I have to block anonymous comments that are considered to be defamatory or insulting. These comments are directed at specific persons.
If you wish to state an honest opinion, you should give your real name. I will be willing to allow these comments through.
I like to ask readers to avoid referring to me as "a hero". I have blocked some of these comments. Some people use it in a cynical way. Others may have good intentions, but it is best to avoid this doubt.
Please help to keep this blog clean.
Monday, October 20, 2008
Response to Mr. Lim Hng Kiang and MAS
I have written a response to Mr. Lim Hng Kiang's statement in Parliament about the failure of the structured products linked to Lehman Brothers.
It is now published in http://www.theonlinecitizen.com/. I want the investors to have a strong heart that there is still a good chance to win this battle.
http://theonlinecitizen.com/2008/10/loss-of-hard-earned-savings/#comments
It is now published in http://www.theonlinecitizen.com/. I want the investors to have a strong heart that there is still a good chance to win this battle.
http://theonlinecitizen.com/2008/10/loss-of-hard-earned-savings/#comments
Independent financial advisers are not able to compensate investors
Dear Mr Tan,
I am an independent financial adviser rep who was spared the ordeal of this Minibond saga as my firm was unable to market structured products.
As a bystander, I commend for your effort in standing out for the individual retail investors who would otherwise be taken advantage by big financial organisations.
I am indeed impressed by your dedication in this whole entire episode, esp on how the statement to financial institution should be written. It was simple and comprehensive to most
adults.
While I have no doubts that any act of mis-selling should be punished and appropriate compensation should be made to retail investors. I think some of my industry players in the IFA industry may have to file for bankruptcy if they have to compensate their clients.
As you may not be aware, most of them are not very profitable and in this current environment when revenues are decreasing and rental costs are hiking, this minibond saga has put them into bigger trouble. Unlike the banks with deep pockets, most IFA firms have little capital to withstand this crisis.
On the individual adviser representative level, what's worse is that as each financial adviser representative is individually licensed, that individual is also liable for any compensation and unable to hide under any corporate veil. I am not sure if professional indemnity insurance could be used in this case. If not, the impact would be equally catastrophic.
These individual advisers became insurance companies to their clients just like the investors who invested in the minibonds.
I am not against your actions and in fact very impressed with it. But I just feel that some of the casualties in this crisis were actually ppl who actually wanted to do a better job than the banks by providing independent and objective advice. But they were caught in this mess. I sincerely hope that they can survive this ordeal and become stronger.
You can quote my reply in your blog but please do not quote my name as I do not want to be seen as gloating over my competitors. I want to remain sensitive in this current environment. There is no need for me to make enemies. Everyone is only trying to make a living.
Regards.
REPLY
I believe that the professional indemnity insurance covers negligence. If the representative was negligent (and not fraudalent), it should be covered by the insurance. The firm should also be protected by insurance.
However, if they were fraudalent (i.e. they knew the risk but deliberately misrepresented them), then the cannot expect to be compensated by the professional indemnity insurance.
I am an independent financial adviser rep who was spared the ordeal of this Minibond saga as my firm was unable to market structured products.
As a bystander, I commend for your effort in standing out for the individual retail investors who would otherwise be taken advantage by big financial organisations.
I am indeed impressed by your dedication in this whole entire episode, esp on how the statement to financial institution should be written. It was simple and comprehensive to most
adults.
While I have no doubts that any act of mis-selling should be punished and appropriate compensation should be made to retail investors. I think some of my industry players in the IFA industry may have to file for bankruptcy if they have to compensate their clients.
As you may not be aware, most of them are not very profitable and in this current environment when revenues are decreasing and rental costs are hiking, this minibond saga has put them into bigger trouble. Unlike the banks with deep pockets, most IFA firms have little capital to withstand this crisis.
On the individual adviser representative level, what's worse is that as each financial adviser representative is individually licensed, that individual is also liable for any compensation and unable to hide under any corporate veil. I am not sure if professional indemnity insurance could be used in this case. If not, the impact would be equally catastrophic.
These individual advisers became insurance companies to their clients just like the investors who invested in the minibonds.
I am not against your actions and in fact very impressed with it. But I just feel that some of the casualties in this crisis were actually ppl who actually wanted to do a better job than the banks by providing independent and objective advice. But they were caught in this mess. I sincerely hope that they can survive this ordeal and become stronger.
You can quote my reply in your blog but please do not quote my name as I do not want to be seen as gloating over my competitors. I want to remain sensitive in this current environment. There is no need for me to make enemies. Everyone is only trying to make a living.
Regards.
REPLY
I believe that the professional indemnity insurance covers negligence. If the representative was negligent (and not fraudalent), it should be covered by the insurance. The firm should also be protected by insurance.
However, if they were fraudalent (i.e. they knew the risk but deliberately misrepresented them), then the cannot expect to be compensated by the professional indemnity insurance.
Investors should not be compensated
Dear Mr. Tan Kin Lian
I would have never drive in a F1 vehicle unless I make sure that I am thoroughly trained in the mechanics and the operation of the specialized automobile.
I wouldn't dare to tread into a dense forestry unless I am well equipped with navigational tools and go though training in advanced topographical skills.
I wouldn't also dare to swim in the deep sea, choppy waters unless I am well sheltered within a shark cage.
Why would any one in the first place, invest in a financial instrument when they have no idea of the underlying principles and functionality of the product?
I can probably think of one word, however harsh it may be - greed. The greed of potential high returns, and indeed this greed has returned to haunt those who have no idea what they were buying in the first place.
Never mind what the bankers says, never mind if there were any misrepresentations, I wouldn't even place a cent of my hard earned money (and I shudder to think of those retirees who placed in their entire life savings) into something that I do not understand.
Please do not get me wrong. My eyes wept for those whom I read in the newspapers who have lost a huge chunk of their life savings into the Minibonds, DBS high notes series etc. They have worked hard to save their money and its almost gone following the collapse of financial institutions in the United States. Some of them, though hard they may slog for the rest of their lives, will not see this kind of money, again.
While I feel nothing but pity for these poor souls, is it fair to ask the rest of us who did not invest, to support this petition and ask DBS, whom all Singaporeans have a stake in, to compensate the investors? I ask in reverse that if the US financial institutions did not fail, the sun shining brightly as ever - when these minibonds investors collect their quarterly payouts and high returns, how will it benefit the rest of us?
While our views may differ, I applaud your efforts in raising the awareness of mis-selling that are so rampantly found in our banks, and providing a voice for Singaporeans when it matters.
My views as a man on the street
Simon Chan
REPLY
Dear Simon Chan
I suggest that you read the views of the investors expressecd in:
www.tankinlian.blogspot.com
www.theonlinecitizen.com
I also suggest that you attend my meetings in Speakers' Corner, Hong Lim Green, on Saturdays 5 to 7 pm.
Can you tell me your age? and occupation?
I would have never drive in a F1 vehicle unless I make sure that I am thoroughly trained in the mechanics and the operation of the specialized automobile.
I wouldn't dare to tread into a dense forestry unless I am well equipped with navigational tools and go though training in advanced topographical skills.
I wouldn't also dare to swim in the deep sea, choppy waters unless I am well sheltered within a shark cage.
Why would any one in the first place, invest in a financial instrument when they have no idea of the underlying principles and functionality of the product?
I can probably think of one word, however harsh it may be - greed. The greed of potential high returns, and indeed this greed has returned to haunt those who have no idea what they were buying in the first place.
Never mind what the bankers says, never mind if there were any misrepresentations, I wouldn't even place a cent of my hard earned money (and I shudder to think of those retirees who placed in their entire life savings) into something that I do not understand.
Please do not get me wrong. My eyes wept for those whom I read in the newspapers who have lost a huge chunk of their life savings into the Minibonds, DBS high notes series etc. They have worked hard to save their money and its almost gone following the collapse of financial institutions in the United States. Some of them, though hard they may slog for the rest of their lives, will not see this kind of money, again.
While I feel nothing but pity for these poor souls, is it fair to ask the rest of us who did not invest, to support this petition and ask DBS, whom all Singaporeans have a stake in, to compensate the investors? I ask in reverse that if the US financial institutions did not fail, the sun shining brightly as ever - when these minibonds investors collect their quarterly payouts and high returns, how will it benefit the rest of us?
While our views may differ, I applaud your efforts in raising the awareness of mis-selling that are so rampantly found in our banks, and providing a voice for Singaporeans when it matters.
My views as a man on the street
Simon Chan
REPLY
Dear Simon Chan
I suggest that you read the views of the investors expressecd in:
www.tankinlian.blogspot.com
www.theonlinecitizen.com
I also suggest that you attend my meetings in Speakers' Corner, Hong Lim Green, on Saturdays 5 to 7 pm.
Can you tell me your age? and occupation?
Do you hear the people sing
Here is my favourite song from Les Miserables. The title is "Do you hear the people sing".
Ths song is sung to reflect the frustration of the poor people of France, who are angry at the authority for not taking care of their poor condition. It is a stirring song.
http://www.youtube.com/watch?v=1VR1bOha40U
Here is the lyrics:
Chorus:
Do you hear the people sing?
Singing a song of angry men?
It is the music of a people
Who will not be slaves again!
When the beating of your heart
Echoes the beating of the drums
There is a life about to start
When tomorrow comes!
Will you join in our crusade?
Who will be strong and stand with me?
Beyond the barricade
Is there a world you long to see?
Then join in the fight
That will give you the right to be free!
Chorus:
Will you give all you can give
So that our banner may advance
Some will fall and some will live
Will you stand up and take your chance?
The blood of the martyrs
Will water the meadows of France!
Chorus:
Can someone change these words to reflect the frustration and anger of the investors of the structured products. Please send to me at kinlian@gmail.com. See Comments for the reworded versions.
Ths song is sung to reflect the frustration of the poor people of France, who are angry at the authority for not taking care of their poor condition. It is a stirring song.
http://www.youtube.com/watch?v=1VR1bOha40U
Here is the lyrics:
Chorus:
Do you hear the people sing?
Singing a song of angry men?
It is the music of a people
Who will not be slaves again!
When the beating of your heart
Echoes the beating of the drums
There is a life about to start
When tomorrow comes!
Will you join in our crusade?
Who will be strong and stand with me?
Beyond the barricade
Is there a world you long to see?
Then join in the fight
That will give you the right to be free!
Chorus:
Will you give all you can give
So that our banner may advance
Some will fall and some will live
Will you stand up and take your chance?
The blood of the martyrs
Will water the meadows of France!
Chorus:
Can someone change these words to reflect the frustration and anger of the investors of the structured products. Please send to me at kinlian@gmail.com. See Comments for the reworded versions.
Exploitation of the consumer
Mr. Tan,
I was a financial adviser. I was simply stating that your motive as interpreted by me that it is more for a positive publicity for your own political ambitions if any. It is hard for me to comprehend that a person on the sideline (as you had declared that you are not invested) would stake your time, reputation and efforts on an issue which is nothing more than a manifestation of the risk in investment.
REPLY
Being a financial adviser used to earning a high commission by selling poor value products to consumers, it is naturally difficult for you to understand that there are people who are willing to spend time to fight against this type of exploitation of the consumers who trusted you.
I was a financial adviser. I was simply stating that your motive as interpreted by me that it is more for a positive publicity for your own political ambitions if any. It is hard for me to comprehend that a person on the sideline (as you had declared that you are not invested) would stake your time, reputation and efforts on an issue which is nothing more than a manifestation of the risk in investment.
REPLY
Being a financial adviser used to earning a high commission by selling poor value products to consumers, it is naturally difficult for you to understand that there are people who are willing to spend time to fight against this type of exploitation of the consumers who trusted you.
Views from an ex-private banker
Dear Mr. Tan
I read with interest your good work to investors on the recent debacle. I have more than 15 years experience in investment and private banking, I have quit this line as I was disillusioned with the wealth management industry.
Not only at retail level, even private banks are mis-selling products, putting bank's interest above clients interest. At the start of the credit crisis, I had foreseen the seriousness of the US credit issue, and gave a recommendation that clients sells all their money market funds. My rationale is that its no point earning additional 10-20 basis point but exposing themselves to underlying commercial papers that may default.
I was badly rapped for this recommendation, for the fact that this is not to the interest of the bank. All I could argue was that I was doing for clients' interest, but of course you can expect management's answer to me. A few months later, the US money market fund "break the buck".
Many products are mis-sold. Right from the start, these minibonds/dbs high note products are positioned wrongly - how can a credit link note be deemed as an alternative to deposit.
Is a bond the same as deposit, be it corporate or govt? Everyone knows the answer is no. Bond investor take the risk of the bond issuer, risk on default of that single name.
In this case, these products are linked to 5 credit name, which is even higher risk than straight bonds. If its higher risk than a straight bond, then why is it sold as an alternative to deposit?
Banks position these products wrongly, taught their RMs to speak the marketing story wrongly and ended up, of course, selling it to the wrong group of clients and the wrong risk profile.
Credit link notes, bonds, structured deposits, equity link notes, capital guarantee/capital protected notes, they are all not the same as deposit.
Even if Lehman's default is almost impossible at the point in time, this kind of products could never been sold as a deposit alternative. Just like a bond can never be sold as deposit.
And not just at retail level, even at the so-called more sophisticated Private Banks, the same mistakes are being made. Its time for a overhaul in banking practice and compensation scheme, may this be the last and most bitter lesson to banks
I wish to remain anonymous as I still have many friends in private banking. But being an insider, I feel for clients and investors.
regards
I read with interest your good work to investors on the recent debacle. I have more than 15 years experience in investment and private banking, I have quit this line as I was disillusioned with the wealth management industry.
Not only at retail level, even private banks are mis-selling products, putting bank's interest above clients interest. At the start of the credit crisis, I had foreseen the seriousness of the US credit issue, and gave a recommendation that clients sells all their money market funds. My rationale is that its no point earning additional 10-20 basis point but exposing themselves to underlying commercial papers that may default.
I was badly rapped for this recommendation, for the fact that this is not to the interest of the bank. All I could argue was that I was doing for clients' interest, but of course you can expect management's answer to me. A few months later, the US money market fund "break the buck".
Many products are mis-sold. Right from the start, these minibonds/dbs high note products are positioned wrongly - how can a credit link note be deemed as an alternative to deposit.
Is a bond the same as deposit, be it corporate or govt? Everyone knows the answer is no. Bond investor take the risk of the bond issuer, risk on default of that single name.
In this case, these products are linked to 5 credit name, which is even higher risk than straight bonds. If its higher risk than a straight bond, then why is it sold as an alternative to deposit?
Banks position these products wrongly, taught their RMs to speak the marketing story wrongly and ended up, of course, selling it to the wrong group of clients and the wrong risk profile.
Credit link notes, bonds, structured deposits, equity link notes, capital guarantee/capital protected notes, they are all not the same as deposit.
Even if Lehman's default is almost impossible at the point in time, this kind of products could never been sold as a deposit alternative. Just like a bond can never be sold as deposit.
And not just at retail level, even at the so-called more sophisticated Private Banks, the same mistakes are being made. Its time for a overhaul in banking practice and compensation scheme, may this be the last and most bitter lesson to banks
I wish to remain anonymous as I still have many friends in private banking. But being an insider, I feel for clients and investors.
regards
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