Dear Mr Tan
I thought that it may be useful to let you know that I have just obtained a verbal offer from X Bank to buy back the Minibond investment (Series 2) that was sold me in 2006. The buyback price is (details deleted .....................).
The bank has requested that I not make this details public for now (.... as they have to sort out some other matters). I am writing to inform you of this to let you know that your actions have resulted in a positive outcome in my situtation. I hope this encourages you to continue your good work for the rest of those affected.
At the same time, I hope that you can (without revealing details of the offer made to me) stress to all affected parties to work closely with the banks concerned in reaching a settlement. I am concerned because I noticed from the comments in your blog that many are disillussioned and are now focusing their energy on the legal action option, rather than working with the banks for a resolution.
Back to my situation, I know that you are very busy with many emails, but if you could find the time, could I ask if there are any concerns that I should have or if there are implications to such a settlement proposed by X? Is it necessary to consult with a lawyer before deciding on whether to accept the settlement?
Once again, my heartfelt thanks for everything that you have done.
Regards
Tuesday, October 21, 2008
Did the financial institution carry out any risk assessment?
Dear Mr Tan,
I have come across in your blog various comments as to whether minibonds and other similar products such as High Note, Jubilee Note, were approved by the regulator.
However, MAS stand is that they only registered these products and did not approve them. This brings me to the next question:
Have the FIs involved in the distribution done any product risk assessment before approving the product for selling to the investors? If the answer is no, it is considered serious as such an FI is selling the product without knowing its risk level.
If the answer is yes, then what is the conclusion (whether low risk or high risk) by the respective FI and is the conclusion properly disclose to the investors at the point of selling?
Do you think the investors should raise the above issue with their respective FI?
NSW
REPLY
I think that the investors should ask the distributor to arrange an open forum to discuss these matters to be discussed.
http://tankinlian.blogspot.com/2008/10/collective-letter-to-distributor.html
I have come across in your blog various comments as to whether minibonds and other similar products such as High Note, Jubilee Note, were approved by the regulator.
However, MAS stand is that they only registered these products and did not approve them. This brings me to the next question:
Have the FIs involved in the distribution done any product risk assessment before approving the product for selling to the investors? If the answer is no, it is considered serious as such an FI is selling the product without knowing its risk level.
If the answer is yes, then what is the conclusion (whether low risk or high risk) by the respective FI and is the conclusion properly disclose to the investors at the point of selling?
Do you think the investors should raise the above issue with their respective FI?
NSW
REPLY
I think that the investors should ask the distributor to arrange an open forum to discuss these matters to be discussed.
http://tankinlian.blogspot.com/2008/10/collective-letter-to-distributor.html
Understanding the technical terms
Dear Mr. Tan.
Thanks once again for helping the us, the victims.
- Can a chartered accountant understand the medical terms used by medical doctor ?
- Can a medical doctor understand the terms used by scientist ?
- Can a management guuru understand terms used by biologist ?
The answer to all these is yes or no - yes, because it is written in ABC (they could even be able to pronounce it), no for the meaning, they just cannot understand the meaning of the terms used.
So the comments "You are educated so you must be able to read the prospectus and understand it" is pure nonsense and cannot be eatablished as the proof of understanding the product because the prospectus is designed to protect the product provider and written in such a way that it is very difficult to understand, full of jargon like CDO, CDS etc. During the sales process, bonds are mentioned, but in the prospectus, the CDO and CDS appears. To lay people, it is assume,thus, that CDO and CDS are just bonds and hence the arguments start after the problem occured. A degree holder in language could be able to write an article in such a way that the articles could be explained in different meanings in different situation!
It is also very difficults when facing the personnel from the financial institution for lodging complain because they are all well prepared to use fine print in the procpectus for arguments.
One officer from a FI even change the wording of the prospectus for the argument. In the prospectus "....the product is designed for defensive investors ......" but in the newspaper the word defensive is taken out and hence declared the product is NOT LOW RISK because High Risk product are not suitable for defensive investors. How can a defensive investor knowingly agrees that the whole capital could be wiped out !!!!!
Just wonder why the authority did not discover this and take serious steps to reprimand the offender.
HS
Thanks once again for helping the us, the victims.
- Can a chartered accountant understand the medical terms used by medical doctor ?
- Can a medical doctor understand the terms used by scientist ?
- Can a management guuru understand terms used by biologist ?
The answer to all these is yes or no - yes, because it is written in ABC (they could even be able to pronounce it), no for the meaning, they just cannot understand the meaning of the terms used.
So the comments "You are educated so you must be able to read the prospectus and understand it" is pure nonsense and cannot be eatablished as the proof of understanding the product because the prospectus is designed to protect the product provider and written in such a way that it is very difficult to understand, full of jargon like CDO, CDS etc. During the sales process, bonds are mentioned, but in the prospectus, the CDO and CDS appears. To lay people, it is assume,thus, that CDO and CDS are just bonds and hence the arguments start after the problem occured. A degree holder in language could be able to write an article in such a way that the articles could be explained in different meanings in different situation!
It is also very difficults when facing the personnel from the financial institution for lodging complain because they are all well prepared to use fine print in the procpectus for arguments.
One officer from a FI even change the wording of the prospectus for the argument. In the prospectus "....the product is designed for defensive investors ......" but in the newspaper the word defensive is taken out and hence declared the product is NOT LOW RISK because High Risk product are not suitable for defensive investors. How can a defensive investor knowingly agrees that the whole capital could be wiped out !!!!!
Just wonder why the authority did not discover this and take serious steps to reprimand the offender.
HS
Collective letter to distributor
The investors of the High Notes have submitted a collective letter to DBS to seek an open forum with the senior management.
I suggest a similar approach be taken by the investors who bought from the other distributors, such as Hong Leong, Maybank, ABN and others. The leaders of the group can take the lead to collect the signatures.
The collective letter should ask for a meeting to address the following:
1. the alleged mis-selling of the product
2. get the product arranger and/or the trustee to give a full statement of account
3. how the distributor can help the investors to reduce their loss or to give appropriate compensation.
Note: This letter to the other distributors should be worded differently from the letter to DBS - as DBS is both the product arranger and the distributor. For the other distributors, they are NOT the product arranger, so the statement of account has to be given by the product arranger.
I suggest a similar approach be taken by the investors who bought from the other distributors, such as Hong Leong, Maybank, ABN and others. The leaders of the group can take the lead to collect the signatures.
The collective letter should ask for a meeting to address the following:
1. the alleged mis-selling of the product
2. get the product arranger and/or the trustee to give a full statement of account
3. how the distributor can help the investors to reduce their loss or to give appropriate compensation.
Note: This letter to the other distributors should be worded differently from the letter to DBS - as DBS is both the product arranger and the distributor. For the other distributors, they are NOT the product arranger, so the statement of account has to be given by the product arranger.
Collective legal action - request for proposals
1. My preference is to consider collective legal action only as the last resort, after the other avenues have failed. Several investors are keen to consider this step now, as they have been disappointed with the steps now taken by MAS.
2. I have written to three lawyers to ask them to submit the following:
Can you give me a proposal for collective legal action. I wish to post this in my blog and ask the investors to indicate their desire to participate in this collective action.
In your proposal, please indicate the grounds for the action, the approach to be taken, the expected legal cost to the investor and the chance of winning. Please indicate the additional cost, if the investor loses the case and has to pay the other party's cost.
3. I suggest that the investors wait for the reply of the lawyers.
2. I have written to three lawyers to ask them to submit the following:
Can you give me a proposal for collective legal action. I wish to post this in my blog and ask the investors to indicate their desire to participate in this collective action.
In your proposal, please indicate the grounds for the action, the approach to be taken, the expected legal cost to the investor and the chance of winning. Please indicate the additional cost, if the investor loses the case and has to pay the other party's cost.
3. I suggest that the investors wait for the reply of the lawyers.
MAS push responsibility to Financial Institution
Dear Mr. Tan,
Being a investor of Minibonds, I got this feeling MAS is just trying to push all responsibility to the Financial Institution.
First, they suggest investors who feel that they have been mislead into buying those Lehman link product to file complaint at respective Financial Institution.
So now those investors will just file the complaint for the sake of filing, just with a hope of getting back their investment if the Minibonds were to be liquid off when come to the stage where there isn't any new swap counter party.
With a mixed of real complaint and fake complaint, the FI are certainly pressured on resolving it, maybe by ways of paying off the losses. Guess this is what all investor like me want in the end.
In the first place, this product is lodged and registered with MAS, so now they are saying they did not approve it. So I wonder why they call them governing body of the regulation?
MAS have said that they are looking at various possibilities of new swap counter party. So the deadline is on this Friday. How true are they doing it? When they know that even if there's no new swap counter party, end of the day the FI will have to be pressurized to pay up the loses in order to let all the saga end.
Is there any proof for investor to know that they are really various potential proposer? Or is it just covering up them that they are doing something about it.
P.S keep me as anonymous thanks.
Being a investor of Minibonds, I got this feeling MAS is just trying to push all responsibility to the Financial Institution.
First, they suggest investors who feel that they have been mislead into buying those Lehman link product to file complaint at respective Financial Institution.
So now those investors will just file the complaint for the sake of filing, just with a hope of getting back their investment if the Minibonds were to be liquid off when come to the stage where there isn't any new swap counter party.
With a mixed of real complaint and fake complaint, the FI are certainly pressured on resolving it, maybe by ways of paying off the losses. Guess this is what all investor like me want in the end.
In the first place, this product is lodged and registered with MAS, so now they are saying they did not approve it. So I wonder why they call them governing body of the regulation?
MAS have said that they are looking at various possibilities of new swap counter party. So the deadline is on this Friday. How true are they doing it? When they know that even if there's no new swap counter party, end of the day the FI will have to be pressurized to pay up the loses in order to let all the saga end.
Is there any proof for investor to know that they are really various potential proposer? Or is it just covering up them that they are doing something about it.
P.S keep me as anonymous thanks.
Where does the BUCK STOP?
Posted in an online forum
It is now established that X is a high risk complex derivative which exposed the investor to risk of losing the capital invested for 5.5 year. This X is not a suitable investment product for retail investor, especially those who are looking just to grow the life savings for retirement.
Knowing that X is NOT suitable for retail investors and yet inappropriately recommend such a product to retail investors, the relation managers (RMs) were mis-selling.
X was marketed by RMs as a safe and low risk investment to retail investors and assurance were given that so long as investors can hold till maturity, the capital will be fully repaid. This was misrepresentation.
The bank’s claim that that there is no misrepresentation on the part of their RMs. Their argument is that since the details of the product and the risks are spelt out in the prospectus they have no responsibility. This is irresponsible as it is the responsibility of the RM to explain in detail not only the advantages but also the risks of the investment.
Someting is wrong here:
“Caveat emptor” is fair if the playing field is level but in a Bank and customer relationship it is NOT. The bank knows the complexity of the X and the high risk involved but the buyer don’t and they are not forewarned. Customers trusted the RMs because of the bank's name and the authority that regulates it. They were misled into investing in a high risk product the resulted in a loss of their life savings. The bank now pleads “caveat emptor”. It now hides behind legalistic protections in documents and shirks from their responsibility.
For now, the authorities are taking, what appears to be, a wait and see approach, as far as blame goes. However, all victims of misrepresentation suffered the same pain and loss. Why should they advocate categorizing the investor for consideration of compensation if they are completely unbiased? Are they saying that the educated young deserve to be cheated?
Investors who intended to go to the bank as a group to ask for early resolution were allegedly, according to press reports, “warned and threatened with arrest”. Are investors being bullied here? Investor groups are now feeling stifled and frustrated.
Group petitions and complaints for redress to the authorities have not yet yielded any resolution and investors were simply advised to file individual claim with the bank that sold them the investment. The insistence of a case-by case investigation by the bank appears to prevent collective action and disadvantage the individual investors.
Is this what one expects from a fair and equal society? I sincerely hope that the authorities are doing the right thing to ensure that justice is done.
It is now established that X is a high risk complex derivative which exposed the investor to risk of losing the capital invested for 5.5 year. This X is not a suitable investment product for retail investor, especially those who are looking just to grow the life savings for retirement.
Knowing that X is NOT suitable for retail investors and yet inappropriately recommend such a product to retail investors, the relation managers (RMs) were mis-selling.
X was marketed by RMs as a safe and low risk investment to retail investors and assurance were given that so long as investors can hold till maturity, the capital will be fully repaid. This was misrepresentation.
The bank’s claim that that there is no misrepresentation on the part of their RMs. Their argument is that since the details of the product and the risks are spelt out in the prospectus they have no responsibility. This is irresponsible as it is the responsibility of the RM to explain in detail not only the advantages but also the risks of the investment.
Someting is wrong here:
“Caveat emptor” is fair if the playing field is level but in a Bank and customer relationship it is NOT. The bank knows the complexity of the X and the high risk involved but the buyer don’t and they are not forewarned. Customers trusted the RMs because of the bank's name and the authority that regulates it. They were misled into investing in a high risk product the resulted in a loss of their life savings. The bank now pleads “caveat emptor”. It now hides behind legalistic protections in documents and shirks from their responsibility.
For now, the authorities are taking, what appears to be, a wait and see approach, as far as blame goes. However, all victims of misrepresentation suffered the same pain and loss. Why should they advocate categorizing the investor for consideration of compensation if they are completely unbiased? Are they saying that the educated young deserve to be cheated?
Investors who intended to go to the bank as a group to ask for early resolution were allegedly, according to press reports, “warned and threatened with arrest”. Are investors being bullied here? Investor groups are now feeling stifled and frustrated.
Group petitions and complaints for redress to the authorities have not yet yielded any resolution and investors were simply advised to file individual claim with the bank that sold them the investment. The insistence of a case-by case investigation by the bank appears to prevent collective action and disadvantage the individual investors.
Is this what one expects from a fair and equal society? I sincerely hope that the authorities are doing the right thing to ensure that justice is done.
Lawyer: No obligation, no fee consultation
Hi Kin Lian,
I am organising meetings to see the investors at my law firm for no obligation no fee consultation. I will also pass you a list of the investors once I meet them.
The weekdays’ timeslots are from
4pm to 4.30pm
7pm to 7.30 pm
7.30pm to 8pm
8pm to 8.30pm
The Sunday special timeslots (at half hourly intervals) are from
2pm to 6pm
7pm to 9pm
Our law firm’s Lehman hotline to call is
(Office) 6557 2422
(Mobile)98456225.
Regards
Leonard Loo
LEONARD LOO & CO
Advocates & Solicitors
25 Tagore Lane #04-06
Singapore 787602 (opposite Thomson Used Car Centre)
Tel: (65) 6557 2422 Fax: (65) 6557 2022
Mobile : (65) 969 55694
Email: leonardloo_co@pacific.net.sg
I am organising meetings to see the investors at my law firm for no obligation no fee consultation. I will also pass you a list of the investors once I meet them.
The weekdays’ timeslots are from
4pm to 4.30pm
7pm to 7.30 pm
7.30pm to 8pm
8pm to 8.30pm
The Sunday special timeslots (at half hourly intervals) are from
2pm to 6pm
7pm to 9pm
Our law firm’s Lehman hotline to call is
(Office) 6557 2422
(Mobile)98456225.
Regards
Leonard Loo
LEONARD LOO & CO
Advocates & Solicitors
25 Tagore Lane #04-06
Singapore 787602 (opposite Thomson Used Car Centre)
Tel: (65) 6557 2422 Fax: (65) 6557 2022
Mobile : (65) 969 55694
Email: leonardloo_co@pacific.net.sg
SCMP: Investors hit by Lehman collapse get papers they can't understand
South China Morning Post (Hong Kong) - Tuesday, October 21, 2008
Author: Joyce Man
Investors who purchased complex derivatives linked to the financial health of now-bankrupt US investment bank Lehman Brothers finally got their hands on documents on the investments' underlying assets yesterday - but could not make head or tail of them.
DBS Bank handed a dozen investors stacks of files and papers centimetres thick, filled with legal and financial jargon. The investors had asked for documents showing what assets backed their investments, hoping to determine how much value they retained.
They pored over the documents for hours. Connie Kwan, who bought HK$1.3 million in derivatives known as retail structured notes in the past two years, said she felt no one could explain the papers.
"They say they will calculate the value based on the underlying assets, but we can't tell what the underlying assets are from these documents," she said.
DBS Bank (Hong Kong) managing director William Kwok Yu-lut explained how they could calculate the assets' value using lists in the documents, but he could not say what the asset breakdown was.
The retail structured notes that DBS distributed were linked to credit events - such as bankruptcies, loan defaults or being forced to repay loans early - of "baskets" of companies. If any company defaulted, investors would redeem their principal minus the reduction in value of that company. Some baskets included Lehman, which filed for the biggest bankruptcy in US history last month.
Investors estimate that DBS distributed more than 30 series of notes to hundreds of customers.
Meanwhile, Secretary for Justice Wong Yan-lung told a Legislative Council panel meeting yesterday that the government would like to see banks accused of mis-selling another type of derivative - minibonds - resolve disputes with investors through mediation.
He said the disputes might be long and expensive if the cases were handled by courts. The government had made contact with mediation agencies, and it would take only "weeks" for them to provide mediation services.
Author: Joyce Man
Investors who purchased complex derivatives linked to the financial health of now-bankrupt US investment bank Lehman Brothers finally got their hands on documents on the investments' underlying assets yesterday - but could not make head or tail of them.
DBS Bank handed a dozen investors stacks of files and papers centimetres thick, filled with legal and financial jargon. The investors had asked for documents showing what assets backed their investments, hoping to determine how much value they retained.
They pored over the documents for hours. Connie Kwan, who bought HK$1.3 million in derivatives known as retail structured notes in the past two years, said she felt no one could explain the papers.
"They say they will calculate the value based on the underlying assets, but we can't tell what the underlying assets are from these documents," she said.
DBS Bank (Hong Kong) managing director William Kwok Yu-lut explained how they could calculate the assets' value using lists in the documents, but he could not say what the asset breakdown was.
The retail structured notes that DBS distributed were linked to credit events - such as bankruptcies, loan defaults or being forced to repay loans early - of "baskets" of companies. If any company defaulted, investors would redeem their principal minus the reduction in value of that company. Some baskets included Lehman, which filed for the biggest bankruptcy in US history last month.
Investors estimate that DBS distributed more than 30 series of notes to hundreds of customers.
Meanwhile, Secretary for Justice Wong Yan-lung told a Legislative Council panel meeting yesterday that the government would like to see banks accused of mis-selling another type of derivative - minibonds - resolve disputes with investors through mediation.
He said the disputes might be long and expensive if the cases were handled by courts. The government had made contact with mediation agencies, and it would take only "weeks" for them to provide mediation services.
Volunteers to write statements of complaints
I wish to ask for volunteers to help the investors to write statements of complaints. Please meet at Speaker's Corner at 4.30 p.m. on Saturday 25 October. You will get a briefing on how to do this work. A form will be given to you to enter the particulars of the investors. We need volunteers to handle complaints in English and Chinese.
Please send your particulars (name, email, telephone) to Adrian Tan atans1@hotmail.com for record. Thank you.
Please send your particulars (name, email, telephone) to Adrian Tan atans1@hotmail.com for record. Thank you.
Post in my blog without Google account
If you wish to post in my blog without a Google account, you can send an e-mail to me at kinlian@gmail.com. I will post it for you as a new topic.
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