I have arranged with two lawyers to assist investors to write a statutory declaration (a statement made under oath) regarding the investment in the structured product.
This declaratoin can be used to support your complaint to the financial institution that sold the structured product to you, and also to take up your complaint to the next stage with the Financial Industry Dispute Resolution Center. As it is a statement made under oath, it is likely to have a stronger impact.
This declaration can be used at a later date, if the investors decide to take legal action against the financial institution.
To prepare this declaration, you have to provide the answers to the following questions:
1. Your name, NRIC, address, telephone
2. How did you get involved in the investment?
3. Which financial institution, branch, amount invested, date
4. What happened when you purchased the investment?
5. Were you alone or accompanied by another person? Who?
6. What did the representative (who sold the investment to you) tell you about investment?
7. Did the representative tell you about any guarantee on your investment?
8. Did they make you sign any form regarding the investment? Did you understand the content of the form? Was it given to you before or after you agreed to make the investment? Did you read the form? Did you understand the content?
9. Did you rely on the advice of the representative in making the investment? Which were the important aspects of the advice?
10. Do you have any other statements to make regarding this matter?
The lawyer fees include the fee payable to the Commissioner of Oath.
Fee $120 plus GST
Bernard & Rada Law Corporation
50 Robinson Road #08-00
VTB Building
Singapore 068882
Call Mr. Glenn Knight or his secretary, Ms Ivy Goh (Tel: 68999888)
Fee $150 plus GST plus disbursement (total $201.55)
Assomull & Partners
111 North Bridge Road
#22-04/05/06 Peninsula Plaza
Singapore 179098
Contact Person: Ms. Lauereth Loh, Tel: 63394466
Note: Previously, I called it an affidavit. A lawyer advised me that an affidavit is a sworn statement made after legal proceeding has commenced. Before that, it is called a "statutory declaration".
Wednesday, October 15, 2008
Statutory declaration - FiDREC
Mr. Goh Joon Seng is the chairman of FiDREC. He said that there is no need to prepare a statutory declaration to lodge a complaint to FiDREC. This is correct.
The statutory declaration is optional. I recommended that the investors should spend $120 to prepare this declaration. My reasons are:
a) The lawyer helps to ensure that the key points are recorded in the declaration
b) A sworn statement will be taken more seriously
c) It is necessary to have this strong statement to overcome the statement in the forms that you have signed (which has not been properly explained to you).
As this sum of $120 is small, compared to the money that you have invested, it may be better to incur this expenditure.
The statutory declaration is optional. I recommended that the investors should spend $120 to prepare this declaration. My reasons are:
a) The lawyer helps to ensure that the key points are recorded in the declaration
b) A sworn statement will be taken more seriously
c) It is necessary to have this strong statement to overcome the statement in the forms that you have signed (which has not been properly explained to you).
As this sum of $120 is small, compared to the money that you have invested, it may be better to incur this expenditure.
Take collective legal action now?
Dear Kin Lian
I am writing this with a heavy heart because whilst I and my family may have escaped the misselling by banks of products I know of friends who have been less fortunate.
Firstly I see the attempts at the banks at mediation and the FRC as a dead end road designed primarily to absolve them of legal blame , responsibility and the consequences which it entails. The fact that the mediators are paid by the banks itself speaks volumes about their true intent. It is a blatant attempt at damage control and whilst a small percentage of investors might be ABLE to prove misselling the majority I feel will be unable. It is unclear to me whether if one choses the FRC route does that close the legal route to the courts ? Is arbitration and the solution reached is mandatory and binding.
1. With the mediation route, investors are unable to gain full disclosure and it will be the word of the individual investor versus the word of the management of the banks and the structures and regulations they will claim they have put in place to protect the investor. The cases will be viewed on an individual basis and each investor will thus be easier to pick of on their own
2. A collective legal case if put forth will allow lawyers as in the case of TT Durai to seek and build a case using the full weight of internal documents and emails from the banks with regards to the products they sold and the extent of knowledge they had when they sold it.
This is I believe the strongest case possible for a class action suit as all other roads are in my view an attempt at damage control and a shifting of blame to the individual investor. I hope you will highlight this to your readers.
MY
REPLY
So far, my strategy is to get MAS to act. It is their job. I will ask the investors to consider legal action only after MAS has failed to do "what is right" for the retail investors.
The decision of FiDREC is binding on the financial institution, but is not binding on the retail investor. If the retail investor does not accept the decision of FiDREC, they still have the right to take the legal action at a later date.
I am writing this with a heavy heart because whilst I and my family may have escaped the misselling by banks of products I know of friends who have been less fortunate.
Firstly I see the attempts at the banks at mediation and the FRC as a dead end road designed primarily to absolve them of legal blame , responsibility and the consequences which it entails. The fact that the mediators are paid by the banks itself speaks volumes about their true intent. It is a blatant attempt at damage control and whilst a small percentage of investors might be ABLE to prove misselling the majority I feel will be unable. It is unclear to me whether if one choses the FRC route does that close the legal route to the courts ? Is arbitration and the solution reached is mandatory and binding.
1. With the mediation route, investors are unable to gain full disclosure and it will be the word of the individual investor versus the word of the management of the banks and the structures and regulations they will claim they have put in place to protect the investor. The cases will be viewed on an individual basis and each investor will thus be easier to pick of on their own
2. A collective legal case if put forth will allow lawyers as in the case of TT Durai to seek and build a case using the full weight of internal documents and emails from the banks with regards to the products they sold and the extent of knowledge they had when they sold it.
This is I believe the strongest case possible for a class action suit as all other roads are in my view an attempt at damage control and a shifting of blame to the individual investor. I hope you will highlight this to your readers.
MY
REPLY
So far, my strategy is to get MAS to act. It is their job. I will ask the investors to consider legal action only after MAS has failed to do "what is right" for the retail investors.
The decision of FiDREC is binding on the financial institution, but is not binding on the retail investor. If the retail investor does not accept the decision of FiDREC, they still have the right to take the legal action at a later date.
To the victims - be strong
Dear Mr Tan
I am very encouraged by your courage, labour, love and compassion heart towards the victims who lose their saving due to the deceitfulness of the financial institutions.
I am praying daily for these victims to be strong, to have the strength and peace to go through this period of stress, anger and sorrow. I am very concerned now for those who are in need of money now for their basic needs such as health, children's education etc. I am wondering is there any need of setting up a donation fund to help them. I feel very sad for them.
Uncles and aunties, you must be strong and stand up like the mountain! Please take good care of your health. I am on your side.
Praying for you
JS
I am very encouraged by your courage, labour, love and compassion heart towards the victims who lose their saving due to the deceitfulness of the financial institutions.
I am praying daily for these victims to be strong, to have the strength and peace to go through this period of stress, anger and sorrow. I am very concerned now for those who are in need of money now for their basic needs such as health, children's education etc. I am wondering is there any need of setting up a donation fund to help them. I feel very sad for them.
Uncles and aunties, you must be strong and stand up like the mountain! Please take good care of your health. I am on your side.
Praying for you
JS
Caveat emptor: A licence to cheat
Definition by Tan Kin Lian: Caveat emptor (let the buyer's beware): A licence for the financial expert to cheat the unsavvy consumers.
Comment posted in my blog
Dear all ,
Please read this article ( published in BT dated 15 Oct ) titled 'Times to make sellers beware, not just buyers'.
I quote the followings : " ... Here we have essentially an insurance policy taken out by Lehman Brothers via its own special-purpose vehicle named Minibond to protect its exposure to six prominent banks known as 'reference entities' or REs. The money invested by the Singapore and Hong Kong public formed the insurance payout should any of the six have failed over the period in question, and in return for use of the public's money, Lehman paid the public an attractive annual coupon of 5 per cent which was, in effect, an insurance premium.
It was brilliant in its conception, simplicity and execution: Lehman transferred its risk of loss from any RE failure to the public but structured the deal and its sale documents to give the impression this was a desirable arrangement.
If caveat emptor is to be reasonably used as a defence (or a criticism of the retail investing public for not reading or understanding the offer documents), then the cover of the prospectus should have had a description of the exact nature of the product as an insurance policy, the fact that Minibond was Lehman, the financial standing of Lehman, Lehman's reasons for needing the insurance and that the risk of loss was not limited to one of six banks failing but, in fact, seven.
Since this was not the case, there must surely be grounds for claims that disclosure was poor, possibly even misleading and that a defence of caveat emptor is not good enough. If buyers were to beware, then there should have been full and proper disclosure of all essential elements in the proper fashion....."
Comment posted in my blog
Dear all ,
Please read this article ( published in BT dated 15 Oct ) titled 'Times to make sellers beware, not just buyers'.
I quote the followings : " ... Here we have essentially an insurance policy taken out by Lehman Brothers via its own special-purpose vehicle named Minibond to protect its exposure to six prominent banks known as 'reference entities' or REs. The money invested by the Singapore and Hong Kong public formed the insurance payout should any of the six have failed over the period in question, and in return for use of the public's money, Lehman paid the public an attractive annual coupon of 5 per cent which was, in effect, an insurance premium.
It was brilliant in its conception, simplicity and execution: Lehman transferred its risk of loss from any RE failure to the public but structured the deal and its sale documents to give the impression this was a desirable arrangement.
If caveat emptor is to be reasonably used as a defence (or a criticism of the retail investing public for not reading or understanding the offer documents), then the cover of the prospectus should have had a description of the exact nature of the product as an insurance policy, the fact that Minibond was Lehman, the financial standing of Lehman, Lehman's reasons for needing the insurance and that the risk of loss was not limited to one of six banks failing but, in fact, seven.
Since this was not the case, there must surely be grounds for claims that disclosure was poor, possibly even misleading and that a defence of caveat emptor is not good enough. If buyers were to beware, then there should have been full and proper disclosure of all essential elements in the proper fashion....."
Individual advice
Many people have written to ask for individual advice on the following matters:
a) How should they invest their savings?
b) Should they keep or sell their investments?
c) How should they lodge their complaints?
d) Should they sell their structured product at a loss?
e) What is the current price of their structured product? What do they contain?
I am not able to give individual advice. I receive 50 to 100 e-mails each day on these personal matters. It is not possible for me to spend the time to read and reply to these e-mails. You can get general advice from the following sources.
For general advice on investments and insurance:
www.tankinlian.com/faq
For assistance on how to lodge a complaint and take subsequent steps:
http://tankinlian.blogspot.com/2008/10/affidavit-statement-made-under-oath.html
http://tankinlian.blogspot.com/2008/10/lodge-your-complaint-with-distributor.html
Refer to the topics on the right under "Credit Linked Securities"
Contact persons:
http://tankinlian.blogspot.com/2008/10/contact-persons.html
For information about the details or price of the structured product:
> Refer to the distributor who sold the product to you. They have a duty to answer your questions completely.
For information about NTUC Income:
> Call the contact center about NTUC Income 6346 2663. They have a duty to answer your questions completely.
a) How should they invest their savings?
b) Should they keep or sell their investments?
c) How should they lodge their complaints?
d) Should they sell their structured product at a loss?
e) What is the current price of their structured product? What do they contain?
I am not able to give individual advice. I receive 50 to 100 e-mails each day on these personal matters. It is not possible for me to spend the time to read and reply to these e-mails. You can get general advice from the following sources.
For general advice on investments and insurance:
www.tankinlian.com/faq
For assistance on how to lodge a complaint and take subsequent steps:
http://tankinlian.blogspot.com/2008/10/affidavit-statement-made-under-oath.html
http://tankinlian.blogspot.com/2008/10/lodge-your-complaint-with-distributor.html
Refer to the topics on the right under "Credit Linked Securities"
Contact persons:
http://tankinlian.blogspot.com/2008/10/contact-persons.html
For information about the details or price of the structured product:
> Refer to the distributor who sold the product to you. They have a duty to answer your questions completely.
For information about NTUC Income:
> Call the contact center about NTUC Income 6346 2663. They have a duty to answer your questions completely.
Tuesday, October 14, 2008
Specific product or distributor
If you have any questions on a specific product or distributor, or you wish to discuss the with other investors in similar situation, you can post your views in this blog:
http://creditlinkedsecurities.blogspot.com/
You should choose the specific topic for your product or distributor
http://creditlinkedsecurities.blogspot.com/
You should choose the specific topic for your product or distributor
Effort to help the victims
Dear Mr. Tan
I am presently a NTUC income policy holder and I have held policies from income since 2001
I never got to know you cos the closest I ever got to know you was seeing your signature on every NTUC income statements that they send to me year after year.
I am indeed very touched by your effort to help these victims of financial structured products that turned into a total if not partial loss.
I observed how you gather the people at the speaker's corner. I saw how you calm their fears by offering them practically recourses, just like a loving father you assured them and gave them some hope. That speaks a lot about your character and more so you are indeed a good model for every financial professionals to emulate.
You have my full permission to publish my letter in your blog because all these words that was written about you is true.
God bless you , Kin Lian
Yours sincerely
Francis Lim
I am presently a NTUC income policy holder and I have held policies from income since 2001
I never got to know you cos the closest I ever got to know you was seeing your signature on every NTUC income statements that they send to me year after year.
I am indeed very touched by your effort to help these victims of financial structured products that turned into a total if not partial loss.
I observed how you gather the people at the speaker's corner. I saw how you calm their fears by offering them practically recourses, just like a loving father you assured them and gave them some hope. That speaks a lot about your character and more so you are indeed a good model for every financial professionals to emulate.
You have my full permission to publish my letter in your blog because all these words that was written about you is true.
God bless you , Kin Lian
Yours sincerely
Francis Lim
Meeting of High Notes investors
To investors of High Notes
The organisers have decided to call off the meeting at DBS headquarters tomorrow (Wednesday). They are arranging a meeting at Speaker's corner on Saturday from 5 - 7 p.m.
Investor of the High Notes will be asked to sign a Collective Letter to DBS Senior Management requesting a meeting to address:
1) To review the Statement of Account for each of the High Notes as to the total amount collected, the amount paid out as commission, the premium collected from the list Credit reference list and the Credit Debt Obligations and the expenses incurred.
2) To discuss how DBS propose to remedy our investments.
End of message
The organisers have decided to call off the meeting at DBS headquarters tomorrow (Wednesday). They are arranging a meeting at Speaker's corner on Saturday from 5 - 7 p.m.
Investor of the High Notes will be asked to sign a Collective Letter to DBS Senior Management requesting a meeting to address:
1) To review the Statement of Account for each of the High Notes as to the total amount collected, the amount paid out as commission, the premium collected from the list Credit reference list and the Credit Debt Obligations and the expenses incurred.
2) To discuss how DBS propose to remedy our investments.
End of message
The Online Citizen
Visit The Online Citizen for news about Singapore
http://theonlinecitizen.com
Coverage of the events at Speaker's Corner and interviews with investors:
http://theonlinecitizen.com/2008/10/more-than-1000-people-at-speakers-corner/
http://theonlinecitizen.com
Coverage of the events at Speaker's Corner and interviews with investors:
http://theonlinecitizen.com/2008/10/more-than-1000-people-at-speakers-corner/
Ignorance and greed
TodayOnline - Tuesday, October 14, 2008
AS HONG Kong investors took to the streets, seeking redress for the failed Mini-Bonds series structured by Lehman Brothers, about 1,000 Singapore investors gathered at Hong Lim Park over the weekend.
Their plight triggered memories of my previous job, and it dawned on me that I could have been responsible for their indignation, either directly or indirectly.
You see, I used to work for a bank, selling similar structured products, unit trusts and insurance to the bank’s customers. Among them were retirees, housewives and professionals — some with high risk appetites, others not at all. And it was my job to convince them of the benefits of the products the bank was promoting.
The remuneration package was structured such that sales performance received a significant weightage when my performance came up for review.
Also, there was a quota of financial products to be sold, so that I did not incur a huge penalty in commissions. For example, if there was enough revenue clocked from unit trusts, but not enough insurance or housing loans revenue,I would lose a sizeable sum.
There was always the pressure to meet any shortfalls in the designated monthly quota, so that both career and salary did not suffer.
There was also external pressure from management. I was hounded daily by my superiors on the shortfalls and sometimes, in order to fulfil the cluster’s overall target, I was told to concentrate on certain products that were not moving. Often, these were dangled with attractive incentives to ensure that I would be more willing to sell them over others.
But with the carrot also came the stick: There was a ranking-list flashed at meetings, with the names of staff who did not meet their sales targets. It was a public shaming routine, and to meet the targets, my weekends were usually spent at roadshows.
Operating in such a high-pressure environment meant that some sales staff resorted to employing strong sales techniques to get the customer to sign on the dotted line.
One senior manager even said that customers were only interested in benefits, so it was advisable to come up with a pitch that maximised these benefits and minimised the costs.
At times, scripts were handed to frontline workers. We were forced to memorise them for a flawless presentation.
Perhaps to avoid accusations of “mis-selling” in future, the time is ripe for financial institutions to review their procedures for assessing sales staff. They should tweak the promotion criteria, which relies heavily on sales results. Benchmarks like service attitude and turnaround time — such as attending to customers’ mundane requests promptly — could be given greater weightage. Customer feedback in the assessment of their relationship managers could be another criteria — after all, most banks covet customer loyalty.
On the other hand, consumers must be aware of what they are investing in. This could be done through more investor-education programmes. Proactive steps should be taken by financial institutions to work with MoneySense, a national investment education body, to acquaint customers with risk management, instead of just concentrating on product-pushing.
As the adage goes, it takes two to tango. If consumers are befuddled by the complex nature of some financial products, they should seek clarifications, or not invest at all.
After all, stable low returns beat sleepless nights, any day.
The author was a financial consultant for two years.
http://www.todayonline.com/articles/281339.asp
AS HONG Kong investors took to the streets, seeking redress for the failed Mini-Bonds series structured by Lehman Brothers, about 1,000 Singapore investors gathered at Hong Lim Park over the weekend.
Their plight triggered memories of my previous job, and it dawned on me that I could have been responsible for their indignation, either directly or indirectly.
You see, I used to work for a bank, selling similar structured products, unit trusts and insurance to the bank’s customers. Among them were retirees, housewives and professionals — some with high risk appetites, others not at all. And it was my job to convince them of the benefits of the products the bank was promoting.
The remuneration package was structured such that sales performance received a significant weightage when my performance came up for review.
Also, there was a quota of financial products to be sold, so that I did not incur a huge penalty in commissions. For example, if there was enough revenue clocked from unit trusts, but not enough insurance or housing loans revenue,I would lose a sizeable sum.
There was always the pressure to meet any shortfalls in the designated monthly quota, so that both career and salary did not suffer.
There was also external pressure from management. I was hounded daily by my superiors on the shortfalls and sometimes, in order to fulfil the cluster’s overall target, I was told to concentrate on certain products that were not moving. Often, these were dangled with attractive incentives to ensure that I would be more willing to sell them over others.
But with the carrot also came the stick: There was a ranking-list flashed at meetings, with the names of staff who did not meet their sales targets. It was a public shaming routine, and to meet the targets, my weekends were usually spent at roadshows.
Operating in such a high-pressure environment meant that some sales staff resorted to employing strong sales techniques to get the customer to sign on the dotted line.
One senior manager even said that customers were only interested in benefits, so it was advisable to come up with a pitch that maximised these benefits and minimised the costs.
At times, scripts were handed to frontline workers. We were forced to memorise them for a flawless presentation.
Perhaps to avoid accusations of “mis-selling” in future, the time is ripe for financial institutions to review their procedures for assessing sales staff. They should tweak the promotion criteria, which relies heavily on sales results. Benchmarks like service attitude and turnaround time — such as attending to customers’ mundane requests promptly — could be given greater weightage. Customer feedback in the assessment of their relationship managers could be another criteria — after all, most banks covet customer loyalty.
On the other hand, consumers must be aware of what they are investing in. This could be done through more investor-education programmes. Proactive steps should be taken by financial institutions to work with MoneySense, a national investment education body, to acquaint customers with risk management, instead of just concentrating on product-pushing.
As the adage goes, it takes two to tango. If consumers are befuddled by the complex nature of some financial products, they should seek clarifications, or not invest at all.
After all, stable low returns beat sleepless nights, any day.
The author was a financial consultant for two years.
http://www.todayonline.com/articles/281339.asp
Protest outside DBS headquarters
Posted in another Forum
Some people have been warned by the police against protesting outside DBS’s Shenton Way headquarters. For those who wish to take effective action, I urge that you first master your own emotions before fighting back. How would breaking the law help you? If even a small group of investors were arrested, it would terrorize the rest into sullen submission. Any attempts at trying to build a case or even to win public opinion would collapse. Do not allow yourself to be used by people with other motivations. There are groups that wish to expand their anarchical ranks and would happily urge you to break the law, but I ask that you stay within the law.
Even though the contracts that have been signed appear to be ironclad, a case of misrepresentation can still be made if it can show that the employees of the financial institutions deployed deceptive sales tactics. Misrepresentation is a criminal act and the investigation and legal prosecution of it would be undertaken by the state via the Commercial Affairs Department and Attorney General. It is not a civil representative lawsuit hence there are no legal liabilities which you need to pay. The penalty for misrepresentation is up to seven years jail.
But in order to motivate an investigation, it is necessary to first make a case that misrepresentation has occurred. To do so would require a concerted effort on the part of investors in gathering evidence that can be used to persuade the authorities and the public. The chances of success maybe slim, but if investors were to throw themselves against the rocks in the name of justice, then the chances of success would be zero. Do not do what many stupid and selfish politicians in Singapore have done and seek self destruction when an intelligent and courageous drive to uncover the truth is needed. More than ever, you need to endure and stand tall.
http://forum.channelnewsasia.com/viewtopic.php?p=2308570#2308570
Some people have been warned by the police against protesting outside DBS’s Shenton Way headquarters. For those who wish to take effective action, I urge that you first master your own emotions before fighting back. How would breaking the law help you? If even a small group of investors were arrested, it would terrorize the rest into sullen submission. Any attempts at trying to build a case or even to win public opinion would collapse. Do not allow yourself to be used by people with other motivations. There are groups that wish to expand their anarchical ranks and would happily urge you to break the law, but I ask that you stay within the law.
Even though the contracts that have been signed appear to be ironclad, a case of misrepresentation can still be made if it can show that the employees of the financial institutions deployed deceptive sales tactics. Misrepresentation is a criminal act and the investigation and legal prosecution of it would be undertaken by the state via the Commercial Affairs Department and Attorney General. It is not a civil representative lawsuit hence there are no legal liabilities which you need to pay. The penalty for misrepresentation is up to seven years jail.
But in order to motivate an investigation, it is necessary to first make a case that misrepresentation has occurred. To do so would require a concerted effort on the part of investors in gathering evidence that can be used to persuade the authorities and the public. The chances of success maybe slim, but if investors were to throw themselves against the rocks in the name of justice, then the chances of success would be zero. Do not do what many stupid and selfish politicians in Singapore have done and seek self destruction when an intelligent and courageous drive to uncover the truth is needed. More than ever, you need to endure and stand tall.
http://forum.channelnewsasia.com/viewtopic.php?p=2308570#2308570
Leveraging and greed
Businesses are greedy. They like to earn a ROE (return on equity ) of 15% to 20% per year. This can only be achieved by taking excessive risk, through leveraging (i.e. borrowing several times of their equity).
In a competitive market, a business can earn a return of say 8% per annum. If all the capital is funded by equity, the ROE is 8% and the risk is low.
If they issue a bond at 5% of the same amount as equity (i.e. leverage of 1 time), they hope to earn the difference of 3% on the bond. This will give a return of 8% + 3% on the equity, i.e. 11%. This is risky as the interest on the bond has to be paid first from the profit.
If they are greedy and are leveraged 2 times, they hope to earn 8% + 2 X 3% or a total of 14% on the equity. This is more risky compared to a leverage of 1 time.
Some investment banks were leveraged 20 times. This is madness.
To make matters worse, the borrowings were made on 30 or 90 days credit, instead of long term bonds. During good times, the cost of short term credit is lower than the cost of bonds. The businesses were greedy to make higher profits on the spread. This is extreme madness.
During the financial crisis, they were not able to get new borrowings to repay back the old borrowings. This lead to the collapse of the global financial system.
In the new financial system, there has to be regulatory control over the amount of leveraging. especially for financial companies, including hedge funds.
In a competitive market, a business can earn a return of say 8% per annum. If all the capital is funded by equity, the ROE is 8% and the risk is low.
If they issue a bond at 5% of the same amount as equity (i.e. leverage of 1 time), they hope to earn the difference of 3% on the bond. This will give a return of 8% + 3% on the equity, i.e. 11%. This is risky as the interest on the bond has to be paid first from the profit.
If they are greedy and are leveraged 2 times, they hope to earn 8% + 2 X 3% or a total of 14% on the equity. This is more risky compared to a leverage of 1 time.
Some investment banks were leveraged 20 times. This is madness.
To make matters worse, the borrowings were made on 30 or 90 days credit, instead of long term bonds. During good times, the cost of short term credit is lower than the cost of bonds. The businesses were greedy to make higher profits on the spread. This is extreme madness.
During the financial crisis, they were not able to get new borrowings to repay back the old borrowings. This lead to the collapse of the global financial system.
In the new financial system, there has to be regulatory control over the amount of leveraging. especially for financial companies, including hedge funds.
DBS will take responsibility, in some cases
TodayOnline
DBS Bank says it will take responsibility for some of the Lehman Brothers products sold through its network in Singapore and Hong Kong if there was mis-selling.
“In specific cases when evidence of mis-selling is established, DBS (Hong Kong) Limited and DBS Bank (Singapore) will take responsibility,” the bank said yesterday.
It issued the statement in reply to queries about a recent report in the South China Morning Post that said it would consider full compensation for losses on one of Lehman’s structured products sold in Hong Kong if its investigations showed that buyers had been misled by the bank’s sales staff.
DBS also pointed out in a separate statement last night that customers in Singapore who had bought High Notes 5, a structured product sold with Lehman as one of the reference entities, may not get a cent back.
The collapse of Lehman triggered the early redemption of High Notes 5 and the unwinding process has begun.
“We expect that the final valuation of the Notes, which is market determined,
will be completed on or around Oct 31. In the worst case scenario, customers could lose their entire investment,” it said.
The bank has since set up dedicated Investor Care Centres in Hong Kong and Singapore, manned by experienced staff specially trained to handle queries about the troubled structured products.
Mr Rajan Raju, DBS’ managing director and head of consumer banking, added: “More than 300 customers have approached our Investor Care Centre and we are addressing their concerns about their investments. As soon as each case is reviewed, DBS will inform the respective customers of the outcome.”
http://www.todayonline.com/articles/281348.asp
DBS Bank says it will take responsibility for some of the Lehman Brothers products sold through its network in Singapore and Hong Kong if there was mis-selling.
“In specific cases when evidence of mis-selling is established, DBS (Hong Kong) Limited and DBS Bank (Singapore) will take responsibility,” the bank said yesterday.
It issued the statement in reply to queries about a recent report in the South China Morning Post that said it would consider full compensation for losses on one of Lehman’s structured products sold in Hong Kong if its investigations showed that buyers had been misled by the bank’s sales staff.
DBS also pointed out in a separate statement last night that customers in Singapore who had bought High Notes 5, a structured product sold with Lehman as one of the reference entities, may not get a cent back.
The collapse of Lehman triggered the early redemption of High Notes 5 and the unwinding process has begun.
“We expect that the final valuation of the Notes, which is market determined,
will be completed on or around Oct 31. In the worst case scenario, customers could lose their entire investment,” it said.
The bank has since set up dedicated Investor Care Centres in Hong Kong and Singapore, manned by experienced staff specially trained to handle queries about the troubled structured products.
Mr Rajan Raju, DBS’ managing director and head of consumer banking, added: “More than 300 customers have approached our Investor Care Centre and we are addressing their concerns about their investments. As soon as each case is reviewed, DBS will inform the respective customers of the outcome.”
http://www.todayonline.com/articles/281348.asp
DBS to settle case by case: Rebecca Lee
I am Mrs Rebecca Lee. I wrote to Straits Time basically saying DBS is omnipotent since DBS defended all their relationship managers and that they have explained all the risks to us "investors". But that's not why I write this. What's important is for all to know:
In Today's news, DBS is saying it will settle case by case. This is obviously a reaction to the gathering that Mr Tan have brought all the victims of DBS HN2, 5 together with others. DBS high note victims have scheduled to go to DBS shenton way 10 am to demand a settlement and bring all documents along. DBS must have gotten wind of this and decided to do a divide and conquer. I just want to make sure that none of us is stupid enough to let this happen and that we will continue to find where the other 1400 investors are, gather friends and family to give us the support and get justice done this Wednesday 10 am as agreed. If not for this gathering, DBS would not have any response. The squeaky door gets the oil. Please get more people to support the DBS HN victims. For some it's their life long savings - for others, it's their children's future that got pawned away.
Look at what the HongKongers do and see what DBS's reaction to them. Don't be a door mat or we will get stepped all over by DBS.
Mrs Rebecca Lee
In Today's news, DBS is saying it will settle case by case. This is obviously a reaction to the gathering that Mr Tan have brought all the victims of DBS HN2, 5 together with others. DBS high note victims have scheduled to go to DBS shenton way 10 am to demand a settlement and bring all documents along. DBS must have gotten wind of this and decided to do a divide and conquer. I just want to make sure that none of us is stupid enough to let this happen and that we will continue to find where the other 1400 investors are, gather friends and family to give us the support and get justice done this Wednesday 10 am as agreed. If not for this gathering, DBS would not have any response. The squeaky door gets the oil. Please get more people to support the DBS HN victims. For some it's their life long savings - for others, it's their children's future that got pawned away.
Look at what the HongKongers do and see what DBS's reaction to them. Don't be a door mat or we will get stepped all over by DBS.
Mrs Rebecca Lee
Look at the Product Advice
Hi Mr Tan,
I am one of the investors in Minibond. I would like to share with the rest of the investors on what I have found out in the Product Advise Report.
In my Product Advice Report, under the section Recommendations and Acknowledgement, it was written that I want to invest in bonds (which was what I said to the Financial Planner) but the Financial Planner recommended minibond to me which invest in CDOs. As I bought 3 series of Minibond from 3 different financial planners, all told me that I was investing in bonds issued by the corporations listed in the brochures. I have since written my complaint to the distributor, FIDReC, one of the three well-respected individuals to oversee the relevant FIs’ complaints, my MP and HSBC Trustee.
Maybe, you can advise those investors who bought these structured products to take a look at the Product Advice Report and see whether there was any evidence of misrepresentation by the financial planners.
On a separate note, I noticed that the prospectus was only given to investors weeks (at least 3 weeks) after investors have bought the structured notes. Is this the correct and acceptable practice by MAS? Shouldn't the financial institutions give out the prospectus (like the case in IPOs although I know not many people read them) before investors invest in these structured products since MAS already approved their products and prospectus?
KK
REPLY
It is wrong for the financial institution to give the prospectus a few weeks after the product was sold. You can mention this point in the statutory declaration (affidavit).
I am one of the investors in Minibond. I would like to share with the rest of the investors on what I have found out in the Product Advise Report.
In my Product Advice Report, under the section Recommendations and Acknowledgement, it was written that I want to invest in bonds (which was what I said to the Financial Planner) but the Financial Planner recommended minibond to me which invest in CDOs. As I bought 3 series of Minibond from 3 different financial planners, all told me that I was investing in bonds issued by the corporations listed in the brochures. I have since written my complaint to the distributor, FIDReC, one of the three well-respected individuals to oversee the relevant FIs’ complaints, my MP and HSBC Trustee.
Maybe, you can advise those investors who bought these structured products to take a look at the Product Advice Report and see whether there was any evidence of misrepresentation by the financial planners.
On a separate note, I noticed that the prospectus was only given to investors weeks (at least 3 weeks) after investors have bought the structured notes. Is this the correct and acceptable practice by MAS? Shouldn't the financial institutions give out the prospectus (like the case in IPOs although I know not many people read them) before investors invest in these structured products since MAS already approved their products and prospectus?
KK
REPLY
It is wrong for the financial institution to give the prospectus a few weeks after the product was sold. You can mention this point in the statutory declaration (affidavit).
Sales representatives did not know - misrepresentation
Hi Mr Tan
I appeal you to highlight this. I feel that most wales representatives thought the credit securities products were "not High Risk" products. If they had known that it is a high risk product, they would not have recommended people to invest.
Therefore, it is definitely a misrepresentation by sales representatives - the way the credit linked products were marketed as relatively "Safe/Low Risk" products by Lehman, Merrill, Morgan to the banks & financial institutions which was in turn presentated to the investors.
It is common sense that if it was marketed as high risk - few people would have invested.
I appeal you to highlight this. I feel that most wales representatives thought the credit securities products were "not High Risk" products. If they had known that it is a high risk product, they would not have recommended people to invest.
Therefore, it is definitely a misrepresentation by sales representatives - the way the credit linked products were marketed as relatively "Safe/Low Risk" products by Lehman, Merrill, Morgan to the banks & financial institutions which was in turn presentated to the investors.
It is common sense that if it was marketed as high risk - few people would have invested.
Hong Kong Lawmakers Criticize Bks Over Lehman-Backed Mini-Bond Sales
October 13, 2008: 03:26 AM EST
HONG KONG -(Dow Jones)- Hong Kong banks came under fire Monday from lawmakers who accused them of playing down the risks of structured products backed by Lehman Brothers Holdings Inc. (LEH) that were sold to thousands of small investors.
The investors lost millions of dollars when Lehman declared bankruptcy last month and many have been protesting in the streets as officials look into the matter.
In an emergency hearing on the crisis, lawmaker Cyd Ho accused bank managers of pressuring staff to sell the products quickly, by playing down risks to customers.
BOC (Hong Kong) Ltd. (2388.HK) and DBS Bank (Hong Kong) Ltd. pledged Monday to compensate customers if they found any wrongdoing occurred, as the products, known as "mini-bonds," were sold to retail customers. "If we find there was any wrongdoing during the sales of structural products, we will be responsible and compensate the customers fully," DBS head of consumer banking Linda Wong told the lawmakers Monday.
BOC (Hong Kong) head of personal banking Lawrence Law said the bank was willing to compensate customers "but needs to look at the cases on an individual basis."
The Hong Hong Monetary Authority has received 9,281 complaints from investors and said last week it was investigating sales of the structured products by nine banks. HKMA officials said they might also consider whether retail banks should be stopped from selling such products.
http://money.cnn.com/news/newsfeeds/articles/djf500/200810130326DOWJONESDJONLINE000106_FORTUNE5.htm
HONG KONG -(Dow Jones)- Hong Kong banks came under fire Monday from lawmakers who accused them of playing down the risks of structured products backed by Lehman Brothers Holdings Inc. (LEH) that were sold to thousands of small investors.
The investors lost millions of dollars when Lehman declared bankruptcy last month and many have been protesting in the streets as officials look into the matter.
In an emergency hearing on the crisis, lawmaker Cyd Ho accused bank managers of pressuring staff to sell the products quickly, by playing down risks to customers.
BOC (Hong Kong) Ltd. (2388.HK) and DBS Bank (Hong Kong) Ltd. pledged Monday to compensate customers if they found any wrongdoing occurred, as the products, known as "mini-bonds," were sold to retail customers. "If we find there was any wrongdoing during the sales of structural products, we will be responsible and compensate the customers fully," DBS head of consumer banking Linda Wong told the lawmakers Monday.
BOC (Hong Kong) head of personal banking Lawrence Law said the bank was willing to compensate customers "but needs to look at the cases on an individual basis."
The Hong Hong Monetary Authority has received 9,281 complaints from investors and said last week it was investigating sales of the structured products by nine banks. HKMA officials said they might also consider whether retail banks should be stopped from selling such products.
http://money.cnn.com/news/newsfeeds/articles/djf500/200810130326DOWJONESDJONLINE000106_FORTUNE5.htm
FAQ from investors (1)
Here are some frequently asked questions. I shall speak on these points at Speaker's Corner on Saturday 18 October at 6 p.m.
1. Can I lodge a complaint?
Some investors ask if they can lodge a complaint, if they have signed certain forms, or if they had bought in a different mode (e.g. by responding to a mail). Each case has to be considered on its own merits. It is impossible for me to give this type of advice.
Generally, you can lodge a complaint if you have been misled into buying the product. This misleading sitaution could occur in various ways, e.g. from the advertisements, brochure, verbal statement and assurances and other forms. You must get the facts and write a sworn statement (i.e. statutory declaration or affidavit).
2. How to get advice
It is best that you get advice from your fellow investors in similar situation. You should join a group and keep in touch with them. You should also read my blog, www.tankinlian.blogspot.com.
I am not able to give individual advice. Each day, 20 people write to me, expecting me to understand their situation. It is impossible for me to perform this role. You are not the only person that needs help. I do not have the time to give proper advice.
3. Gather the facts
Many investors asked me, "Should I sell or hold on to this investment?". This type of question can only be answered, if you get the facts. You cannot expect anyone to give you the answer without the facts.
If the facts are not available, no one can answer them. If you ask about the future, no one knows the answer (except God).
4. To hold or sell?
Many people are uncertain and frightened. They ask for advice on whether to sell or hold to a certain structured product. They have to find out the facts about the product. What is the current price now. What are the quality of the underlying assets?
There are more than 50 different types of structured products in the market. Each product is complicated and different from the other products. Even the financial institutions marketing the product do not know what they are.
The best is for you to ask the financial institution and get the facts. Do not expect someone else to know the answer. If the facts are not available, you should not expect any outsider to be able to get the answers for you.
Here are my general advice:
a) If you sell any structured product now, you are likely to get a bad price. The market is very bad. It is generally better to keep the product and hope for the best.
b) Nobody knows if the situation will get worse. You cannot expect anyone to help you to know the future. You have to make the decision on your own. It is your own money.
c) If things are uncertain, I will wait and not sell now. I hold shares and are losing money. I decide to keep them and wait for things to recover.
5. Financial institution to pressure their sales representatives
Some investors said that the financial institutions are putting pressure on their sales representative to tell lies, so that they will protect the institution. This is unethical, but it cannot be helped. If the representatives tell lies, they are committing a crime of cheating. This can be serious.
6. DBS to compensate on case by case basis
Some investors said that DBS has agreed to compensate the investors on a case by case basis. This is the correct apporach.
Any claim for compensation has to be decided on a case by case basis. Some people are misled and need to be compensated. Other people are not misled and cannot claim for the same type of compensation.
7. Fair compensation
I hope that the financial institution will offer a fair compensation to investors who have been misled. A fair compensation is for the loss to be shared equally between the investor and the distributor.
Some investors expect 100% compensation. This is unreasonable. The distributor expects to get away with no compensation. This is unreasonable also.
Tan Kin Lian
1. Can I lodge a complaint?
Some investors ask if they can lodge a complaint, if they have signed certain forms, or if they had bought in a different mode (e.g. by responding to a mail). Each case has to be considered on its own merits. It is impossible for me to give this type of advice.
Generally, you can lodge a complaint if you have been misled into buying the product. This misleading sitaution could occur in various ways, e.g. from the advertisements, brochure, verbal statement and assurances and other forms. You must get the facts and write a sworn statement (i.e. statutory declaration or affidavit).
2. How to get advice
It is best that you get advice from your fellow investors in similar situation. You should join a group and keep in touch with them. You should also read my blog, www.tankinlian.blogspot.com.
I am not able to give individual advice. Each day, 20 people write to me, expecting me to understand their situation. It is impossible for me to perform this role. You are not the only person that needs help. I do not have the time to give proper advice.
3. Gather the facts
Many investors asked me, "Should I sell or hold on to this investment?". This type of question can only be answered, if you get the facts. You cannot expect anyone to give you the answer without the facts.
If the facts are not available, no one can answer them. If you ask about the future, no one knows the answer (except God).
4. To hold or sell?
Many people are uncertain and frightened. They ask for advice on whether to sell or hold to a certain structured product. They have to find out the facts about the product. What is the current price now. What are the quality of the underlying assets?
There are more than 50 different types of structured products in the market. Each product is complicated and different from the other products. Even the financial institutions marketing the product do not know what they are.
The best is for you to ask the financial institution and get the facts. Do not expect someone else to know the answer. If the facts are not available, you should not expect any outsider to be able to get the answers for you.
Here are my general advice:
a) If you sell any structured product now, you are likely to get a bad price. The market is very bad. It is generally better to keep the product and hope for the best.
b) Nobody knows if the situation will get worse. You cannot expect anyone to help you to know the future. You have to make the decision on your own. It is your own money.
c) If things are uncertain, I will wait and not sell now. I hold shares and are losing money. I decide to keep them and wait for things to recover.
5. Financial institution to pressure their sales representatives
Some investors said that the financial institutions are putting pressure on their sales representative to tell lies, so that they will protect the institution. This is unethical, but it cannot be helped. If the representatives tell lies, they are committing a crime of cheating. This can be serious.
6. DBS to compensate on case by case basis
Some investors said that DBS has agreed to compensate the investors on a case by case basis. This is the correct apporach.
Any claim for compensation has to be decided on a case by case basis. Some people are misled and need to be compensated. Other people are not misled and cannot claim for the same type of compensation.
7. Fair compensation
I hope that the financial institution will offer a fair compensation to investors who have been misled. A fair compensation is for the loss to be shared equally between the investor and the distributor.
Some investors expect 100% compensation. This is unreasonable. The distributor expects to get away with no compensation. This is unreasonable also.
Tan Kin Lian
Monday, October 13, 2008
Concern about disorderly behaviour
Dear Mr Tan,
I appreciate that you are trying to help those people who were at Hong Lim Park on Saturday. As a great amount of money is involved, and from what I gathered at the park, there were many people who had possibly lost their life savings, emotions will indeed run high as some people will inevitably be in desperate positions.
I do want to caution you as a concerned citizen that I am indeed worried about some of the group leaders encouraging the people to gather at the banks at a scheduled day and time. I had no intention of prying into the matter but I cannot help overhearing the plan to crowd the banks. I am not so sure that it is safe for the public to have a big group of unhappy investors gathered in a public place at the same time. The people were even advised to pretend not to know each other.
I am not so sure that the group leaders will be able to keep order if the group of unhappy people do not get what they want and react emotionally that could lead to disorder.
I respect that you are a former CEO of a big company like NTUC Income and that with your in-depth knowledge of the financial matters, you might be able to provide some guidance to many people who are apparently feeling very helpless. May God bless you.
I had wanted to speak to you about this on Saturday but I did not get the chance. I just feel that there must be other ways of addressing this problem. As you mentioned that you are in communication with SM Goh, perhaps you can ask him to arrange a proper venue and get all the banks involved in addressing this matter.
I wish you God’s speed and wisdom.
I appreciate that you are trying to help those people who were at Hong Lim Park on Saturday. As a great amount of money is involved, and from what I gathered at the park, there were many people who had possibly lost their life savings, emotions will indeed run high as some people will inevitably be in desperate positions.
I do want to caution you as a concerned citizen that I am indeed worried about some of the group leaders encouraging the people to gather at the banks at a scheduled day and time. I had no intention of prying into the matter but I cannot help overhearing the plan to crowd the banks. I am not so sure that it is safe for the public to have a big group of unhappy investors gathered in a public place at the same time. The people were even advised to pretend not to know each other.
I am not so sure that the group leaders will be able to keep order if the group of unhappy people do not get what they want and react emotionally that could lead to disorder.
I respect that you are a former CEO of a big company like NTUC Income and that with your in-depth knowledge of the financial matters, you might be able to provide some guidance to many people who are apparently feeling very helpless. May God bless you.
I had wanted to speak to you about this on Saturday but I did not get the chance. I just feel that there must be other ways of addressing this problem. As you mentioned that you are in communication with SM Goh, perhaps you can ask him to arrange a proper venue and get all the banks involved in addressing this matter.
I wish you God’s speed and wisdom.
Subscribe to:
Posts (Atom)