Nov 10, 2008
Suit against Lehman, UBS seeks an order certifying it as a class-action.
LEHMAN Brothers Holdings Inc's Chief Executive Officer Richard Fuld and UBS AG's US brokerage were accused in a lawsuit of misleading investors who bought Lehman's 'principal protected notes' before its September bankruptcy.
The complaint, filed on Nov 6 in federal court in Manhattan, claims Mr Fuld and 10 other past and current Lehman directors deceived investors about the risks of buying notes that are now almost worthless, Bloomberg news reported on Monday.
The suit seeks unspecified damages and an order certifying it as a class-action, or group lawsuit, on behalf of other investors.
Sales documents for the securities 'contained untrue statements of material fact and omitted other material facts', according to the complaint filed by Girard Gibbs LLP in San Francisco.
Lehman didn't disclose that repayment of the debt might be threatened by 'exposure to losses from its real estate and mortgage portfolio', and UBS Financial Services should have 'diligently' investigated the disclosures before helping sell the notes, the complaint said.
Mr George Sard, a spokesman for Mr Fuld, didn't respond to a message seeking comment.
Monday, November 10, 2008
Joseph Stiglitz
Joseph Stiglitz shared the Nobel prize in Economics in 2001 for helping to develop a theory of assymetrical information which showed that only under exceptional circumstances are markets efficient.
Prof Stiglitz argued that inadequate regulation has caused the global financial crisis. He argued for stronger regulation relating to corporate governance, pay, lending practices, etc.
Here are some of his remarks in a debate organised by the Economist magazine.
> The current crisis is caused, in part, by inadequate regulation.
> Financial crisis has occurred quite regularly in recent decades. They have occured in developed and developed countries. The only countries that have been spared so far are thsoe with strong regulatory frameworks.
> In each case, the crisis has affected not just the lenders and borrowers, but also innocent bystanders. Workers have been thrown out of jobs. Governments had to intervene.
> Regulations are necessary to restore confidence.
Prof Stiglitz argued that inadequate regulation has caused the global financial crisis. He argued for stronger regulation relating to corporate governance, pay, lending practices, etc.
Here are some of his remarks in a debate organised by the Economist magazine.
> The current crisis is caused, in part, by inadequate regulation.
> Financial crisis has occurred quite regularly in recent decades. They have occured in developed and developed countries. The only countries that have been spared so far are thsoe with strong regulatory frameworks.
> In each case, the crisis has affected not just the lenders and borrowers, but also innocent bystanders. Workers have been thrown out of jobs. Governments had to intervene.
> Regulations are necessary to restore confidence.
Quality of financial advice and fact find
Sunday Times 9 Nov 2008
Under the Financial Advisers Act (FAA), financial institutions and their representatives or financial advisers (FAs) are required to have a reasonable basis for recommending investment products to their customers.
The Act states that an FA must collect and document from the client information such as his financial objectives; risk tolerance; employment status; financial situation including assets, liabilities, cash flow and income; and current investment portfolio.
However, clients may choose not to provide the above information or choose to opt out from receiving advice. In such cases, the FA has to highlight to the client that it is the latter's responsibility to ensure that the product selected is suitable.
The FA may then proceed with his request for the transaction.
The Monetary Authority of Singapore (MAS) has encouraged the industry to improve the quality of advice and extent of fact-find.
It also expects FAs to have additional safeguards when dealing with clients with limited knowledge of investment products and who may find it difficult to understand the features of complex investment products.
Whether there is a breach of the FAA would depend on the facts and circumstances of a particular case.
Breaches of the FAA are punishable by a range of actions, including fines and imprisonment.
In particular, Section 27 of the Act provides that an FA is liable to pay damages to an investor who suffers loss or damage arising from advice that was not supported by a reasonable basis for recommending a certain product.
In addition, MAS may also take other regulatory actions such as issuing a prohibition order to bar the contravening person from providing financial advisory service for a fixed period.
Under the Financial Advisers Act (FAA), financial institutions and their representatives or financial advisers (FAs) are required to have a reasonable basis for recommending investment products to their customers.
The Act states that an FA must collect and document from the client information such as his financial objectives; risk tolerance; employment status; financial situation including assets, liabilities, cash flow and income; and current investment portfolio.
However, clients may choose not to provide the above information or choose to opt out from receiving advice. In such cases, the FA has to highlight to the client that it is the latter's responsibility to ensure that the product selected is suitable.
The FA may then proceed with his request for the transaction.
The Monetary Authority of Singapore (MAS) has encouraged the industry to improve the quality of advice and extent of fact-find.
It also expects FAs to have additional safeguards when dealing with clients with limited knowledge of investment products and who may find it difficult to understand the features of complex investment products.
Whether there is a breach of the FAA would depend on the facts and circumstances of a particular case.
Breaches of the FAA are punishable by a range of actions, including fines and imprisonment.
In particular, Section 27 of the Act provides that an FA is liable to pay damages to an investor who suffers loss or damage arising from advice that was not supported by a reasonable basis for recommending a certain product.
In addition, MAS may also take other regulatory actions such as issuing a prohibition order to bar the contravening person from providing financial advisory service for a fixed period.
Leadership styles
Hi Mr. Tan KL
President elect Obama is a good speaker. But he has no experience at leading a country or even a state. Will be make an effective president? What are your views?
REPLY
I do not wish to comment about President elect Obama specifically.
I like to view my general about leadership. I shall describe them as the "democratic" style and the "authoritarian" style.
The democratic style has the following characteristics:
> the leader has a clear vision with strong values and principles
> is able to attract capable people
> listens to diverse views and make the best balanced decision
> is ready to monitor the implementation and adapt according to the circumstances
The authoritian stlye hs the following characteristics:
> a strong and capable leader
> makes most of the decisions
> attracts loyal followers and implementators
> able to make major decisions and moves fast
Each style of leadership has its strengths and shortcomings. I believe that both style can succeed.
President elect Obama is a good speaker. But he has no experience at leading a country or even a state. Will be make an effective president? What are your views?
REPLY
I do not wish to comment about President elect Obama specifically.
I like to view my general about leadership. I shall describe them as the "democratic" style and the "authoritarian" style.
The democratic style has the following characteristics:
> the leader has a clear vision with strong values and principles
> is able to attract capable people
> listens to diverse views and make the best balanced decision
> is ready to monitor the implementation and adapt according to the circumstances
The authoritian stlye hs the following characteristics:
> a strong and capable leader
> makes most of the decisions
> attracts loyal followers and implementators
> able to make major decisions and moves fast
Each style of leadership has its strengths and shortcomings. I believe that both style can succeed.
Investigate the creators of the structured products?
Hi Mr. Tan
I see that the International Panel of MAS include the CEOs of Morgan Stanley and Merrill Lynch, who are responsible for creating the Pinnacle Notes and the Jubilee Notes. DBS, which is subsidary of Temasek, creates the High Notes.
Is this the reason why MAS is reluctant to go after these investment banks that created these toxic products?
REPLY
We still do not know if MAS is investing the investment banks that created these structured products. So far, we have not heard of any news from this angle.
The only news is that the distributors are encouraged by the MAS to compensate the "vulnerable" investors in full, and to seek a "fair settlement" with the other investors. It appears that the claims of the non-vulnerable investors are being rejected on the grounds that there were "no mis-selling".
I see that the International Panel of MAS include the CEOs of Morgan Stanley and Merrill Lynch, who are responsible for creating the Pinnacle Notes and the Jubilee Notes. DBS, which is subsidary of Temasek, creates the High Notes.
Is this the reason why MAS is reluctant to go after these investment banks that created these toxic products?
REPLY
We still do not know if MAS is investing the investment banks that created these structured products. So far, we have not heard of any news from this angle.
The only news is that the distributors are encouraged by the MAS to compensate the "vulnerable" investors in full, and to seek a "fair settlement" with the other investors. It appears that the claims of the non-vulnerable investors are being rejected on the grounds that there were "no mis-selling".
Decisions of FiDREC
I wish to ask investors who have lodged a complaint with FiDREC and received their decision to share your experience. Do you feel that your side of the issue has been fairly considered by FiDREC?
This will help other investors to decide if they wish to submit their case to FiDREC or to take legal action.
This will help other investors to decide if they wish to submit their case to FiDREC or to take legal action.
Investors should be aware about the risk: MM
Hi Mr. Tan,
I am quite discouraged by the lack of action by MAS. Even MM said that the investor should be aware that they are taking risk by going for 5%, instead of 1%.
Many investors could have received 2% as they are investing a large sum of money. We thought that the higher interest rate of 5% is due to locking up our money for 5 years, which we are prepared to accept. I was not aware that the product is so highly risky. Why should I risk my total principal just to get 3% more? Does MM know the facts?
What is the best course of action now?
REPLY
I think MM should know the facts as they are contained in several petitions submitted to MAS. They are also well covered in the newspapers.
Although the lack of progress is discouraging for the investors, my suggestions are:
1. Spend $120 to make a statutory declaration to state honestly how you were misled into making this investment.
2. Submit your claim again to the financial institution with the statutory declaration
3. If it is rejected by the financial institution (or rejected again, if you have been rejected earlier), you can submit your claim to FiDREC.
4. If many cases were by other investors were rejected by FiDREC, you can take a collective legal action.
The investors can still hope that the government in Hong Kong or USA can take legal action against on the financial institution. If the financial institution are found to be acted wrongfully, then our government may have to take similar action.
I am quite discouraged by the lack of action by MAS. Even MM said that the investor should be aware that they are taking risk by going for 5%, instead of 1%.
Many investors could have received 2% as they are investing a large sum of money. We thought that the higher interest rate of 5% is due to locking up our money for 5 years, which we are prepared to accept. I was not aware that the product is so highly risky. Why should I risk my total principal just to get 3% more? Does MM know the facts?
What is the best course of action now?
REPLY
I think MM should know the facts as they are contained in several petitions submitted to MAS. They are also well covered in the newspapers.
Although the lack of progress is discouraging for the investors, my suggestions are:
1. Spend $120 to make a statutory declaration to state honestly how you were misled into making this investment.
2. Submit your claim again to the financial institution with the statutory declaration
3. If it is rejected by the financial institution (or rejected again, if you have been rejected earlier), you can submit your claim to FiDREC.
4. If many cases were by other investors were rejected by FiDREC, you can take a collective legal action.
The investors can still hope that the government in Hong Kong or USA can take legal action against on the financial institution. If the financial institution are found to be acted wrongfully, then our government may have to take similar action.
HK: Probe into minibonds bankers wins support
Bonnie ChenandAdele Wong
Monday, November 10, 2008
The chances of bankers being summoned to explain the Lehman Brothers minibond fiasco grew stronger yesterday after the largest party in the Legislative Council indicated support for such a motion.
The move comes despite a warning by Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung that the concern raised by foreign banks over a legislative inquiry may have an adverse effect on the business environment.
Chan said he believes the banks involved would probably buy back the minibonds next month.
The motion to summon bankers can only be passed if it gets majority support from lawmakers representing both the geographical and functional constituencies.
Thirteen of the functional constituency lawmakers are expected to support the motion but they will still need at least three votes from the Democratic Alliance for the Betterment and Progress of Hong Kong.
DAB chairman Tam Yiu-chung said the party will decide tomorrow whether a Legco investigation will affect the time of compensation and Hong Kong's status as an international financial center.
But another DAB member, Wong Tin-kwong representing the import and export sector, said he was inclined to support the motion.
"If the issue is to be investigated, it has to be tackled in the right direction," he said.
Only three former Liberal Party members and David Li Kwok-po of the finance sector have said they will vote against the motion. However, the pan-democrats said Li should not vote since he is chairman of the Bank of East Asia.
Civic party chairwoman Audrey Eu Yuet-mee said an open investigation by Legco would be fair to all sides. A source said the government is trying to get the DAB and some functional constituency independent legislators to vote against the motion.
Monday, November 10, 2008
The chances of bankers being summoned to explain the Lehman Brothers minibond fiasco grew stronger yesterday after the largest party in the Legislative Council indicated support for such a motion.
The move comes despite a warning by Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung that the concern raised by foreign banks over a legislative inquiry may have an adverse effect on the business environment.
Chan said he believes the banks involved would probably buy back the minibonds next month.
The motion to summon bankers can only be passed if it gets majority support from lawmakers representing both the geographical and functional constituencies.
Thirteen of the functional constituency lawmakers are expected to support the motion but they will still need at least three votes from the Democratic Alliance for the Betterment and Progress of Hong Kong.
DAB chairman Tam Yiu-chung said the party will decide tomorrow whether a Legco investigation will affect the time of compensation and Hong Kong's status as an international financial center.
But another DAB member, Wong Tin-kwong representing the import and export sector, said he was inclined to support the motion.
"If the issue is to be investigated, it has to be tackled in the right direction," he said.
Only three former Liberal Party members and David Li Kwok-po of the finance sector have said they will vote against the motion. However, the pan-democrats said Li should not vote since he is chairman of the Bank of East Asia.
Civic party chairwoman Audrey Eu Yuet-mee said an open investigation by Legco would be fair to all sides. A source said the government is trying to get the DAB and some functional constituency independent legislators to vote against the motion.
Credit default of Pinnacle Notes Series 9
Dear Mr. Tan,
We were notified by Elgin Ting of OCBC securities that redemption event may shortly occur for Pinnacle Notes Series 9 as a result of credit events. This is urgent and of paramount importance for those who are exposed to it.
Before allowing the redemption to happen, can MAS, SIAS or other professional bodies help look into the matter instead of letting the arranger (Morgan Stanley) call the shot? Can it be saved?
I'm befuddled by the horrendous risk factors stated in the letter relating to Synthetic CDO Securities, CDO Squared Securities, Credit Commodity linked Securities and Asset Backed Securities. Please help post this in your blog.
S8Neo
REPLY
You can oranise a collective letter to be sent to MAS, if you wish.
Before you do so, you can check the facts. I believe that a credit event occurs when a certain number of the underlying assets have failed - in accordance with a key term of the structured product.
When this happens, the total amount invested is used to pay the counter-party of the credit default swap. This is like paying an insurance claim - when the insured event occurs. In this case, the investors of the structured product is the insurer of the event and the swap counter-party is the recipient of the payment.
Many investors are shocked that they are exposed to this type of risk - which they were not propertly informed at the time of their investment. In additional, they were also exposed to the risk of default of any of several reference entity.
These types of risks apply to all the other "credit linked notes" as well. Some have failed now. The others may face the same outcome later. If they are likely, they may avoid a credit event.
We were notified by Elgin Ting of OCBC securities that redemption event may shortly occur for Pinnacle Notes Series 9 as a result of credit events. This is urgent and of paramount importance for those who are exposed to it.
Before allowing the redemption to happen, can MAS, SIAS or other professional bodies help look into the matter instead of letting the arranger (Morgan Stanley) call the shot? Can it be saved?
I'm befuddled by the horrendous risk factors stated in the letter relating to Synthetic CDO Securities, CDO Squared Securities, Credit Commodity linked Securities and Asset Backed Securities. Please help post this in your blog.
S8Neo
REPLY
You can oranise a collective letter to be sent to MAS, if you wish.
Before you do so, you can check the facts. I believe that a credit event occurs when a certain number of the underlying assets have failed - in accordance with a key term of the structured product.
When this happens, the total amount invested is used to pay the counter-party of the credit default swap. This is like paying an insurance claim - when the insured event occurs. In this case, the investors of the structured product is the insurer of the event and the swap counter-party is the recipient of the payment.
Many investors are shocked that they are exposed to this type of risk - which they were not propertly informed at the time of their investment. In additional, they were also exposed to the risk of default of any of several reference entity.
These types of risks apply to all the other "credit linked notes" as well. Some have failed now. The others may face the same outcome later. If they are likely, they may avoid a credit event.
Loss in the Singapore reserves
Dear Mr. Tan Kin Lian
I am getting worried about the financial crisis that Singapore is facing. MM said that Singapore has strong reserves. I am not sure if the reserves are still there.
How much has Singapore invested in the banks like UBS, Merrill Lynch, Citigroup and other banks? How much is Singapore guaranteeing in the IR project by Sands? Why should Singapore invest in the global banks when they are in deep trouble? Are we trying to bail them out?
REPLY
I do not know how much has been invested in these global banks and also the terms of the investments. Perhaps, someone can do some research and share the information here.
I recall that, in some cases, the investments were made in bonds, so the actual loss may not be that large - although the share price may have dropped a lot. In the case of Merrill Lynch, there was an arrangement for a compensation in case the share price dropped during a certain period. This helped to reduce the loss. In fact, it turned out to be profitable for us.
At the time of the investment, I personally thought that it was a good opportunity to invest in these banks at the knocked down price. I was not aware about the extent of the leverage and risks carried in their books. With the benefit of hindsight, we should not have have made these investments, but these facts were not known at that time - at least to the general public.
I do not recall any mention about guaranteeing the loan by Sands. But, I think that something should be done to keep the project from being a white elephant. The global financial crisis was unexpected when the project was approved two years ago. How the world has changed in a short time!
I am getting worried about the financial crisis that Singapore is facing. MM said that Singapore has strong reserves. I am not sure if the reserves are still there.
How much has Singapore invested in the banks like UBS, Merrill Lynch, Citigroup and other banks? How much is Singapore guaranteeing in the IR project by Sands? Why should Singapore invest in the global banks when they are in deep trouble? Are we trying to bail them out?
REPLY
I do not know how much has been invested in these global banks and also the terms of the investments. Perhaps, someone can do some research and share the information here.
I recall that, in some cases, the investments were made in bonds, so the actual loss may not be that large - although the share price may have dropped a lot. In the case of Merrill Lynch, there was an arrangement for a compensation in case the share price dropped during a certain period. This helped to reduce the loss. In fact, it turned out to be profitable for us.
At the time of the investment, I personally thought that it was a good opportunity to invest in these banks at the knocked down price. I was not aware about the extent of the leverage and risks carried in their books. With the benefit of hindsight, we should not have have made these investments, but these facts were not known at that time - at least to the general public.
I do not recall any mention about guaranteeing the loan by Sands. But, I think that something should be done to keep the project from being a white elephant. The global financial crisis was unexpected when the project was approved two years ago. How the world has changed in a short time!
Sunday, November 09, 2008
Obama's Day
YES. WE CAN. This is our moment. This is our time ... that out of many, we are one; that while we breathe, we hope, and where we are met with cynicism and doubt, and those who tell us that we can't, we will respond ... Yes, we can.
CHANGE. It's been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come to America.
LEADERSHIP. To all those watching tonight from beyond our shores ... our stories are singular, but our destiny is shared, and a new dawn of American leadership is at hand.
I HEAR YOU. To those Americans whose support I have yet to earn ... I may not have won your vote, but I hear your voices, I need your help, and I will be your president too.
UNITY. Let us summon a new spirit of patrotism, of service and responsibility, where each of us resolves to pitch in and work harder and look after not only ourselves, but each other ... in this country, we rise and fall as a nation, and one people.
VICTOR. Above all, I will never forget who this victory truly belongs to - it belongs to you.
CHALLENGES. The road ahead will be long. our climb will be steep. We may not get there in one year or one term, but America, I have never been more hopeful that I am tonight that we will get there. I promise you - we as a people will get there.
CHANGE. It's been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come to America.
LEADERSHIP. To all those watching tonight from beyond our shores ... our stories are singular, but our destiny is shared, and a new dawn of American leadership is at hand.
I HEAR YOU. To those Americans whose support I have yet to earn ... I may not have won your vote, but I hear your voices, I need your help, and I will be your president too.
UNITY. Let us summon a new spirit of patrotism, of service and responsibility, where each of us resolves to pitch in and work harder and look after not only ourselves, but each other ... in this country, we rise and fall as a nation, and one people.
VICTOR. Above all, I will never forget who this victory truly belongs to - it belongs to you.
CHALLENGES. The road ahead will be long. our climb will be steep. We may not get there in one year or one term, but America, I have never been more hopeful that I am tonight that we will get there. I promise you - we as a people will get there.
Is this fair?
Contributed by R Williams
Inflation keeps rising … 5 to 6%
Savings rate depressed … 1 to 2%.
Your fixed deposit has just matured, or you have some hard-earned life savings to put to work.
Like any prudent saver, you look for reasonable return, reasonable risk. You were not prepared to gamble with these savings.
You were attracted by promotional literature and bank employees touting " 5% Return ! , … Solid Foundations !, … Low Risks !, … Defensive !, …".
You signed the dotted line, "comforted" by employees from trusted institutions.
SURPRISE ! SURPRISE ! : you have just lost/risked your entire savings, buying insurance you did not know about, and placing bets against the failure of any one of 6 company names prominently marketed to you, but not explained to you that the actual probability of failure is, in fact, multiplied 6-fold, and not decreased 1/6th , or that the risks were compounded to include the failure of 10 of 150 other companies/securities you were never told or heard of. Did you suddenly change your mind and decide to gamble away your entire savings ?
Did the advertisements or anyone from the banks and FIs tell you before you signed on the dotted line that you have actually :
1) bought insurance from, and
2) swapped bets with, Lehman/Merrill Lynch/Morgan Stanley/DBS, and
3) underwrote extremely high risks with 150 companies/securities that were never revealed to you, as an owner of these products, even till today ?
Did you know that when you stepped into the bank or FI, you actually wandered into a CASINO and you unwittingly placed BETS with Lehman/Merrill Lynch/Morgan Stanley or DBS ?
Did you realize that you were not told of the REAL ODDS, unlike in a REAL CASINO ?
Did you know that you were actually buying INSURANCE protecting Lehman and the other banks manufacturing these poisonous products ?
Did you know that you were actually TRADING RISKS with Lehman and these banks ?
Were you blissfully thinking that you were just putting your hard-earned savings to work for a paltry 5% return over 5 long years ?
Were you were expected to be conversant with, let alone learn, esoteric terms like : "counter-party risks", "first-to-default", "credit-default swaps" , "collaterised debt obligations" etc , financial concepts which require deep understanding of complex mathematical models ? You had to be a mathematician, a financial engineer and an actuary ( with a real interest in probability, statistics, risks analysis ) to appreciate even a bit of what was offered, and run through complicated mathematical models to discover the full risks, not just the vigorously promoted false pretense of the "low" risk of 1 of 6 known companies collapsing. Does this not amount to deception ?
If this is the case, and the products were sold through advertisements not highlighting the actual risks of the products, and sales employees not qualified with the above skills, how can loyal and trusting customers be now ridiculed with taunts of "buyers beware" and be told that you are "not vulnerable" ?
If these products require so much specialized knowledge and skills to even begin to understand them properly, how can they be sold like a "commodity" ?
Whose responsibility is it if the mass market is sold "commodity" products which turn out to be cleverly disguised and harmful to consumers ? Should we expect the consumers to suffer the pain and anguish and "move on" ?
"Banks not out to cheat" ?
The housing bubble started to burst in 2006, yet the products were engineered and sold in 2006. In other words, when the products were first sold, they were already "destined to fail right from the start". Furthermore, by selling the products in different Series ( to give the appearance of overwhelming "success", and thereby, sucking in more and more and more victims ) and, to even continue selling in 2007 and late into 2008, with full knowledge of the rotting "underlying securities" ( "liar loans" in US mortgages which made up the CDOs are loans with no chance of repayment as they were given without any proof of income nor collateral ), does this not show intent to defraud ?
Yet, no visible action is being taken to punish wrong-doers, especially the discredited "investment" banks, whereas in the United States, State Regulators and the Courts have been UNIMPRESSED with, and REJECTED the banks' defence of "buyers beware" and " caveat emptor" . Instead, banks there have been fined heavily and forced to completely return billions to individual customers, Municipalities ( Town Councils ), School Districts, etc.
Perversely, over here, lower-level bank employees are now becoming the second wave of victims.
The original victims and their loved ones are the people ridiculed and labelled "greedy" ( for 5% return on savings locked in for 5 long years ? ), "not vulnerable" ( for being under 62 and educated ? ), "they deserve it for trusting people" ( for believing in the banks and FIs ? ), "hard luck" ( for not keeping tape-recorded evidence of conversations, for not disputing what was hurriedly written about them, for not doing due diligence on 85-page prospectuses, for not knowing they were in a betting game of trading risks with counter-parties, etc).
For being simple-minded human beings, the 10,000 victims are the ones punished, trying to be prudent savers. Now, we have a second wave of victims.
Is this fair ?
R Williams
Inflation keeps rising … 5 to 6%
Savings rate depressed … 1 to 2%.
Your fixed deposit has just matured, or you have some hard-earned life savings to put to work.
Like any prudent saver, you look for reasonable return, reasonable risk. You were not prepared to gamble with these savings.
You were attracted by promotional literature and bank employees touting " 5% Return ! , … Solid Foundations !, … Low Risks !, … Defensive !, …".
You signed the dotted line, "comforted" by employees from trusted institutions.
SURPRISE ! SURPRISE ! : you have just lost/risked your entire savings, buying insurance you did not know about, and placing bets against the failure of any one of 6 company names prominently marketed to you, but not explained to you that the actual probability of failure is, in fact, multiplied 6-fold, and not decreased 1/6th , or that the risks were compounded to include the failure of 10 of 150 other companies/securities you were never told or heard of. Did you suddenly change your mind and decide to gamble away your entire savings ?
Did the advertisements or anyone from the banks and FIs tell you before you signed on the dotted line that you have actually :
1) bought insurance from, and
2) swapped bets with, Lehman/Merrill Lynch/Morgan Stanley/DBS, and
3) underwrote extremely high risks with 150 companies/securities that were never revealed to you, as an owner of these products, even till today ?
Did you know that when you stepped into the bank or FI, you actually wandered into a CASINO and you unwittingly placed BETS with Lehman/Merrill Lynch/Morgan Stanley or DBS ?
Did you realize that you were not told of the REAL ODDS, unlike in a REAL CASINO ?
Did you know that you were actually buying INSURANCE protecting Lehman and the other banks manufacturing these poisonous products ?
Did you know that you were actually TRADING RISKS with Lehman and these banks ?
Were you blissfully thinking that you were just putting your hard-earned savings to work for a paltry 5% return over 5 long years ?
Were you were expected to be conversant with, let alone learn, esoteric terms like : "counter-party risks", "first-to-default", "credit-default swaps" , "collaterised debt obligations" etc , financial concepts which require deep understanding of complex mathematical models ? You had to be a mathematician, a financial engineer and an actuary ( with a real interest in probability, statistics, risks analysis ) to appreciate even a bit of what was offered, and run through complicated mathematical models to discover the full risks, not just the vigorously promoted false pretense of the "low" risk of 1 of 6 known companies collapsing. Does this not amount to deception ?
If this is the case, and the products were sold through advertisements not highlighting the actual risks of the products, and sales employees not qualified with the above skills, how can loyal and trusting customers be now ridiculed with taunts of "buyers beware" and be told that you are "not vulnerable" ?
If these products require so much specialized knowledge and skills to even begin to understand them properly, how can they be sold like a "commodity" ?
Whose responsibility is it if the mass market is sold "commodity" products which turn out to be cleverly disguised and harmful to consumers ? Should we expect the consumers to suffer the pain and anguish and "move on" ?
"Banks not out to cheat" ?
The housing bubble started to burst in 2006, yet the products were engineered and sold in 2006. In other words, when the products were first sold, they were already "destined to fail right from the start". Furthermore, by selling the products in different Series ( to give the appearance of overwhelming "success", and thereby, sucking in more and more and more victims ) and, to even continue selling in 2007 and late into 2008, with full knowledge of the rotting "underlying securities" ( "liar loans" in US mortgages which made up the CDOs are loans with no chance of repayment as they were given without any proof of income nor collateral ), does this not show intent to defraud ?
Yet, no visible action is being taken to punish wrong-doers, especially the discredited "investment" banks, whereas in the United States, State Regulators and the Courts have been UNIMPRESSED with, and REJECTED the banks' defence of "buyers beware" and " caveat emptor" . Instead, banks there have been fined heavily and forced to completely return billions to individual customers, Municipalities ( Town Councils ), School Districts, etc.
Perversely, over here, lower-level bank employees are now becoming the second wave of victims.
The original victims and their loved ones are the people ridiculed and labelled "greedy" ( for 5% return on savings locked in for 5 long years ? ), "not vulnerable" ( for being under 62 and educated ? ), "they deserve it for trusting people" ( for believing in the banks and FIs ? ), "hard luck" ( for not keeping tape-recorded evidence of conversations, for not disputing what was hurriedly written about them, for not doing due diligence on 85-page prospectuses, for not knowing they were in a betting game of trading risks with counter-parties, etc).
For being simple-minded human beings, the 10,000 victims are the ones punished, trying to be prudent savers. Now, we have a second wave of victims.
Is this fair ?
R Williams
SCMP:Bank admits substandard tactics
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=QFNVC9DS4FG6&linkid=bfabf212-c096-4704-8aeb-8fb450dc7661&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
8 Nov 2008
Joyce Man
Standard Chartered Bank admitted yesterday it had used substandard methods to sell derivatives issued by bankrupt firm Lehman Brothers to some customers.
Benjamin Hung Pi-cheng, Standard Chartered executive director and chief executive officer, said the bank had concluded an initial investigation. Although it had not found any systemic problems, there were cases where sales methods had been below the bank’s internal standards.
“The bank is willing to bear full responsibility and will handle [the cases] accordingly,” he said.
Meanwhile, Bank of China (Hong Kong) settled with two customers yesterday.
Standard Chartered customers have been complaining since September along with thousands of investors who bought Lehman-related products from other banks.
The bank sold Lehman-issued derivatives, but not minibonds, to 2,200 customers, 10 per cent of whom were elderly, Mr Hung said. It is initially dealing with customers aged 65 and over with little investment experience. Some elderly customers were financially well-educated, he said.
The bank had formed an independent group covering sales issues and would conduct individual and thorough investigations of each case. Mr Hung did not disclose the total amount invested, or what compensation, if any, had been agreed.
Elsie Ho, representing a group of Standard Chartered complainants, said so far two investors out of about 150 who registered with the group had reported settling with the bank.
She was surprised to learn that more than 2,000 customers were involved, instead of the 300 she had estimated.
The Monetary Authority referred 24 more cases to the Securities and Futures Commission yesterday, bringing the total to 96.
BOCHK settled with two customers, named only as Mr Wong and Ms Tseng. Mr Wong was seen leaving the bank smiling yesterday.
The customers were satisfied with the arrangements, said the Democratic Alliance for the Betterment and Progress of Hong Kong, which had been helping them.
The group Allied Victims of Lehman Products will hold a candle-light vigil this evening.
8 Nov 2008
Joyce Man
Standard Chartered Bank admitted yesterday it had used substandard methods to sell derivatives issued by bankrupt firm Lehman Brothers to some customers.
Benjamin Hung Pi-cheng, Standard Chartered executive director and chief executive officer, said the bank had concluded an initial investigation. Although it had not found any systemic problems, there were cases where sales methods had been below the bank’s internal standards.
“The bank is willing to bear full responsibility and will handle [the cases] accordingly,” he said.
Meanwhile, Bank of China (Hong Kong) settled with two customers yesterday.
Standard Chartered customers have been complaining since September along with thousands of investors who bought Lehman-related products from other banks.
The bank sold Lehman-issued derivatives, but not minibonds, to 2,200 customers, 10 per cent of whom were elderly, Mr Hung said. It is initially dealing with customers aged 65 and over with little investment experience. Some elderly customers were financially well-educated, he said.
The bank had formed an independent group covering sales issues and would conduct individual and thorough investigations of each case. Mr Hung did not disclose the total amount invested, or what compensation, if any, had been agreed.
Elsie Ho, representing a group of Standard Chartered complainants, said so far two investors out of about 150 who registered with the group had reported settling with the bank.
She was surprised to learn that more than 2,000 customers were involved, instead of the 300 she had estimated.
The Monetary Authority referred 24 more cases to the Securities and Futures Commission yesterday, bringing the total to 96.
BOCHK settled with two customers, named only as Mr Wong and Ms Tseng. Mr Wong was seen leaving the bank smiling yesterday.
The customers were satisfied with the arrangements, said the Democratic Alliance for the Betterment and Progress of Hong Kong, which had been helping them.
The group Allied Victims of Lehman Products will hold a candle-light vigil this evening.
SCMP:Minibonds meeting ends in recriminations
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=QFNVC9DS4FG6&linkid=9d8feb82-75fc-48b9-a551-9f7eb64f0243&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
8 Nov 2008
Ambrose Leung
A meeting between bankers and lawmakers over how to resolve the Lehman Brothers minibonds saga ended with complaints on both sides yesterday, with some politicians saying “no sincerity” had been shown at the gathering.
Representatives of Hong Kong’s leading banks, who initiated the meeting, also complained about pressure on them to compensate affected investors ahead of next week’s vote, when lawmakers will decide on whether to invoke the Legislative Council (Powers and Privileges) Ordinance to investigate the issue.
The two-hour meeting at a private club in Central, which was organised by banking-sector lawmaker David Li Kwok-po, was attended by all major political parties and banks.
But several lawmakers, including Democrat Kam Nai- wai, Liberal Party chairwoman Miriam Lau Kinyee and Starry Lee Wai-king of the Democratic Alliance for the Betterment and Progress of Hong Kong, walked out after 20 minutes. “We cannot accept the bankers’ culture of chatting in a clubhouse,” Mr Kam said. “Unlike a social function, such an important issue must be discussed over a conference table.”
Financial services lawmaker Chim Pui-chung said he had hoped to discuss the steps banks would take to buy back the minibonds, but had been disappointed.
In the meeting, He Guangbei, chairman of the Hong Kong Association of Banks, said the banking sector was very concerned over the plight of small investors and had been working to resolve the issue.
“Everybody knows that the seriousness and wide-reaching effects of the financial tsunami are unprecedented and the banks were at the forefront of the wave when it hit. But even under these circumstances, the banks have still deployed huge resources and manpower to give priority to the Lehman Brothers incident,” Mr He said.
About 43,700 Hongkongers invested HK$15.7 billion in Lehmanlinked derivatives sold by local banks and stockbrokers. Most bought minibonds – which are not corporate bonds but high- risk investments deriving part of their value from the performance of underlying assets.
Civic Party leader Audrey Eu Yuetmee said: “During the entire meeting, not one banker stood up to say that if Legco invokes its special investigative powers it would affect their operations,” she said.
Lawmakers will vote on Wednesday to decide on whether a special subcommittee set up last month should be empowered to investigate the minibonds incident.
8 Nov 2008
Ambrose Leung
A meeting between bankers and lawmakers over how to resolve the Lehman Brothers minibonds saga ended with complaints on both sides yesterday, with some politicians saying “no sincerity” had been shown at the gathering.
Representatives of Hong Kong’s leading banks, who initiated the meeting, also complained about pressure on them to compensate affected investors ahead of next week’s vote, when lawmakers will decide on whether to invoke the Legislative Council (Powers and Privileges) Ordinance to investigate the issue.
The two-hour meeting at a private club in Central, which was organised by banking-sector lawmaker David Li Kwok-po, was attended by all major political parties and banks.
But several lawmakers, including Democrat Kam Nai- wai, Liberal Party chairwoman Miriam Lau Kinyee and Starry Lee Wai-king of the Democratic Alliance for the Betterment and Progress of Hong Kong, walked out after 20 minutes. “We cannot accept the bankers’ culture of chatting in a clubhouse,” Mr Kam said. “Unlike a social function, such an important issue must be discussed over a conference table.”
Financial services lawmaker Chim Pui-chung said he had hoped to discuss the steps banks would take to buy back the minibonds, but had been disappointed.
In the meeting, He Guangbei, chairman of the Hong Kong Association of Banks, said the banking sector was very concerned over the plight of small investors and had been working to resolve the issue.
“Everybody knows that the seriousness and wide-reaching effects of the financial tsunami are unprecedented and the banks were at the forefront of the wave when it hit. But even under these circumstances, the banks have still deployed huge resources and manpower to give priority to the Lehman Brothers incident,” Mr He said.
About 43,700 Hongkongers invested HK$15.7 billion in Lehmanlinked derivatives sold by local banks and stockbrokers. Most bought minibonds – which are not corporate bonds but high- risk investments deriving part of their value from the performance of underlying assets.
Civic Party leader Audrey Eu Yuetmee said: “During the entire meeting, not one banker stood up to say that if Legco invokes its special investigative powers it would affect their operations,” she said.
Lawmakers will vote on Wednesday to decide on whether a special subcommittee set up last month should be empowered to investigate the minibonds incident.
Exchange currency in a bank - an analogy
Posted at request of HS
Mr ABC is American currency expert. As there are a lot of counterfeit in the US currency, sometime money changers or even banks will ask Mr. ABC for verification.
Now, Mr ABC would like to tour Europe with his family and, being not the expert in the EURO, he decided to exchanged the EURO in the Big and reputable Bank, CAR Bank.
Soon after, Mr ABC discovered that some of the EURO are counterfeit. He went to CAR Bank and complain about it (the counterfiet EURO).
The Bank response :
1. You are a currency expert and you should know how to differentiate the counterfeit from the real !!
2. Buyer Beware - you should have checked all the pieces of the EURO before you leave the Bank, how can you just trust the bank teller.
3. No body asked you to come here and nobody put the knife over your neck to change the Euro.
Comments 2 and 3 are self explanatory, but I want to mention about comment No 1.
Being an expert in American currency does not equal to expert in currencies. So even though an investor is familiar with some financial product, no one should expect him, thus, to know all the financial product, in this case I refer to HN2, HN5, Minibond, Jubilee 3 etc.
HS
Mr ABC is American currency expert. As there are a lot of counterfeit in the US currency, sometime money changers or even banks will ask Mr. ABC for verification.
Now, Mr ABC would like to tour Europe with his family and, being not the expert in the EURO, he decided to exchanged the EURO in the Big and reputable Bank, CAR Bank.
Soon after, Mr ABC discovered that some of the EURO are counterfeit. He went to CAR Bank and complain about it (the counterfiet EURO).
The Bank response :
1. You are a currency expert and you should know how to differentiate the counterfeit from the real !!
2. Buyer Beware - you should have checked all the pieces of the EURO before you leave the Bank, how can you just trust the bank teller.
3. No body asked you to come here and nobody put the knife over your neck to change the Euro.
Comments 2 and 3 are self explanatory, but I want to mention about comment No 1.
Being an expert in American currency does not equal to expert in currencies. So even though an investor is familiar with some financial product, no one should expect him, thus, to know all the financial product, in this case I refer to HN2, HN5, Minibond, Jubilee 3 etc.
HS
Rejection letter by DBS
Hi Mr Tan Kin Lian
It's been a dismay after this long struggle for justice with DBS ending with yet another rejection letter from DBS on the appeal against their High Notes 5.
Even if we raised a number of direct and specific questions about the Mar and Jun letters from them urging and misleading investors into holding on to their Notes till the fateful day of 15 Sep, they simply refused to offer any replies on these questions.
The only thing that DBS keep referring to is that the investor has signed on the sales agreement, which we thought is the obvious otherwise how could the product be sold in the first place.
The appeal on mis-selling on the part of DBS and the many issues surrounding the complex product went totally unanswered.
What should we do now?
REPLY
You can sign a statutory declaration and bring it up to DBS again. The statutory declaration should state the grounds of mis-selling. If they still reject your complaint based on the statutory declaration, you can take it up to FiDREC. You can also join the collective legal action.
Read my blog:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
It's been a dismay after this long struggle for justice with DBS ending with yet another rejection letter from DBS on the appeal against their High Notes 5.
Even if we raised a number of direct and specific questions about the Mar and Jun letters from them urging and misleading investors into holding on to their Notes till the fateful day of 15 Sep, they simply refused to offer any replies on these questions.
The only thing that DBS keep referring to is that the investor has signed on the sales agreement, which we thought is the obvious otherwise how could the product be sold in the first place.
The appeal on mis-selling on the part of DBS and the many issues surrounding the complex product went totally unanswered.
What should we do now?
REPLY
You can sign a statutory declaration and bring it up to DBS again. The statutory declaration should state the grounds of mis-selling. If they still reject your complaint based on the statutory declaration, you can take it up to FiDREC. You can also join the collective legal action.
Read my blog:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.html
Saturday, November 08, 2008
Has MAS responded to the 3 petitions?
Someone asked if MAS has responded to me on the three petitions. I will give an update at the next meeting in Hong Lim Park on 15 November 2008.
Friday, November 07, 2008
Proposed terms of settlement
Submitted by Richard Woo
Maybe the refund, in full, by distributors, can be made on the condition, and mutually agreed with the investors, that it is put back on fixed deposit with the distributor, for example:
Refund by ABN [RBS] to go back on fixed deposit with RBS, refund by Maybank to go back on fixed deposit with Maybank, and so on.
Since investors had agreed to a waiting period of about 5 years to get their principal back, under the original terms of the investment, it may not sound unreasonable for distributors to suggest that the term of the deposits should be somewhere from, say, 3 to 5 years. The rate of interest payable on such deposits can be something “reasonable” and mutually agreed between the investors and the distributor/bank concerned. Such an arrangement may be beneficial to some extent to both sides.
For the banks/financial institutions, no cash outlay is involved, at least not before the maturity date of the deposits [and this also does not mean the holders of the deposits will withdraw all the funds on maturity], and it should be borne in mind that perhaps a large part of the funds used by investors in the purchase of the product could have emanated from external sources, e.g. accounts maintained with other banks/institutions.
Litigation may end up with bigger losses for one side or the other and in such a scenario any goodwill there is will be lost, presumably, for good. Investors should be accorded a settlement that would restore confidence in the banking/financial industry; any proposal for settlement that leaves a bitter taste in the mouth is, obviously, not something to be considered. Banks and the other institutions have to think long term and their reputation and future business interests may largely depend on the actions they take now.
Maybe, as an exception, these banks/financial institutions deserve special treatment in accounting procedures; maybe they should be accorded, by the authorities concerned, the option as to how they intend to write off the losses, for example, whether in one fell swoop or over a period of several years, starting, say, from the time when these deposits start to mature or when funds from them are being released. As can be seen, and if I am not wrong, such an arrangement would entail mainly book entries and “cash” is involved only much later. Their balance sheets may in fact take on a healthy glow. But I have to admit I could be wrong. If so, please point out.
Richard Woo
Maybe the refund, in full, by distributors, can be made on the condition, and mutually agreed with the investors, that it is put back on fixed deposit with the distributor, for example:
Refund by ABN [RBS] to go back on fixed deposit with RBS, refund by Maybank to go back on fixed deposit with Maybank, and so on.
Since investors had agreed to a waiting period of about 5 years to get their principal back, under the original terms of the investment, it may not sound unreasonable for distributors to suggest that the term of the deposits should be somewhere from, say, 3 to 5 years. The rate of interest payable on such deposits can be something “reasonable” and mutually agreed between the investors and the distributor/bank concerned. Such an arrangement may be beneficial to some extent to both sides.
For the banks/financial institutions, no cash outlay is involved, at least not before the maturity date of the deposits [and this also does not mean the holders of the deposits will withdraw all the funds on maturity], and it should be borne in mind that perhaps a large part of the funds used by investors in the purchase of the product could have emanated from external sources, e.g. accounts maintained with other banks/institutions.
Litigation may end up with bigger losses for one side or the other and in such a scenario any goodwill there is will be lost, presumably, for good. Investors should be accorded a settlement that would restore confidence in the banking/financial industry; any proposal for settlement that leaves a bitter taste in the mouth is, obviously, not something to be considered. Banks and the other institutions have to think long term and their reputation and future business interests may largely depend on the actions they take now.
Maybe, as an exception, these banks/financial institutions deserve special treatment in accounting procedures; maybe they should be accorded, by the authorities concerned, the option as to how they intend to write off the losses, for example, whether in one fell swoop or over a period of several years, starting, say, from the time when these deposits start to mature or when funds from them are being released. As can be seen, and if I am not wrong, such an arrangement would entail mainly book entries and “cash” is involved only much later. Their balance sheets may in fact take on a healthy glow. But I have to admit I could be wrong. If so, please point out.
Richard Woo
Saving the Financial Industry?
Contributed by RW
After destroying the savings of valued customers, we have to wonder if the financial industry, in its present form, is worth saving.
The carnage has now extended to our Town Councils.
The same pattern is seen elsewhere.
Tens of thousands of individuals in Hong Kong and Taiwan. In United States, UBS customers of products marketed in a remarkably similar manner are shocked to receive statements showing their investments are almost wiped out and are suing the bank.
Some United States Municipalities, School Districts, etc are on the verge of bankruptcy. Using derivatives, JPMorgan pitched a host of deals whose names alone are indecipherable. For Philadelphia International Airport, the bank sold something called a ``path-dependent knock-out swaption.''
Individual customers were unfairly tricked and trapped into products with long lists of secretive "underlying securities", purposely hidden from view. Perhaps, the key to the scam?
But if Town Councils, Municipalities, etc did not escape, what chance do individual customers have?
The banks and FIs should act promptly with humility and humanity, and not with tiny gestures. Your bold acts can still save the local industry and earn the enormous goodwill and gratitude of the victims and your other customers.
The costs of sustaining a futile public relations campaign, expensive legal advice, loss of management and staff focus on the real battles, fallout costs, opportunity costs, etc must easily exceed the amounts you need to return. In the United States, banks have returned customers their money in dubious products.
If this impasse continues, what future is there? Working-class individuals will never look "relationship" managers and "personal" bankers in the eye ever again. Rich individuals, burnt by collapse of hedge funds and wealth management investments, will avoid "private" bankers like the plague.
It is very sad when the mainstream media continues to come up with articles from its own employees or from commentators, without researching the trail of destruction, without regard for the feelings of the victims but instead to deride their intelligence, and focus on a tiny few who could afford to "move on". The distress, worries, fatigue and permanent psychological damage extends to not only the 10,000 victims, but their immediate families, relatives, friends and colleagues. The tipping point must surely be near.
In the United States, justice has been done and continues to be done. Banks are forced to pay back all customers in full and are heavily fined. Banks and FIs in Singapore can show the world that they do not need the prodding of the authorities to "do the right thing".
RW
After destroying the savings of valued customers, we have to wonder if the financial industry, in its present form, is worth saving.
The carnage has now extended to our Town Councils.
The same pattern is seen elsewhere.
Tens of thousands of individuals in Hong Kong and Taiwan. In United States, UBS customers of products marketed in a remarkably similar manner are shocked to receive statements showing their investments are almost wiped out and are suing the bank.
Some United States Municipalities, School Districts, etc are on the verge of bankruptcy. Using derivatives, JPMorgan pitched a host of deals whose names alone are indecipherable. For Philadelphia International Airport, the bank sold something called a ``path-dependent knock-out swaption.''
Individual customers were unfairly tricked and trapped into products with long lists of secretive "underlying securities", purposely hidden from view. Perhaps, the key to the scam?
But if Town Councils, Municipalities, etc did not escape, what chance do individual customers have?
The banks and FIs should act promptly with humility and humanity, and not with tiny gestures. Your bold acts can still save the local industry and earn the enormous goodwill and gratitude of the victims and your other customers.
The costs of sustaining a futile public relations campaign, expensive legal advice, loss of management and staff focus on the real battles, fallout costs, opportunity costs, etc must easily exceed the amounts you need to return. In the United States, banks have returned customers their money in dubious products.
If this impasse continues, what future is there? Working-class individuals will never look "relationship" managers and "personal" bankers in the eye ever again. Rich individuals, burnt by collapse of hedge funds and wealth management investments, will avoid "private" bankers like the plague.
It is very sad when the mainstream media continues to come up with articles from its own employees or from commentators, without researching the trail of destruction, without regard for the feelings of the victims but instead to deride their intelligence, and focus on a tiny few who could afford to "move on". The distress, worries, fatigue and permanent psychological damage extends to not only the 10,000 victims, but their immediate families, relatives, friends and colleagues. The tipping point must surely be near.
In the United States, justice has been done and continues to be done. Banks are forced to pay back all customers in full and are heavily fined. Banks and FIs in Singapore can show the world that they do not need the prodding of the authorities to "do the right thing".
RW
A favourable impression of Tunis
Tunis is the capital of Tunisia, a country in North Africa, next to Libya. It has a temperate, Mediterranean climate. It is cool and pleasant during my visit in November.
Tunis has a population of 2 million people. There is a large lake (actually part of the sea) that gives a shoreline to many parts of this charming city. Most of the houses or villas near the lake are low, less than four stories. The architecturial style is Mediterranean.
Tunisia was a French protectorate for 70 over years prior to independence in mid 1950s. The people speak Arabic and French.
I visited a beautiful town outside of Tunis called Sidi Bou Said. It is unusual, charming, picturesque and wonderful. Here are some pictures:
http://images.google.com/images?q=sidi+bou+said&rls=com.microsoft:en-us&ie=UTF-8&oe=UTF-8&um=1&sa=X&oi=image_result_group&resnum=4&ct=title
More about Tunisia
http://www.africa-business.com/features/tunisia.html
Tunis has a population of 2 million people. There is a large lake (actually part of the sea) that gives a shoreline to many parts of this charming city. Most of the houses or villas near the lake are low, less than four stories. The architecturial style is Mediterranean.
Tunisia was a French protectorate for 70 over years prior to independence in mid 1950s. The people speak Arabic and French.
I visited a beautiful town outside of Tunis called Sidi Bou Said. It is unusual, charming, picturesque and wonderful. Here are some pictures:
http://images.google.com/images?q=sidi+bou+said&rls=com.microsoft:en-us&ie=UTF-8&oe=UTF-8&um=1&sa=X&oi=image_result_group&resnum=4&ct=title
More about Tunisia
http://www.africa-business.com/features/tunisia.html
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