Dear Mr Tan,
I had attended the interview. It's feels like asking a criminal to conduct the trial and pass his own verdict. It may be a bit exaggerating but it's definitely not a fair trial. I will be surprise if anyone can get a fair hearing and compensaiton from this.
One of the most ridiculous question I was asked is, "If no one from X tell you it's a Fixed Deposit, what is your complaint then?". I never know a broking house is allowed to sell FD. I started to recall and found out that this person actually heads the department that was selling all these toxic products.....Head of Business Developement Department. So is it fair?
The other one is he claimed that X is only distributing and not selling. So there is no mis-selling. X not selling but did received a commission from the issuer, sound ridiculous again. I went alone; I will only challenge him when there is a fair trial.
I insisted on bringing the form home to fill in. He tried to pressured me to submit on the spot claiming that my hearing will be delay if I don't submit on the spot, etc. Clearly this is another one of those pressure tactic used. I told him off. I do not want to say much, because the other 2 persons just keep writing the moment I open my mouth. It was quite a hostile interview because of the stupid questions asked and the pressure tactic used.
It's a waste of time to attend. Think about it, it really a ridiculous approach from MAS. Like asking us to go commit sucide.
I'm sorry to bother you, but I think only you can help us and provide leadership to us since MAS is washing hand. I'm very disappointed with the government.
I wish to remain anonymous
REPLY
This is an interview. Is should not be described as a trial or interrogation. You can write a complaint to the "well regarded person" who is supposed to review the complaint handling process for the distributor, i.e. Mr. Ee, Mr. Low or Mr. Hwang.
Sunday, October 26, 2008
Deposit Guarantee scheme in New Zealand
Hi Mr. Tan,
I thought you might be interested to know how the deposit guarantee scheme is being implemented in NZ.
A few points to note:
1) It is a facility where the Crown guarantees people who have deposits with institutions in the scheme. It covers all retail deposits of participating New Zealand-registered banks, and retail deposits by locals in non-bank deposit-taking entities. This would include building societies, credit unions and deposit-taking finance companies.
It only covers deposits and other debt securities.
2) Financial instutions are charged and the charges might be passed on to consumer at the banks' discretion.
For institutions with total retail deposits above $5 billion, a fee of 10 basis points per annum will be charged. This means that a bank with $20 billion in retail deposits would pay $15 million in fees per annum.
Following changes announced on 22 October 2008, there are also now fees for the new business component of registered banks and non-bank deposit-takers that are not already subject to a fee charge. These institutions whose covered liabilities are under $5 billion will be charged the following fees on the cumulative growth in their book since 12 October 2008 (with an allowance of plus 10 per cent per year on this amount):
- 10 basis points per annum to institutions rated AA minus and above
- 20 basis points per annum to institutions rated A+, A and A minus
- 50 basis points per annum to institutions rated BBB+, BBB and BBB minus
- 100 basis points per annum to institutions rated BB+ and BB
- 300 basis points per annum to institutions rated below BB or are unrated
Growth would be measured, and charged for, monthly.
3) There is a deposit coverage cap of $1 million per depositor per covered institution
4) For non-residents:
The guarantee will cover resident and non-resident holders of debt securities issued by approved New Zealand registered banks.
However, for approved local branches of overseas banks existing on 12 October 2008, the guarantee for non-resident depositors in these branches will be capped at the total amount owed to such depositors at 12 October 2008, allowing for growth of 10 percent per year.
For approved non-bank deposit takers, only debt securities held by New Zealand tax residents or New Zealand citizens will be covered by the guarantee.
In all of the above situations, the deposit coverage cap of $1 million per depositor per covered institution also applies
5) Full set of Q&A at: http://www.treasury.govt.nz/economy/guarantee/qanda
In fact, this scheme is till being fine tuned. So the details are changed from time to time.
HL
REPLY
Thank you. I hope that the Singapore Government has similar charges and safeguards.
I thought you might be interested to know how the deposit guarantee scheme is being implemented in NZ.
A few points to note:
1) It is a facility where the Crown guarantees people who have deposits with institutions in the scheme. It covers all retail deposits of participating New Zealand-registered banks, and retail deposits by locals in non-bank deposit-taking entities. This would include building societies, credit unions and deposit-taking finance companies.
It only covers deposits and other debt securities.
2) Financial instutions are charged and the charges might be passed on to consumer at the banks' discretion.
For institutions with total retail deposits above $5 billion, a fee of 10 basis points per annum will be charged. This means that a bank with $20 billion in retail deposits would pay $15 million in fees per annum.
Following changes announced on 22 October 2008, there are also now fees for the new business component of registered banks and non-bank deposit-takers that are not already subject to a fee charge. These institutions whose covered liabilities are under $5 billion will be charged the following fees on the cumulative growth in their book since 12 October 2008 (with an allowance of plus 10 per cent per year on this amount):
- 10 basis points per annum to institutions rated AA minus and above
- 20 basis points per annum to institutions rated A+, A and A minus
- 50 basis points per annum to institutions rated BBB+, BBB and BBB minus
- 100 basis points per annum to institutions rated BB+ and BB
- 300 basis points per annum to institutions rated below BB or are unrated
Growth would be measured, and charged for, monthly.
3) There is a deposit coverage cap of $1 million per depositor per covered institution
4) For non-residents:
The guarantee will cover resident and non-resident holders of debt securities issued by approved New Zealand registered banks.
However, for approved local branches of overseas banks existing on 12 October 2008, the guarantee for non-resident depositors in these branches will be capped at the total amount owed to such depositors at 12 October 2008, allowing for growth of 10 percent per year.
For approved non-bank deposit takers, only debt securities held by New Zealand tax residents or New Zealand citizens will be covered by the guarantee.
In all of the above situations, the deposit coverage cap of $1 million per depositor per covered institution also applies
5) Full set of Q&A at: http://www.treasury.govt.nz/economy/guarantee/qanda
In fact, this scheme is till being fine tuned. So the details are changed from time to time.
HL
REPLY
Thank you. I hope that the Singapore Government has similar charges and safeguards.
Singapore Government guarantees bank deposits
The Singapore Government has guaranteed all bank deposits in Singapore. I think that this is a bad idea. It is putting taxpayers at risk, without any appropriate return.
Here is a possible risk. A foreign bank receives $1 billion of deposits in Singapore. The bank engages in risky trading and lost $1 billion. After deducting its capital, the remaining loss has to be borne by the Singapore Government, actually the taxpayers of Singapore.
The Monetary Authority of Singapore may have ways of monitoring this risk and preventing it. But, can MAS look after the detailed operations of all the banks in Singapore? Do they have the resources and expertise?
Suppose the Singapore Government does not give this guarantee. Some of the money in Singapore will flow to Hong Kong or Malaysia. To keep the money in Singapore, the banks have to offer higher interest rate, maybe 3%, 4% or 5%. This will allow the deposit rate to increase to the market rate, and give the public a better interest rate on their savings. This is a good idea.
If there is a real need to guarantee the deposits, perhaps it should be up to 50% instead of the total sum. Maybe, the bank should pay some guarantee fee to the Singapore Government.
I hope to raise this point to the Singapore Government at an appropriate time, if my views are confirmed to be sensible. I look forward to receive the views of knowledgeable people on this matter.
Here is a possible risk. A foreign bank receives $1 billion of deposits in Singapore. The bank engages in risky trading and lost $1 billion. After deducting its capital, the remaining loss has to be borne by the Singapore Government, actually the taxpayers of Singapore.
The Monetary Authority of Singapore may have ways of monitoring this risk and preventing it. But, can MAS look after the detailed operations of all the banks in Singapore? Do they have the resources and expertise?
Suppose the Singapore Government does not give this guarantee. Some of the money in Singapore will flow to Hong Kong or Malaysia. To keep the money in Singapore, the banks have to offer higher interest rate, maybe 3%, 4% or 5%. This will allow the deposit rate to increase to the market rate, and give the public a better interest rate on their savings. This is a good idea.
If there is a real need to guarantee the deposits, perhaps it should be up to 50% instead of the total sum. Maybe, the bank should pay some guarantee fee to the Singapore Government.
I hope to raise this point to the Singapore Government at an appropriate time, if my views are confirmed to be sensible. I look forward to receive the views of knowledgeable people on this matter.
Leveraged Dual Currency Investments
I have been advising people to avoid Dual Currency Investment for the past year. My views are stated in this FAQ: http://www.tankinlian.com/faq/duali.html
This type of investment allows you to bet on currency movements. You stand the chance of a big loss when the currency moves against you. You only get a small return (in the form of a higher interest rate) when currency moves in your favour.
Recently, the AUD dropped by 30%. Those who were "long" in AUD lost 30%. But those who were "short" in AUD did not gain 30%. They only gain 1% or 2% in higher interest. The bank keeps the remainder of the profit.
I learned to my horror that unsophisticated investors were asked to invest in "leveraged" dual currency investments. The bank lends them 4 times of their investment, so that they can take 5 times of the risk. If the currency drops by 20%, their total investment is wiped out (i.e. 20% X 5 times).
The relationship manager of the bank who sold the leveraged DCI earned 5 times of the commission on this product. But, it wiped out the total savings of the investors.
Someone told me that her mother lost $500,000 on this type of investment. Another retiree told me that he lost $150,000 in 2 months, out of the invested sum of S200,000.
Do not invest in any of these products. Be careful about the advice of the relationship managers.
This type of investment allows you to bet on currency movements. You stand the chance of a big loss when the currency moves against you. You only get a small return (in the form of a higher interest rate) when currency moves in your favour.
Recently, the AUD dropped by 30%. Those who were "long" in AUD lost 30%. But those who were "short" in AUD did not gain 30%. They only gain 1% or 2% in higher interest. The bank keeps the remainder of the profit.
I learned to my horror that unsophisticated investors were asked to invest in "leveraged" dual currency investments. The bank lends them 4 times of their investment, so that they can take 5 times of the risk. If the currency drops by 20%, their total investment is wiped out (i.e. 20% X 5 times).
The relationship manager of the bank who sold the leveraged DCI earned 5 times of the commission on this product. But, it wiped out the total savings of the investors.
Someone told me that her mother lost $500,000 on this type of investment. Another retiree told me that he lost $150,000 in 2 months, out of the invested sum of S200,000.
Do not invest in any of these products. Be careful about the advice of the relationship managers.
Pinnacle Notes - lodge a complaint now
Dear Mr. Tan,
I met the RM of my bank and asked about the Pinnacle Notes. The RM said that there is no problem with the Pinnacle Notes now, and if the reference entity does not "credit event", I will be able to get back 100% of my invested sum.
I asked about the price of the Pinnacle Notes now, but the RM said that I should sell but wait until maturity to get back 100%. Is this correct?
REPLY
You should ask the relationship manager to put the assurance in writing that 100% of the invested sum will be paid back on the maturity date, if there is no credit event involving any of the reference entities.
It is better for you to lodge a complaint now about mis-selling, as the price of the Pinnacle Notes have dropped significantly and you these notes may default before the maturity date. Even if there is no default, you may get less than 100%.
I met the RM of my bank and asked about the Pinnacle Notes. The RM said that there is no problem with the Pinnacle Notes now, and if the reference entity does not "credit event", I will be able to get back 100% of my invested sum.
I asked about the price of the Pinnacle Notes now, but the RM said that I should sell but wait until maturity to get back 100%. Is this correct?
REPLY
You should ask the relationship manager to put the assurance in writing that 100% of the invested sum will be paid back on the maturity date, if there is no credit event involving any of the reference entities.
It is better for you to lodge a complaint now about mis-selling, as the price of the Pinnacle Notes have dropped significantly and you these notes may default before the maturity date. Even if there is no default, you may get less than 100%.
Saturday, October 25, 2008
HK Monetary Authority refers 40 more 'mini-bonds' cases to SFC
Saturday, 25 October 2008
The Hong Kong Monetary Authority said yesterday it had referred to the Securities and Futures Commission 40 more cases of alleged mis-selling of Lehman Brothers-backed financial products by banks.
"The 40 cases, which are the second batch of Lehman-Brothers-related cases referred in this way, involved alleged misconduct by two licensed banks in Hong Kong," the city's de-facto central bank said in a statement.
It said one of the banks in question was also involved in the first batch of 24 cases it referred on October 17.
Up to Thursday, the authority said it had received 16,301 complaints by investors who said their banks had sold them "mini-bonds" backed by the collapsed US giant without having fully explained to them the risks involved.
Apart from the 64 referrals to the SFC, the authority said it had opened investigations on 285 complaints and was seeking further information on 1,942 complaints.
In light of the large number of complaints, the authority said it would have to streamline the investigation process by identifying groups of cases with common features in making referrals to the SFC.
The Hong Kong Association of Banks said in a statement Friday that individual banks had since earlier this week started the process of settling with relevant investors, particularly elderly customers with no investment experience.
The association said its special task force will be in close liaison with the Monetary Authority to explore a mediation mechanism between the banks and their investors.
Thousands of investors have held protests across the territory in the past few weeks claiming the banks mis-sold the mini-bonds as risk-free investments, and lured vulnerable citizens into using up their life-savings.
Although the banks agreed last week to adopt a government proposal for them to buy back the products from customers at their current market value, the move failed to pacify investors who said they would get back a portion of their investment.
The mini-bonds are complex financial products linked to a bundle of derivatives backed by Lehman, and their value plummeted after the investment bank collapsed in September.
http://www.macaudailytimesnews.com/index.php?option=com_content&task=view&id=18068&Itemid=34
The Hong Kong Monetary Authority said yesterday it had referred to the Securities and Futures Commission 40 more cases of alleged mis-selling of Lehman Brothers-backed financial products by banks.
"The 40 cases, which are the second batch of Lehman-Brothers-related cases referred in this way, involved alleged misconduct by two licensed banks in Hong Kong," the city's de-facto central bank said in a statement.
It said one of the banks in question was also involved in the first batch of 24 cases it referred on October 17.
Up to Thursday, the authority said it had received 16,301 complaints by investors who said their banks had sold them "mini-bonds" backed by the collapsed US giant without having fully explained to them the risks involved.
Apart from the 64 referrals to the SFC, the authority said it had opened investigations on 285 complaints and was seeking further information on 1,942 complaints.
In light of the large number of complaints, the authority said it would have to streamline the investigation process by identifying groups of cases with common features in making referrals to the SFC.
The Hong Kong Association of Banks said in a statement Friday that individual banks had since earlier this week started the process of settling with relevant investors, particularly elderly customers with no investment experience.
The association said its special task force will be in close liaison with the Monetary Authority to explore a mediation mechanism between the banks and their investors.
Thousands of investors have held protests across the territory in the past few weeks claiming the banks mis-sold the mini-bonds as risk-free investments, and lured vulnerable citizens into using up their life-savings.
Although the banks agreed last week to adopt a government proposal for them to buy back the products from customers at their current market value, the move failed to pacify investors who said they would get back a portion of their investment.
The mini-bonds are complex financial products linked to a bundle of derivatives backed by Lehman, and their value plummeted after the investment bank collapsed in September.
http://www.macaudailytimesnews.com/index.php?option=com_content&task=view&id=18068&Itemid=34
Speech at Speaker’s Corner – 25 Oct 2008
http://theonlinecitizen.com/2008/10/investors-to-submit-fourth-petition-to-mas/#respond
1. Lodge your complaint
The first step is to lodge your complaint with the financial institution that sold the product to you.
Be honest. In your report, you should state honestly what you were told and what you were led to believe, when you decided to invest in the product. Many investors were assured that the structured product is “safe” and “low risk” and is a good alternative to “fixed deposit”. If this is the case, you can state it honestly.
Do not worry that you have signed forms given to you by the sales representative (or relationship manager). If you were not told about the content of the form and did not get a clear explanation on what the statements meant, you can state it in your report.
The most important point is to state how you were misled, and what you were told by the sales representative.
I have printed the forms for you to collect the relevant information to complete your complaint. You can get the assistance of the volunteers, if you are not clear about the type of information that is needed.
Read this advice:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
2. “Non-Vulnerable” Investor
Many investors were unsure about how they will be treated, as the fall outside of the “vulnerable” group. So far, MAS and the financial institutions have not stated how these investor will be treated.
Let us take it one step at a time. You should lodge your complaint and attend the interview arranged by the financial institution. You can state honestly what is contained in your statement that you lodged with the financial institution.
If you do not wish to attend alone, you can bring a family member, friend or fellow investor to accompany you.
3. Dispute Resolution Center
If you are not able to get a satisfactory compensation from the financial institution, you can bring you case to Financial Industry Dispute Resolution Center, FiDREC (http://www.fidrec.com.sg/). You pay a fee of $50.
FiDREC will form a panel to consider your complaint. FiDREC has the authority to pass a judgment that is binding on the financial institution. This decision is NOT binding on the consumer. The consumer still has the right to take the case to court.
At present, FiDREC has the authority to decide on claims up to $50,000. It can hear larger cases, subject to agreement of the financial institution.
4. Open Forum with Financial Institution
I suggest that investors should get together, according to the financial institution that sold the product to you, to request the financial institution to hold an open forum with the investors to discuss the following:
a) How the investors were misled by the information given by the sales representatives
b) How the financial institution can compensate the investors for their loss, caused by the bad advice and mis-information.
5. Petition #4
There are a potential of 10,000 cases to be handled. So far, just a handful of cases under the “vulnerable group” have been handled. It will take a long time for these 10,000 cases to be resolved, using the “case by case” approach. Many of those affected have still not lodged their complaint.
I will be organizing another Petition #4 addressed to the chairman of MAS. This is to ask MAS to help find a collective solution to the mis-selling by the financial institutions. A collective approach will reduce the stress on the individual investors in making the complaint and will ensure that fair compensation is given to all the affected investors, according to the category that they fall under.
6. Legal action
Some investors wish to take collective legal action. I like them to be aware that it can be costly and risky to take this action. It should be considered only as a last resort.
Before the investors decide to take this action, they should be aware about the cost and the chance of winning the case. They must also agree on the approach. They may be able to get different estimates of the cost from other lawyers.
Tan Kin Lian
http://www.tankinlian.blogspot.com/
SCMP: Angry investors protest
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=DNB3L2CAL132&linkid=b7a97cb4-e18d-4fe7-a5c8-f27afb0432d2&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
SCMP:Angry investors protest
25 Oct 2008
Peter So
About 100 desperate investors who bought retail structured notes and equity-linked notes from local banks linked to the bankrupt US investment bank Lehman Brothers protested to the Hong Kong Monetary Authority and the Securities and Futures Commission yesterday morning.
They said the authorities had only paid attention to the victims of Lehman-linked minibonds but ignored those who bought other structured products. Minibonds are not corporate bonds but consist of high-risk creditlinked derivatives.
The protesters included customers of Citic Ka Wah Bank, Chong Hing Bank, DBS Bank, Citibank, Standard Chartered Bank, ABN Amro, Royal Bank of Scotland and Dai Sang Bank.
They said the banks had deceived them into putting their life savings into the high-risk investment products and urged the banks to make full repayments. DBS said it would notify clients yesterday of the value of their structured products linked to Lehman, and would compensate the customers for losses if mis-selling was found.
But protester Wong Kam-chuen, who invested more than HK$2 million in the bank’s retail structured notes, said he had heard nothing from DBS.
“The bank staff couldn’t tell me when the investigation [into alleged mis-selling] will finish. I really have no idea of when I can have my money back,” said Mr Wong.
SCMP:Angry investors protest
25 Oct 2008
Peter So
About 100 desperate investors who bought retail structured notes and equity-linked notes from local banks linked to the bankrupt US investment bank Lehman Brothers protested to the Hong Kong Monetary Authority and the Securities and Futures Commission yesterday morning.
They said the authorities had only paid attention to the victims of Lehman-linked minibonds but ignored those who bought other structured products. Minibonds are not corporate bonds but consist of high-risk creditlinked derivatives.
The protesters included customers of Citic Ka Wah Bank, Chong Hing Bank, DBS Bank, Citibank, Standard Chartered Bank, ABN Amro, Royal Bank of Scotland and Dai Sang Bank.
They said the banks had deceived them into putting their life savings into the high-risk investment products and urged the banks to make full repayments. DBS said it would notify clients yesterday of the value of their structured products linked to Lehman, and would compensate the customers for losses if mis-selling was found.
But protester Wong Kam-chuen, who invested more than HK$2 million in the bank’s retail structured notes, said he had heard nothing from DBS.
“The bank staff couldn’t tell me when the investigation [into alleged mis-selling] will finish. I really have no idea of when I can have my money back,” said Mr Wong.
Friday, October 24, 2008
Speaker's Corner - 25 October 2008
I have registered to speak at Speaker Corner from 5 to 7 pm on Saturday 25 October.
Some investors are very angry at the action by the Government regarding investors outside of the "vulnerable" group. They sent strong messages to me in my blog and by e-mail.
I agree with your views. I receive more than 100 of these messages. I suggest that some of these investors should come forward and speak at Speaker's Corner. You can register quite easily at:
http://www.nparks.gov.sg/cms/index.php?option=com_chronocontact&chronoformname=honglim_park_speakers_corner
If you have registered, send your particulars to me. I will get the host to call the speakers to talk in an orderly manner.
Some investors are very angry at the action by the Government regarding investors outside of the "vulnerable" group. They sent strong messages to me in my blog and by e-mail.
I agree with your views. I receive more than 100 of these messages. I suggest that some of these investors should come forward and speak at Speaker's Corner. You can register quite easily at:
http://www.nparks.gov.sg/cms/index.php?option=com_chronocontact&chronoformname=honglim_park_speakers_corner
If you have registered, send your particulars to me. I will get the host to call the speakers to talk in an orderly manner.
A serious recession in the months ahead
We have to prepare for a serious recession in the months ahead. Here are the likely trend of events:
a) Banks reduce their credit
b) Businesses do not have the operating capital
c) Consumers reduce their spending
d) Businesses cannot meet their operating expenses
e) They reduce the size of their offices, shops and factories and retrench employees
f) They cannot pay their rentals - so the landlords have to evict them (but they cannot find new tenants)
This will be a downward spiral.
What can be done?
a) Banks reduce their credit
b) Businesses do not have the operating capital
c) Consumers reduce their spending
d) Businesses cannot meet their operating expenses
e) They reduce the size of their offices, shops and factories and retrench employees
f) They cannot pay their rentals - so the landlords have to evict them (but they cannot find new tenants)
This will be a downward spiral.
What can be done?
Call for Public Inquiry - some views
Anonymous said...
There should be a PUBLIC INQUIRY held which should be initiated by the Govt on this matter. Do not let them sweep this matter 'under the carpet'.
Issues include:
1. MAS role as a regulator in this matter. Why there was an oversight over this matter? Who was the head of the division who oversaw this?
2. Why MAS did not further investigate when complaints as far back as 2003/04 began regarding mis-selling of structured products? How many complaints of mis-selling had been brought to MAS attention?
3. Can the Finance Ministry also look into their role to provide a higher level overview over MAS responsibilities?
4. Can those who bought structured investment products sold by Lehman/Merrill Lynch via local banks go to their MP and raise the issue with them. Go every day or week - go pester them as much as possible! They should be working for you - Spore citizens & not the govt! Go in a collective group but behave yourselves first! Agitate for a PUBLIC INQUIRY via a petition! A govt cannot refuse the public's request!
5. Organize collective groups to go to the MAS & Banks to protest & demand a PUBLIC INQUIRY. Do not fear the riot police squad because it's your money that is at risk. There is a fine line between political protest & personal protest. If you keep quiet & don't agitate, then you won't see your money! Better to go to jail than not see your money! What can they do to you as a collective group? It is not a time to be passive. Assert your rights as citizens to be heard!
2:01 PM
Donald said...
I agree with 2.01 pm. A PUBLIC INQUIRY is definitely required. If MAS failed in their role, they people responsible should be removed. FIs being the 'main mastermind' if found guilty should be penalised. Very sad, hard to find independance in Singapore. I am not surprised the minibond issue will drag to 2009, as FIs need their books to look good for 2008 to justify their bonuses.
Anonymous said...
From the way MAS is handling this issue, it is obvious to me that it is trying to side-step responsibility.
I suspect that there could be wrong-doings or careless decisions being made by MAS when they "registered" (which is as good as giving consent) for such dubious toxic entrapping products to be sold by the Financial Institutions.
Therefore, I fully agree and support the call for a Commission of Inquiry to be conducted by an independent neutral body convened by the Govt. Either the PM or the Finance Minister should initiate the Commission of Inquiry to address likely injustice, fraudulent dealings, breaches of regulations, cunning manipulations of the laws as well as to draw lessons from such a fiasco so that MAS and FIs would be put into their proper shoes in order to bring confidence back to Singapore as a financial centre.
by Neutral Observer, 24 Oct 2008.
2:43 AM
There should be a PUBLIC INQUIRY held which should be initiated by the Govt on this matter. Do not let them sweep this matter 'under the carpet'.
Issues include:
1. MAS role as a regulator in this matter. Why there was an oversight over this matter? Who was the head of the division who oversaw this?
2. Why MAS did not further investigate when complaints as far back as 2003/04 began regarding mis-selling of structured products? How many complaints of mis-selling had been brought to MAS attention?
3. Can the Finance Ministry also look into their role to provide a higher level overview over MAS responsibilities?
4. Can those who bought structured investment products sold by Lehman/Merrill Lynch via local banks go to their MP and raise the issue with them. Go every day or week - go pester them as much as possible! They should be working for you - Spore citizens & not the govt! Go in a collective group but behave yourselves first! Agitate for a PUBLIC INQUIRY via a petition! A govt cannot refuse the public's request!
5. Organize collective groups to go to the MAS & Banks to protest & demand a PUBLIC INQUIRY. Do not fear the riot police squad because it's your money that is at risk. There is a fine line between political protest & personal protest. If you keep quiet & don't agitate, then you won't see your money! Better to go to jail than not see your money! What can they do to you as a collective group? It is not a time to be passive. Assert your rights as citizens to be heard!
2:01 PM
Donald said...
I agree with 2.01 pm. A PUBLIC INQUIRY is definitely required. If MAS failed in their role, they people responsible should be removed. FIs being the 'main mastermind' if found guilty should be penalised. Very sad, hard to find independance in Singapore. I am not surprised the minibond issue will drag to 2009, as FIs need their books to look good for 2008 to justify their bonuses.
Anonymous said...
From the way MAS is handling this issue, it is obvious to me that it is trying to side-step responsibility.
I suspect that there could be wrong-doings or careless decisions being made by MAS when they "registered" (which is as good as giving consent) for such dubious toxic entrapping products to be sold by the Financial Institutions.
Therefore, I fully agree and support the call for a Commission of Inquiry to be conducted by an independent neutral body convened by the Govt. Either the PM or the Finance Minister should initiate the Commission of Inquiry to address likely injustice, fraudulent dealings, breaches of regulations, cunning manipulations of the laws as well as to draw lessons from such a fiasco so that MAS and FIs would be put into their proper shoes in order to bring confidence back to Singapore as a financial centre.
by Neutral Observer, 24 Oct 2008.
2:43 AM
No compensation from ABN AMRO
Dear Mr Tan,
My mother and I are joint account holders for minibond series 2 from ABN AMRO. My mum is 68 years old, attended only a few years of schooling, does not read or write English, stayed in a 4 room HDB flat that is more than 25 years old, and has been a frugal housewife all her life. Two years old, my mother's fixed deposit of S$170,000 matured and she put the entire amount of her hard-earned savings into the minibond series 2, thinking that she was investing in a safe bond as explained by the RM.
My mother clearly falls into the vulnerable investor group as described by MAS, and such risky product should never have been recommended to her. In fact, the RM did not even carry out a Financial Needs Analysis on my mother. When I asked for her profile report, the bank replied that they only need to do one profile. I told them that it is ridiculous for a bank and a gross negligent on the bank's part to assume that my risk profile and my mother's risk profile are the same.
This morning I just received a call from ABN AMRO that there will be no compensation for our minibond investment. I was so shocked to hear that since local FIs are already making the right steps to compensate the vulnerable investors. My mother was clearly a vulnerable investor sold on a product totally not suitable for her. The bank officer on the phone could not give a reason why there was no compensation, but only to say that the decision was made by a committee. After demanding to meet the committee, the officer came back to say that the bank will review the case again and get back to me.
I would like to caution other investors that some banks will try to get away with the compensation if they can. Do not give up, fight for what is rightfully ours.
Isabel Tan
My mother and I are joint account holders for minibond series 2 from ABN AMRO. My mum is 68 years old, attended only a few years of schooling, does not read or write English, stayed in a 4 room HDB flat that is more than 25 years old, and has been a frugal housewife all her life. Two years old, my mother's fixed deposit of S$170,000 matured and she put the entire amount of her hard-earned savings into the minibond series 2, thinking that she was investing in a safe bond as explained by the RM.
My mother clearly falls into the vulnerable investor group as described by MAS, and such risky product should never have been recommended to her. In fact, the RM did not even carry out a Financial Needs Analysis on my mother. When I asked for her profile report, the bank replied that they only need to do one profile. I told them that it is ridiculous for a bank and a gross negligent on the bank's part to assume that my risk profile and my mother's risk profile are the same.
This morning I just received a call from ABN AMRO that there will be no compensation for our minibond investment. I was so shocked to hear that since local FIs are already making the right steps to compensate the vulnerable investors. My mother was clearly a vulnerable investor sold on a product totally not suitable for her. The bank officer on the phone could not give a reason why there was no compensation, but only to say that the decision was made by a committee. After demanding to meet the committee, the officer came back to say that the bank will review the case again and get back to me.
I would like to caution other investors that some banks will try to get away with the compensation if they can. Do not give up, fight for what is rightfully ours.
Isabel Tan
Just One Year
During the past 12 months, the stockmarkets dropped as follows:
S&P (USA) 45%
Nikkei (Japan) 60%
STI (Singapore) 60%
I cannot imagine the scale of this drop in just 1 year. It is unimaginable. Earlier this year, the Singapore Government was projecting good economic growth. Now, we are likely to see a serious recession.
Previously, I thought that the hedge funds should be blamed for short selling the market to make a speculative gain. Maybe, this is not the reason.
It is possible that the hedge funds are invested to the full, with borrowings of 10 times of their capital. During this crisis, the lenders pulled back their credit lines. This forced the hedge funds to sell their holdings. This could be the reason for the massive falls in the stockmarkts of 10% a day.
Lesson: All hedge funds should be regulated. They are not allowed to operate on leverage. They should only invest their capital.
S&P (USA) 45%
Nikkei (Japan) 60%
STI (Singapore) 60%
I cannot imagine the scale of this drop in just 1 year. It is unimaginable. Earlier this year, the Singapore Government was projecting good economic growth. Now, we are likely to see a serious recession.
Previously, I thought that the hedge funds should be blamed for short selling the market to make a speculative gain. Maybe, this is not the reason.
It is possible that the hedge funds are invested to the full, with borrowings of 10 times of their capital. During this crisis, the lenders pulled back their credit lines. This forced the hedge funds to sell their holdings. This could be the reason for the massive falls in the stockmarkts of 10% a day.
Lesson: All hedge funds should be regulated. They are not allowed to operate on leverage. They should only invest their capital.
Investors want open forum with DBS
By Francis Chan
INVESTORS of DBS High Notes 5 went to the bank's Shenton Way headquarters yesterday to ask that an open forum be held for customers caught up in the debacle.
DBS said last night it was considering the request.
An investor, who wanted to stay anonymous, said she and two others gave a letter to DBS' consumer banking group head, Mr Rajan Raju, during the afternoon visit.
She said the letter contained signatures of 166 High Notes 5 investors identifying themselves as 'DBS's valued customers who have placed explicit trust in you and your organisation'.
The letter asked the bank's top brass to 'provide investors with a detailed statement of account for each series of the High Notes, from the inception until the latest available date' and to produce 'a valuation of each series of the notes at the latest available date'.
The group also asked the bank to organise a meeting with investors to help clarify various issues.
The letter, which was copied to the Monetary Authority of Singapore, also stated that the investors wanted Mr Gerard Ee to attend the meeting.
Mr Ee is the independent person appointed by DBS to oversee the bank's handling of complaints related to the sale of High Notes 5.
Over the last month, DBS has been accused of mis-selling the structured product, which went bad after the collapse of bankrupt US investment bank, Lehman Brothers.
But despite bearing the brunt of its customers' anger over the past month, the bank has been open to meeting investors.
'I must say that the senior management were very positive when they met us,' said the investor who handed over the letter.
'They even asked us if it would be better to hold a few meetings so that they could cater to more investors. I think that is a good sign.'
DBS officials met a small group of investors at its headquarters last Wednesday.
http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20081023-95689.html
INVESTORS of DBS High Notes 5 went to the bank's Shenton Way headquarters yesterday to ask that an open forum be held for customers caught up in the debacle.
DBS said last night it was considering the request.
An investor, who wanted to stay anonymous, said she and two others gave a letter to DBS' consumer banking group head, Mr Rajan Raju, during the afternoon visit.
She said the letter contained signatures of 166 High Notes 5 investors identifying themselves as 'DBS's valued customers who have placed explicit trust in you and your organisation'.
The letter asked the bank's top brass to 'provide investors with a detailed statement of account for each series of the High Notes, from the inception until the latest available date' and to produce 'a valuation of each series of the notes at the latest available date'.
The group also asked the bank to organise a meeting with investors to help clarify various issues.
The letter, which was copied to the Monetary Authority of Singapore, also stated that the investors wanted Mr Gerard Ee to attend the meeting.
Mr Ee is the independent person appointed by DBS to oversee the bank's handling of complaints related to the sale of High Notes 5.
Over the last month, DBS has been accused of mis-selling the structured product, which went bad after the collapse of bankrupt US investment bank, Lehman Brothers.
But despite bearing the brunt of its customers' anger over the past month, the bank has been open to meeting investors.
'I must say that the senior management were very positive when they met us,' said the investor who handed over the letter.
'They even asked us if it would be better to hold a few meetings so that they could cater to more investors. I think that is a good sign.'
DBS officials met a small group of investors at its headquarters last Wednesday.
http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20081023-95689.html
Hong Kong: Legco raps shortcomings in minibonds monitoring
The Legislative Council has passed a motion and three amendments to criticize the government for failing to monitor the sale of Lehman Brothers minibonds and other products by financial institutions and banks.
Diana Lee
Thursday, October 23, 2008
The Legislative Council has passed a motion and three amendments to criticize the government for failing to monitor the sale of Lehman Brothers minibonds and other products by financial institutions and banks.
Lawmakers also called for strengthening the protection of investors' interests and preventing any recurrence.
But banking sector legislator David Li Kwok-po said he hoped the issue would not be "politicized."
A bank is just the agent of the minibonds and selling them has been approved by the authorities, Li said.
"The banks have no obligation to conduct buyback deals with customers. They responded to market demand and were also taking risks."
Li's remarks raised the hackles of unionist Lee Cheuk-yan. "The banks abused the trust of the public," Lee said.
Meanwhile, the Hong Kong Association of Banks said the first Lehman minibond buyback exercise can be conducted in early December.
The Consumer Council said at least one complainant had sought assistance from its legal action fund to file a lawsuit.
A source said the Securities and Futures Commission expects banks to do their own review of the cases.
The source said the SFC has no plans to launch a blanket solution on compensation as it prefers banks to decide for themselves.
Meanwhile, the Monetary Authority of Singapore said it received two proposals to restructure Lehman products, a move that could help investors recoup some losses.
HSBC Institutional Trust Services (Singapore), the trustee for the minibonds, said two international financial institutions have offered to restructure the notes to allow them to run to maturity.
DBS said total customer compensation in Singapore and Hong Kong will be around HK$362 million.
http://www.thestandard.com.hk/news_print.asp?art_id=73338&sid=21122158
Diana Lee
Thursday, October 23, 2008
The Legislative Council has passed a motion and three amendments to criticize the government for failing to monitor the sale of Lehman Brothers minibonds and other products by financial institutions and banks.
Lawmakers also called for strengthening the protection of investors' interests and preventing any recurrence.
But banking sector legislator David Li Kwok-po said he hoped the issue would not be "politicized."
A bank is just the agent of the minibonds and selling them has been approved by the authorities, Li said.
"The banks have no obligation to conduct buyback deals with customers. They responded to market demand and were also taking risks."
Li's remarks raised the hackles of unionist Lee Cheuk-yan. "The banks abused the trust of the public," Lee said.
Meanwhile, the Hong Kong Association of Banks said the first Lehman minibond buyback exercise can be conducted in early December.
The Consumer Council said at least one complainant had sought assistance from its legal action fund to file a lawsuit.
A source said the Securities and Futures Commission expects banks to do their own review of the cases.
The source said the SFC has no plans to launch a blanket solution on compensation as it prefers banks to decide for themselves.
Meanwhile, the Monetary Authority of Singapore said it received two proposals to restructure Lehman products, a move that could help investors recoup some losses.
HSBC Institutional Trust Services (Singapore), the trustee for the minibonds, said two international financial institutions have offered to restructure the notes to allow them to run to maturity.
DBS said total customer compensation in Singapore and Hong Kong will be around HK$362 million.
http://www.thestandard.com.hk/news_print.asp?art_id=73338&sid=21122158
Global financial crisis is getting out of control
I wish to ask investors to be aware that the global financial crisis is getting out of control. Since the lodging of the Petition 3 weeks ago, the stockmarkets have dropped by 30%.
The timing may be bad for the investors to press the claims at this time. The financial institutions will be quite busy managing their other issues, including the solvency of their main business.
The timing may be bad for the investors to press the claims at this time. The financial institutions will be quite busy managing their other issues, including the solvency of their main business.
Treat all investors fairly
Dear Mr. Tan,
I appreciate the good work you have done todate.
It is wrong to give priority to the so-called vulnerable group because this implies that the vulnerable group has a Right for full compensation whilst those outside it do not have such a Right. You can somehow discern that the FIs are driving in that directions.
If the aim of giving priority to the vulnerable group is to prevent immediate financial hardship because he or she needs immediate cash as otherwise he or she has to seek government help, then that is understandable. I believe those elderly investors' fund were not "daily expense savings".
In such a case, then education and knowing the English language is NOT a criteria to be used to define the vulnerable group. We therefore need MAS to state that education is not a criteria. Mis-selling (as defined in the ST today) is mis-selling. It has nothing to do with the educational level of the investor.
Albert Tan
tan4tell@yahoo.com
I appreciate the good work you have done todate.
It is wrong to give priority to the so-called vulnerable group because this implies that the vulnerable group has a Right for full compensation whilst those outside it do not have such a Right. You can somehow discern that the FIs are driving in that directions.
If the aim of giving priority to the vulnerable group is to prevent immediate financial hardship because he or she needs immediate cash as otherwise he or she has to seek government help, then that is understandable. I believe those elderly investors' fund were not "daily expense savings".
In such a case, then education and knowing the English language is NOT a criteria to be used to define the vulnerable group. We therefore need MAS to state that education is not a criteria. Mis-selling (as defined in the ST today) is mis-selling. It has nothing to do with the educational level of the investor.
Albert Tan
tan4tell@yahoo.com
Response to: DBS begins process to compensate customers
Letter sent to Straits Times
I read your report in The Straits Times dated 24 October 2008, entitled "DBS begins process to compensate customers". It had a statement which mentioned "Brokerages like OCBC Securities, which distribute, but do not advise investors on Minibonds, ..........".
I beg to differ with the words 'do not advise'. OCBC Securities has an alternative product department which gives advice on alternative products such as minibonds, pinnacle notes, equity linked notes, etc. By stating so boldly that they only distribute but do not adivse is clearly a misnormer. How else can you market your products if you do not advise? Do you think clients of OCBC Securties will just purchase these products off the shelf with no questiones asked and advice given by their alternative product sales personnel. Insofar, I find statements made by OCBC Securities as a way of trying to evade responsibility and I find it very disturbing.
For your information, my husband and I are both victims of the minibond and pinnacle notes debacle and you probably can guess who had sold us the products. I also find that brokerages (in general) that had marketed these products to their clients, have been keeping a low profile and not willing to admit to any misrepresentation in mis-selling. Perhaps it is time to put pressure on them to "do the right thing' as of the like of DBS, Maybank etc. "
Regards
C P Tay
I read your report in The Straits Times dated 24 October 2008, entitled "DBS begins process to compensate customers". It had a statement which mentioned "Brokerages like OCBC Securities, which distribute, but do not advise investors on Minibonds, ..........".
I beg to differ with the words 'do not advise'. OCBC Securities has an alternative product department which gives advice on alternative products such as minibonds, pinnacle notes, equity linked notes, etc. By stating so boldly that they only distribute but do not adivse is clearly a misnormer. How else can you market your products if you do not advise? Do you think clients of OCBC Securties will just purchase these products off the shelf with no questiones asked and advice given by their alternative product sales personnel. Insofar, I find statements made by OCBC Securities as a way of trying to evade responsibility and I find it very disturbing.
For your information, my husband and I are both victims of the minibond and pinnacle notes debacle and you probably can guess who had sold us the products. I also find that brokerages (in general) that had marketed these products to their clients, have been keeping a low profile and not willing to admit to any misrepresentation in mis-selling. Perhaps it is time to put pressure on them to "do the right thing' as of the like of DBS, Maybank etc. "
Regards
C P Tay
Reputation as financial services hub
Hi Mr. Tan,
I have been quietly watching you championing for those who have lost their money at minibonds and High Notes. And, I must congratulate you as it is a good first success step that ST reported that the 3 banks may compensate the "vulnerable".
I have to tell you that I also bought the minibonds, series 2, although a small sum only.
I did not seek out for such an investment. I think I went to May Bank 2 years ago to do an FD, and the RM sold it to me.
Also, with the explanation, I was given to understand that I bought the bonds of these 7 organisations. Bonds should be quite safe right esp if held to maturity?
I remembered very clearly that I asked him what was the risk?
He told me that the risk is - if any of the 7 organisations went under , then I would lose the portion depending what is the percentage of the bonds. So, I calculated the risk. At most 1 company go under, then I should still get back he rest of the money from the balance of the bonds in the basket I remembered asking him this scenario, and he did not disagree with me. Looking at the list of the 7 big companies, the chance of 1 going under is slim leave alone more than one company going under.
No time during our conversation was Lehman Bros a risk analysis factor.
My friend, who has low risk appetite and is an accountancy grad, is also affected when she bought High Notes (given the understanding that in the worse case scenario, she would get the full sum back if held until maturity). Again, she did not seek out the investment, she went to DBS to do an FD.
Hence, my main point here is that - it is not only the vulnerable is affected. Someone with degree is also affected.
The Govt need to deal with banks who gave misleading info to consumers , if it wants its banks and our financial services here to retain a reputation as a reliable financial service hub.
KKW
I have been quietly watching you championing for those who have lost their money at minibonds and High Notes. And, I must congratulate you as it is a good first success step that ST reported that the 3 banks may compensate the "vulnerable".
I have to tell you that I also bought the minibonds, series 2, although a small sum only.
I did not seek out for such an investment. I think I went to May Bank 2 years ago to do an FD, and the RM sold it to me.
Also, with the explanation, I was given to understand that I bought the bonds of these 7 organisations. Bonds should be quite safe right esp if held to maturity?
I remembered very clearly that I asked him what was the risk?
He told me that the risk is - if any of the 7 organisations went under , then I would lose the portion depending what is the percentage of the bonds. So, I calculated the risk. At most 1 company go under, then I should still get back he rest of the money from the balance of the bonds in the basket I remembered asking him this scenario, and he did not disagree with me. Looking at the list of the 7 big companies, the chance of 1 going under is slim leave alone more than one company going under.
No time during our conversation was Lehman Bros a risk analysis factor.
My friend, who has low risk appetite and is an accountancy grad, is also affected when she bought High Notes (given the understanding that in the worse case scenario, she would get the full sum back if held until maturity). Again, she did not seek out the investment, she went to DBS to do an FD.
Hence, my main point here is that - it is not only the vulnerable is affected. Someone with degree is also affected.
The Govt need to deal with banks who gave misleading info to consumers , if it wants its banks and our financial services here to retain a reputation as a reliable financial service hub.
KKW
High risk, absymal return
Dear Kin Lian
You are certainly doing a great job for the community by bravely taking side against the establishments. If not for your effort at galvanizing support and media coverage I am sure the response by the banks will have been different.
My heart goes out to all the investors who have bought these derivatives without understanding the associated risks. I do not expect the vast majority of them to even have an inkling that these products can be so risky. After all when one steps into a bank and is told by their staffs that they have a very "safe" product to sell which yields higher than deposit rates then of course many will be simply sold by the fact that they are dealing with a reputable bank that will not dupe them.
I myself have been approached many time by staffs of banks wishing to sell me "products that are high yielding and safe." When I queried them further on their products abysmal return versus the risk they were unable to answer me. I guess they are only repeating what they have been taught not what they should know. I do not blame the staffs as most of the products they are selling have so many clauses, technicalities and conditions that they themselves are overwhelmed. I think the banks who sold these products should bear responsibility for any and all losses incurred by investors.
Well done and keep up the excellent work.
Paul (a fund manager)
You are certainly doing a great job for the community by bravely taking side against the establishments. If not for your effort at galvanizing support and media coverage I am sure the response by the banks will have been different.
My heart goes out to all the investors who have bought these derivatives without understanding the associated risks. I do not expect the vast majority of them to even have an inkling that these products can be so risky. After all when one steps into a bank and is told by their staffs that they have a very "safe" product to sell which yields higher than deposit rates then of course many will be simply sold by the fact that they are dealing with a reputable bank that will not dupe them.
I myself have been approached many time by staffs of banks wishing to sell me "products that are high yielding and safe." When I queried them further on their products abysmal return versus the risk they were unable to answer me. I guess they are only repeating what they have been taught not what they should know. I do not blame the staffs as most of the products they are selling have so many clauses, technicalities and conditions that they themselves are overwhelmed. I think the banks who sold these products should bear responsibility for any and all losses incurred by investors.
Well done and keep up the excellent work.
Paul (a fund manager)
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