affairs of the company according to recognised audit practice shall be admissible, for any party to the proceedings, as evidence of the financial position of the company at that time or during that period, notwithstanding that the opinion is based in whole or in part on book-entries, documents or vouchers or on written or verbal statements by other persons.
[SIA, s. 100; Companies, s. 404 (4)]
By SFA's definition:
"securities" means —
(a) debentures or stocks issued or proposed to be issued by a government;
(b) debentures, stocks or shares issued or proposed to be issued by a corporation or body unincorporate;
(c) any right, option or derivative in respect of any such debentures, stocks or shares;
(d) any right under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —
(i) the value or price of any such debentures, stocks or shares;
(ii) the value or price of any group of any such debentures, stocks or shares; or
(iii) an index of any such debentures, stocks or shares;
(e) any unit in a collective investment scheme;
(f) any unit in a business trust; or
(g) any derivative of a unit in a business trust,
but does not include —
(i) futures contracts which are traded on a futures market;
(ii) bills of exchange;
(iii) promissory notes; or
(iv) certificates of deposit issued by a bank or finance company whether situated in Singapore or elsewhere;
http://statutes.agc.gov.sg/non_version/cgi-bin/cgi_retrieve.pl?actno=REVED-289&doctitle=SECURITIES%20AND%20FUTURES%20ACT&date=latest&method=part
SFA's Section 199 (False or misleading statements, etc.) reads:
No person shall make a statement, or disseminate information, that is false or misleading in a material particular and is likely —
(a) to induce other persons to subscribe for securities;
(b) to induce the sale or purchase of securities by other persons; or
(c) to have the effect of raising, lowering, maintaining or stabilising the market price of securities,
if, when he makes the statement or disseminates the information —
(i) he does not care whether the statement or information is true or false; or
(ii) he knows or ought reasonably to have known that the statement or information is false or misleading in a material particular.
[SIA, s. 99; Aust. Corporations 2001, s. 999]
SFA's Section 200 (Fraudulently inducing persons to deal in securities) reads:
(1) No person shall —
(a) by making or publishing any statement, promise or forecast that he knows or ought reasonably to have known to be misleading, false or deceptive;
(b) by any dishonest concealment of material facts;
(c) by the reckless making or publishing of any statement, promise or forecast that is misleading, false or deceptive; or
(d) by recording or storing in, or by means of, any mechanical, electronic or other device information that he knows to be false or misleading in a material particular,
induce or attempt to induce another person to deal in securities.
(2) In any proceedings against a person for a contravention of subsection (1) constituted by recording or storing information as mentioned in subsection (1) (d), it is a defence if it is established that, at the time when the defendant so recorded or stored the information, he had no reasonable grounds for expecting that the information would be available to any other person.
(3) In any proceedings against a person for a contravention of subsection (1), the opinion of any registered or public accountant as to the financial position of any company at any time or during any period in respect of which he has made an audit or examination of the affairs of the company according to recognised audit practice shall be admissible, for any party to the proceedings, as evidence of the financial position of the company at that time or during that period, notwithstanding that the opinion is based in whole or in part on book-entries, documents or vouchers or on written or verbal statements by other persons.
[SIA, s. 100; Companies, s. 404 (4)]
By SFA's definition:
"securities" means —
(a) debentures or stocks issued or proposed to be issued by a government;
(b) debentures, stocks or shares issued or proposed to be issued by a corporation or body unincorporate;
(c) any right, option or derivative in respect of any such debentures, stocks or shares;
(d) any right under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —
(i) the value or price of any such debentures, stocks or shares;
(ii) the value or price of any group of any such debentures, stocks or shares; or
(iii) an index of any such debentures, stocks or shares;
(e) any unit in a collective investment scheme;
(f) any unit in a business trust; or
(g) any derivative of a unit in a business trust,
but does not include —
(i) futures contracts which are traded on a futures market;
(ii) bills of exchange;
(iii) promissory notes; or
(iv) certificates of deposit issued by a bank or finance company whether situated in Singapore or elsewhere;
Friday, October 03, 2008
Petition to Singapore Government
I have received over 900 signatures to this online Petition. It will be sent to Mr. Goh Chok Tong next week.
PETITION TO SINGAPORE GOVERNMENT
1. We write to petition the Singapore Government, particularly the Commercial Affairs Department (Singapore Police Force) and/or the Monetary Authority of Singapore, to conduct a full and independent inquiry in relation to the credit linked securities sold by various financial institutions in Singapore. These structured products include, but are not limited to, the Lehman Minibonds, DBS High Notes, Morgan Stanley Pinnacles Notes and Merrill Lynch Jubilee Notes.
2. Singaporeans, including the persons who have signed this petition, lost their hard-earned savings by investing in these financial products. Such products clearly did not suit the risk profiles of these consumers. The consumers were not made aware of the high risks involved in the financial product when buying the product. They became innocent victims of misrepresentation by the financial institutions that distributed the structured products.
3. We now wish to be assured that those who invested in such financial products have not been victims of negligent and/or dishonest conduct and/or fraud by these financial institutions.
4. The Government has a duty to ensure that investment products are marketed and sold appropriately in our jurisdiction. Such products must be sold in a manner compliant with the laws of Singapore. Financial institutions, including their respective key management, that do not follow the laws or regulations applicable to them must be held accountable for such breaches.
5. Please commence a full and independent inquiry into the sale of structured products by various financial institutions in Singapore. If the inquiry deems necessary, the Attorney-General of Singapore should act against these financial institutions.
6. We also ask the Government to help these investors to claim fair and adequate compensation from these financial institutions for their losses which are caused by the mis-conduct of these financial institutions.
7. We ask the Government to act now and restore the peoples' faith in our financial system.
PETITION TO SINGAPORE GOVERNMENT
1. We write to petition the Singapore Government, particularly the Commercial Affairs Department (Singapore Police Force) and/or the Monetary Authority of Singapore, to conduct a full and independent inquiry in relation to the credit linked securities sold by various financial institutions in Singapore. These structured products include, but are not limited to, the Lehman Minibonds, DBS High Notes, Morgan Stanley Pinnacles Notes and Merrill Lynch Jubilee Notes.
2. Singaporeans, including the persons who have signed this petition, lost their hard-earned savings by investing in these financial products. Such products clearly did not suit the risk profiles of these consumers. The consumers were not made aware of the high risks involved in the financial product when buying the product. They became innocent victims of misrepresentation by the financial institutions that distributed the structured products.
3. We now wish to be assured that those who invested in such financial products have not been victims of negligent and/or dishonest conduct and/or fraud by these financial institutions.
4. The Government has a duty to ensure that investment products are marketed and sold appropriately in our jurisdiction. Such products must be sold in a manner compliant with the laws of Singapore. Financial institutions, including their respective key management, that do not follow the laws or regulations applicable to them must be held accountable for such breaches.
5. Please commence a full and independent inquiry into the sale of structured products by various financial institutions in Singapore. If the inquiry deems necessary, the Attorney-General of Singapore should act against these financial institutions.
6. We also ask the Government to help these investors to claim fair and adequate compensation from these financial institutions for their losses which are caused by the mis-conduct of these financial institutions.
7. We ask the Government to act now and restore the peoples' faith in our financial system.
Not to be retailed in USA
Dear Mr. Tan,
In some prospectuses I came across recently, I have noticed that there are statements on various pages of the same prospectus saying that the product should not be retailed to USA citizens.
Hope that SM Goh will get MAS to study this and learn from USA to protect Singapore citizens.
XL
In some prospectuses I came across recently, I have noticed that there are statements on various pages of the same prospectus saying that the product should not be retailed to USA citizens.
Hope that SM Goh will get MAS to study this and learn from USA to protect Singapore citizens.
XL
Petition to Singapore Government
I have decided to lodge the Petition early next week, one week ahead of schedule. I now have over 900 signatories. The gathering at Speaker's Corner on 11 October will still be held as planned earlier.
Banks deny refund deals for minibond investors
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=2J6I999CTEE4&preview=magnifier&linkid=fc71a779-d21c-4026-b0c6-af6bdeceec43&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
Hong Kong banks yesterday rejected suggestions they were offering refunds to investors in minibonds backed by bankrupt US bank Lehman Brothers, after a report that one had agreed to pay back a customer.
Mevas Bank, a subsidiary of Dah Sing Bank, issued a firm denial that it had refunded a customer. Standard Chartered, Fubon Bank, DBS, Chong Hing Bank, Citibank, Wing Lung Bank, Bank of China (Hong Kong), Chiyu Banking Corporation, Nanyang Commercial Bank and Shanghai Commercial Bank all said they had not concluded any refund agreements with clients. Bank of East Asia and Citic Ka Wah Bank said only that they were handling complaints. Other banks did not respond.
Since Lehman Brothers, the fourth-largest US investment bank, filed for bankruptcy on September 15, hundreds of investors have been demanding refunds from the banks and brokerages that sold them the minibonds – high-risk credit-linked derivatives marketed as proxy investments in well-known companies – and similar complex derivatives.
Hong Kong investors have bought HK$15.6 billion in minibonds and similar derivatives backed by Lehman Brothers. They stand to lose most, if not all, their money. A Chinese-language newspaper this week reported that Mevas Bank had agreed to a refund for a minibond investor. It quoted Democratic Party legislator-elect Kam Nai-wai, who is helping a group of the investors, as saying that the investor had asked that their name be withdrawn from a list of those seeking help. Mr Kam would neither confirm nor deny the report.
In response to Mevas Bank’s denial, he said: “It’s no surprise … They don’t want the other investors to know.” The Mevas investor declined comment. No other investors have withdrawn their requests to the Democratic Party for help. Some investors drew hope from the rumours. “
There’s justice in this world,” said Grace Lau Ngar-pui, organiser of a group of investors who bought Lehmanbacked investment products from ABN Amro, She also believes Mevas’ denial is a tactic to ward off other investors who want a refund.
Yesterday, for the first time, Secretary for Financial Services and the Treasury Chan Ka-keung discussed the complaints with representatives of the banks, brokerages, trustees, the Monetary Authority and the Securities and Futures Commission. The two watchdogs are, respectively, investigating the banks and brokerages which sold the investments. “I specifically urged the banks to seriously and quickly handle the complaints about the methods used for selling the minibonds,” he said.
The Hong Kong Association of Banks has decided to form a taskforce to deal with the minibonds issue. The authority has received 3,555 complaints about minibonds.
Hong Kong banks yesterday rejected suggestions they were offering refunds to investors in minibonds backed by bankrupt US bank Lehman Brothers, after a report that one had agreed to pay back a customer.
Mevas Bank, a subsidiary of Dah Sing Bank, issued a firm denial that it had refunded a customer. Standard Chartered, Fubon Bank, DBS, Chong Hing Bank, Citibank, Wing Lung Bank, Bank of China (Hong Kong), Chiyu Banking Corporation, Nanyang Commercial Bank and Shanghai Commercial Bank all said they had not concluded any refund agreements with clients. Bank of East Asia and Citic Ka Wah Bank said only that they were handling complaints. Other banks did not respond.
Since Lehman Brothers, the fourth-largest US investment bank, filed for bankruptcy on September 15, hundreds of investors have been demanding refunds from the banks and brokerages that sold them the minibonds – high-risk credit-linked derivatives marketed as proxy investments in well-known companies – and similar complex derivatives.
Hong Kong investors have bought HK$15.6 billion in minibonds and similar derivatives backed by Lehman Brothers. They stand to lose most, if not all, their money. A Chinese-language newspaper this week reported that Mevas Bank had agreed to a refund for a minibond investor. It quoted Democratic Party legislator-elect Kam Nai-wai, who is helping a group of the investors, as saying that the investor had asked that their name be withdrawn from a list of those seeking help. Mr Kam would neither confirm nor deny the report.
In response to Mevas Bank’s denial, he said: “It’s no surprise … They don’t want the other investors to know.” The Mevas investor declined comment. No other investors have withdrawn their requests to the Democratic Party for help. Some investors drew hope from the rumours. “
There’s justice in this world,” said Grace Lau Ngar-pui, organiser of a group of investors who bought Lehmanbacked investment products from ABN Amro, She also believes Mevas’ denial is a tactic to ward off other investors who want a refund.
Yesterday, for the first time, Secretary for Financial Services and the Treasury Chan Ka-keung discussed the complaints with representatives of the banks, brokerages, trustees, the Monetary Authority and the Securities and Futures Commission. The two watchdogs are, respectively, investigating the banks and brokerages which sold the investments. “I specifically urged the banks to seriously and quickly handle the complaints about the methods used for selling the minibonds,” he said.
The Hong Kong Association of Banks has decided to form a taskforce to deal with the minibonds issue. The authority has received 3,555 complaints about minibonds.
Question for Member of Parliament
One question investors may want to ask MPs is What is the point of a regulatory system that does not lead to investor compensation?"
MAS has said "However, investors should understand that while regulatory actions are important to deter breaches and uphold the integrity of the system, they do not lead to compensation for investors"
MAS has said "However, investors should understand that while regulatory actions are important to deter breaches and uphold the integrity of the system, they do not lead to compensation for investors"
Immense pressure to sell the structured products
Dear Mr Tan KL,
In today's TodayOnline a certain L H Tang, who is a personal financial consultant gave a first person perspective, of his job in the forum letter. Below is an excerpt:
"......Consumers should understand that consultants are under immense pressure to think of ways such products can be“beneficial” to them."
http://www.todayonline.com/articles/279135.asp
The content is quite similar to that posted in the Straits Time Online Forum on 01/10/08 by Ms Geraldine Teng. If we are able to gather more of such statements from Relationship Managers /
Financial Consultants it would be evidentially beneficial in proving that these RM / FC were under immense pressure to push or hard sell such high risk products as 'low risk' products backed by the reputable banks.
Your kind assistance in this matter is highly commendable.
TKH
REPLY
Financial advisers or relationship managers who face similar pressure to achieve sales results can send an e-mail to me at kinlian@gmail.com
In today's TodayOnline a certain L H Tang, who is a personal financial consultant gave a first person perspective, of his job in the forum letter. Below is an excerpt:
"......Consumers should understand that consultants are under immense pressure to think of ways such products can be“beneficial” to them."
http://www.todayonline.com/articles/279135.asp
The content is quite similar to that posted in the Straits Time Online Forum on 01/10/08 by Ms Geraldine Teng. If we are able to gather more of such statements from Relationship Managers /
Financial Consultants it would be evidentially beneficial in proving that these RM / FC were under immense pressure to push or hard sell such high risk products as 'low risk' products backed by the reputable banks.
Your kind assistance in this matter is highly commendable.
TKH
REPLY
Financial advisers or relationship managers who face similar pressure to achieve sales results can send an e-mail to me at kinlian@gmail.com
Meet your Members of Parliament
I am compiling a list of investors (who signed the Petition) according to their residential postal code. This allows them to contact other investors in the same constituency and meet the members of Parliament.
Call for volunteers: If you are willing to call other investors to meet the MP, please send an email to me at kinlian@gmail.com giving your name, mobile phone, and postal code now.
It is better for the investors to meet the MP during the weekly "Meet the People" session and tell your MP how you were misled into investing in the high risk structured products.
If the MP meets several of the investors personally, they will better appreciate the problem. They may ask MAS to be pro-active in helping the investors to deal with the financial institution that sold the structured products.
You can find out your Member of Parliament and the venue, day and time of the "Meet the People" session from this website:
http://www.parliament.gov.sg/cgi-bin/new-mpsearch.pl
Call for volunteers: If you are willing to call other investors to meet the MP, please send an email to me at kinlian@gmail.com giving your name, mobile phone, and postal code now.
It is better for the investors to meet the MP during the weekly "Meet the People" session and tell your MP how you were misled into investing in the high risk structured products.
If the MP meets several of the investors personally, they will better appreciate the problem. They may ask MAS to be pro-active in helping the investors to deal with the financial institution that sold the structured products.
You can find out your Member of Parliament and the venue, day and time of the "Meet the People" session from this website:
http://www.parliament.gov.sg/cgi-bin/new-mpsearch.pl
Send feedback to NTUC Income
Dear Mr Tan,
Do you have the NTUC Income CEO's email address for me to file a complaint to? Their call centre and email service are useless and they do nothing to help me.
My wife's total hospitalisation bill is $9k. She has an operation on (date). Till now, the claims department only paid out $250 Medishield claims. My wife has a Income Shield Insurance Preferred Plan with Rider Plan and they only paid out $250 in claims so far. I have called the claim department and they keep saying they will get back to us as they are processing it or wait for their letters. I have already paid $3k in cash upfront before her operation. Now the hospital has deducted $3k from my wife's medisave and now the hospital is demanding us to pay the remaining 3K. What is happening to NTUC now?
The irony is right now they have just sent me a letter to ask me to renew my incomeshield policy stating the benefits and advantages of signing up with them.
EL
REPLY
I suggest that you send a registered letter addressed to the CEO of NTUC Income:
Bras Basah Branch
75 Bras Basah Road,
NTUC Income Centre
Singapore 189557
Or you can send a fax to 67883777
If there is delay in settling your claim, you can file a complaint to FiDREC, www.fidrec.com.sg
Do you have the NTUC Income CEO's email address for me to file a complaint to? Their call centre and email service are useless and they do nothing to help me.
My wife's total hospitalisation bill is $9k. She has an operation on (date). Till now, the claims department only paid out $250 Medishield claims. My wife has a Income Shield Insurance Preferred Plan with Rider Plan and they only paid out $250 in claims so far. I have called the claim department and they keep saying they will get back to us as they are processing it or wait for their letters. I have already paid $3k in cash upfront before her operation. Now the hospital has deducted $3k from my wife's medisave and now the hospital is demanding us to pay the remaining 3K. What is happening to NTUC now?
The irony is right now they have just sent me a letter to ask me to renew my incomeshield policy stating the benefits and advantages of signing up with them.
EL
REPLY
I suggest that you send a registered letter addressed to the CEO of NTUC Income:
Bras Basah Branch
75 Bras Basah Road,
NTUC Income Centre
Singapore 189557
Or you can send a fax to 67883777
If there is delay in settling your claim, you can file a complaint to FiDREC, www.fidrec.com.sg
Proposed Commission on Life Insurance Products
Dear Mr. Tan,
I have a proposal. In future the products will have a low cost(commission and expenses) and reasonable profit margin for the company.
Commission will range between 5-10%
1. whole life and endowment products will pay 10% for 1st year and 5% next 2 years.
2.Term products will pay 5% for 2 years.
3.Other products 5% for 1 year.
The commissions above are to be paid to agents who sell and push products and do nothing but soliciting and form filling.
Those who are qualified and competent and who can prove professional competence in specific area to provide financial planning advice can charge a NEGOTIABLE FEE (hourly or piece rate)with customers.
This will keep the cost low for the consumers and the company. The products can charge low premium for larger coverage and higher return of about 4% after 10 years.
This model will attract those advisers who are serious about helping people to upgrade themselves and to be paid according to service and work done for the customers.
For agents who sell only, they get the commission as in the products.
This will be akin to other professions where fee commensurate with professional advice and work and not for form filling, legwork or solicitation and some other non financial services.
This is the most equitable and agents who think of 'get rich quick' are nor suitable for this trade.This will stop mis-selling and misrepresentation, unethical selling , conflict of interest and malpractices.
This will weed out agents who are in the business just for the money and who not interested in helping the customers. This will elevate the profession .
Fair Dealing
REPLY
Under the current market price, the commission paid to agents is 5 to 10 times of the above proposed rates. I agree that the current commission rates are too high and unfair to consumers. I advice consumers to look at the commission rates stated in the Benefit Illustration and avoid life insurance products that pay comissions of $1,000 or more to the insurance agent.
I have a proposal. In future the products will have a low cost(commission and expenses) and reasonable profit margin for the company.
Commission will range between 5-10%
1. whole life and endowment products will pay 10% for 1st year and 5% next 2 years.
2.Term products will pay 5% for 2 years.
3.Other products 5% for 1 year.
The commissions above are to be paid to agents who sell and push products and do nothing but soliciting and form filling.
Those who are qualified and competent and who can prove professional competence in specific area to provide financial planning advice can charge a NEGOTIABLE FEE (hourly or piece rate)with customers.
This will keep the cost low for the consumers and the company. The products can charge low premium for larger coverage and higher return of about 4% after 10 years.
This model will attract those advisers who are serious about helping people to upgrade themselves and to be paid according to service and work done for the customers.
For agents who sell only, they get the commission as in the products.
This will be akin to other professions where fee commensurate with professional advice and work and not for form filling, legwork or solicitation and some other non financial services.
This is the most equitable and agents who think of 'get rich quick' are nor suitable for this trade.This will stop mis-selling and misrepresentation, unethical selling , conflict of interest and malpractices.
This will weed out agents who are in the business just for the money and who not interested in helping the customers. This will elevate the profession .
Fair Dealing
REPLY
Under the current market price, the commission paid to agents is 5 to 10 times of the above proposed rates. I agree that the current commission rates are too high and unfair to consumers. I advice consumers to look at the commission rates stated in the Benefit Illustration and avoid life insurance products that pay comissions of $1,000 or more to the insurance agent.
Posting comments in my blog
I like to ask readers who post comments in my blog to observe the following:
1. Write your full name at the bottom of your comment
2. Avoid defamatory statements against any person
3. Avoid political statements
I will disallow any comment that fail to observe the above requests.
1. Write your full name at the bottom of your comment
2. Avoid defamatory statements against any person
3. Avoid political statements
I will disallow any comment that fail to observe the above requests.
Failure to observe the risk assessment
Dear Mr. Tan,
Under the Financial Adviser Act, financial advisers are required to collect information about a client's financial objective, risk tolerance, employment status and financial situation, among othe things, before they can make a recommendation on an investment product.
In my case, I bought the Minibond product in Feb 07. My intention was to open a fixed deposit account. After recommendation and confirmation to buy the product, the relationship manager then collected the infomations as stated in the Act.
Please let the others victims who also bought from the financial institution, especially aunties and uncles, know whether they were in the same scenerio as me.
Under the Financial Adviser Act, financial advisers are required to collect information about a client's financial objective, risk tolerance, employment status and financial situation, among othe things, before they can make a recommendation on an investment product.
In my case, I bought the Minibond product in Feb 07. My intention was to open a fixed deposit account. After recommendation and confirmation to buy the product, the relationship manager then collected the infomations as stated in the Act.
Please let the others victims who also bought from the financial institution, especially aunties and uncles, know whether they were in the same scenerio as me.
Subscribe to:
Posts (Atom)