Not an isolated case

Posted in Straits Times Forum

stalingrad
Today, 12:47 PM
I am somewhat amused by MAS’s reaction or the lack thereof recently. MAS asked the victims to complain to the FIs. Isn’t that similar to the police asking the victim in a robbery case to complain to the robber, and the one in a rape case to complain to the rapist? If someone is dealt with by one or two individuals of an FI unfairly and it is just an isolated case, then the approach adopted by MAS would be correct. The FI in this case is not part of the incident, and therefore will probably take actions to deal with the employees involved and take corrective actions such as compensating the victim.

But it seems to me the case involving the minibonds and similar products is not an isolated case and it does not involve just a few employees. Rather, it is probably a systemic problem and involves the banks systematically hiding truths from potential buyers and providing misleading information, and preying on the old, the retired and vulnerable, and the trusting type who does not read every fine print. In other words, the top brass of the FIs themselves are probably involved in the mis-selling. The fact that the reference entities are splashed across the top of the product information sheet in bold print, and even the bond ratings of the entities are shown prominently while hiding the key information like the role of Lehman and the CDS nature of the product in fine print, is prima facie evidence that the issuer and the FIs were out to mislead and to hide the truths about such products. In that case, what use is it for the victims to complain to the FIs? Instead of asking the victims to do that, MAS themselves should play a leading role to seek redress for the victims starting from the beginning.

One may even argue that there is malice involved, and this case should be treated as a fraud case, and call for not only a return of the original investment funds, but also punitive damages, which are only fair given that by investing in these bogus products, the victims have lost returns they could have earned otherwise. Thus, a good lawyer should be able to give the victim not only the full refund, but say 50% more as a compensation for their suffering and opportunity costs.

http://comment.straitstimes.com/showthread.php?t=14126&page=14