Dear Mr. Tan Kin Lian,
I am an avid reader of your blog and must thank you very much for all the help and info you provided. Unfortunately I invested in Minibond before getting to know about your blog.
Though not urgent, perhaps you could write something about Islamic Investment products in your blog. I somehow feel that the current fiasco involving Minibond, Jubilee, Pinnacle, High Notes 5 products etc WOULD NOT have occurred had these products been structured according to Islamic investment guidelines.
From the little I know about Islamic investments, they are governed by certain principles viz:-
> Full transparency in the product structure. Product should not knowingly hide bad points and boast about the good points.
> There must be no intent to deceive investors, nor sell knowingly worthless products.
> Product should not involve highly risky companies whose values may swing very high or very low.
> Product should not be speculative in nature, but rather based on solid long-term fundamentals.
> Investment should not be linked to immoral activities eg gambling, drug trafficking, prostitution etc.
> “Interest” should not be paid to investors, but modest “dividends” may be distributed to investors based on product profitability.
> Above all, the investment product must comply with Islamic religious scriptures.
I feel such products are what we need in this age of uncertainty. They will be very reassuring for the bulk of investors who are mainly low-risk type. Certain Middle East countries are moving fast in this direction, including targeting women investors who are traditionally risk-averse and are now coming out of the closet.
In the book that you are planning to write, pls dedicate several detailed chapters on Islamic Investment products. The world is full of western-style investment gurus, but short on Islamic Investment advisers.
I don’t see much of Islamic investment opportunities for the retail sector in Singapore. There are some, but are meant more for institutional investors or having a high entry level. Any pointers on this pls? Thank you very much for your continued efforts to educate investors.
VS
REPLY
I am not knowledgeable on Islamic principles. But, I must say that I like all of the principles that have been described above (except the "above all" principle, which is relevant only to the Muslims).
Sunday, November 16, 2008
Remembering Mohideen Gany
Dear Mr Tan,
On behalf of my family, I wish to thank you for your kind concern, visits and support during my father's last few moments.
I know how much my father must have been comforted by your visit and presenceand had valued & treasured those moments when you visted him at the hospital and at home.
He had held NTUC INCOME very dear to his life. I know that for sure as my siblings and I grew up in the midst of his untiring effort, commitment and dedication to the progress and development of NTUC INCOME.
He had been a model and an inspiration to me and we sorely miss him. We are proud of his achievements as the First President of NTUC Summit Club President and for being one of the leading organisers for several years in the 1970's and 80's.
Thanks for remembering him in your blog.
With deep appreciation and thanks
Naseer Ghani
(His Eldest Son)
On behalf of my family, I wish to thank you for your kind concern, visits and support during my father's last few moments.
I know how much my father must have been comforted by your visit and presenceand had valued & treasured those moments when you visted him at the hospital and at home.
He had held NTUC INCOME very dear to his life. I know that for sure as my siblings and I grew up in the midst of his untiring effort, commitment and dedication to the progress and development of NTUC INCOME.
He had been a model and an inspiration to me and we sorely miss him. We are proud of his achievements as the First President of NTUC Summit Club President and for being one of the leading organisers for several years in the 1970's and 80's.
Thanks for remembering him in your blog.
With deep appreciation and thanks
Naseer Ghani
(His Eldest Son)
Interview of investors on Blogs
The Online Citizen and Wayang Party wish to interview investors and upload the interview (on video) into their blogs. This will help to bring the message to the wider public about how the ordinary people have been misled into investing in these toxic products.
If you are willing to share your experience, as a lesson for other people to be careful in the future, please come forward to be interviewed.
You can send an email to kinlian@gmail.com
If you are willing to share your experience, as a lesson for other people to be careful in the future, please come forward to be interviewed.
You can send an email to kinlian@gmail.com
Publish a book on Credit Linked Notes
I wish to collect materials to publish a book to outline the experience of investors of the credit linked notes (i.e. minibonds, pinnacle notes, high notes, jubilee notes, etc).
If you wish to share your personal experience, please write your story (800 to 1200 words) to explain the following:
1. How did you get to invest in these notes
2. What were your told about the product
3. How much did you invest
4. What was your past experience in investing your money?
5. What was your reaction when you learn about the true nature of these credit linked notes?
6. How does the financial loss impact you?
7. What lesson do you wish to share with the future generation?
Please use your real name, contact number, name of product and financial institution. The editor will use another name (to hide your identity) and get your agreement, before your story is published.
Send your story to kinlian1@gmail.com
If you wish to share your personal experience, please write your story (800 to 1200 words) to explain the following:
1. How did you get to invest in these notes
2. What were your told about the product
3. How much did you invest
4. What was your past experience in investing your money?
5. What was your reaction when you learn about the true nature of these credit linked notes?
6. How does the financial loss impact you?
7. What lesson do you wish to share with the future generation?
Please use your real name, contact number, name of product and financial institution. The editor will use another name (to hide your identity) and get your agreement, before your story is published.
Send your story to kinlian1@gmail.com
How I was misled (2)
Dear Mr. Tan,
My UOB fixed deposit has matured during that period. During that time H has a better interest rate offer for fixed deposit. We intend to place the money as fixed deposit with H.
When we were there, the staff at the counter persistently advised us to deposit our money into their investment product. We told her that it was our life saving and we were a low risk taker and would not want to take risk and we would want to place it as fixed deposit and we don’t want to get involve in any investment which we are not sure of.
She continued to show us a brochure on Pinnacle Notes and persistently advised us to reconsider as it is high interest rate return and also very low risk. Thinking that it would be very safe and we are going to put in our saving for sometimes, we agreed to understand further. She directed us to the Financial Manager R.
The Financial Manager R explained to us on the Pinnacles Notes product. She told us how good the product is and told us that it is for 5.5 years saving with higher interest rate of 5.25%. It is also a very low risk investment as the bank is investing on reputable AAA’s companies listed under the Reference Entities stated in the brochure so we don’t have to worry.
They are:
Commonwealth of Australia
Hong Kong Special Adminstrative Region of the People’s Republic of China
Republic of Singapore
Singapore Telecommunications Limited
Temasek Holdings Pte Ltd
She told us that even in the event that US or the whole world goes into financial crisis our deposit and interest will remain and continue to receive the interest every six-monthly. She told us that ONLY if one of the 5 companies goes bankrupt then our deposit will be affected.
We repeatedly highlighted to her that we are very low risk takers and this is our life saving. She kept reassuring us that the companies involved are all AAA and reputable company and we don’t have to worry about that. However, she never mentioned of any other investment on any other companies that the bank does that would affect my deposit.
She also told us that this product is overwhelming and they reopened it again.
To be cautious, I called one of my colleagues for his opinion. He said that the five companies are quite reputable and if the promise is there, then it should be ok.
After some thoughts, we decided to invest in the product since she kept repeatedly said that the risk is very low and ONLY if one of the 5 companies goes bankrupt then our deposit will be affected and the product is going to end soon on 30 Nov 2007 and we may miss the opportunity.
She did mention to us that the investment is not guaranteed return. She repeatedly assured that ONLY if one of the 5 companies goes bankrupt then our deposit will be affected.
She asked us to sign some forms to declare that she have briefed us on the product. She mentioned that it is only for formality sake. We don’t totally understand the content in details. Based on verbal trust of what she had assured us and since it is formality we signed the form as this is our first time investing in such a product.
The forms were given only after we agreed to invest in the product. We didn’t really read the forms in detail. Just like we buy and sell HDB flat where the officer will require us to sign copies and copies of forms, we do not have the time to read all the details especially the small prints. We don’t really fully know and understand what is in the content in the forms.
We totally rely on what the Financial Manager R verbally assured us. The most important aspects of the advice is that she kept repeatedly assuring us that the risk is very low and ONLY if one of the 5 companies in the Reference Entities goes bankrupt then our deposit will be affected. Even if US or the world goes into crisis it will not affect our investment and we will continue to get our interest six monthly. The most important point is that she did not mention of any other investment on any other companies that the bank does that would affect my deposit.
Speech at Speaker's Corner - 15 Nov 2008
1. Petitions to MAS
1 wish to give you an update of the progress of the three Petitions sent to the Monetary Authority of Singapore.
Petition #1 was sent to MAS on 9 October 2008. It was signed by 983 investors of the credit linked securities. It asked the Government to investigate into possible wrong-doings by the financial institutions that created and marketed these securities to the retail investors.
If there were possible wrong doings or breaches of the existing laws, specifically the Securities and Futures Act and the Financial Advisers Act, the Petition ask the Government to take appropriate action against the financial institutions and to seek fair compensation for the investors for their losses.
I met with Dr. Andrew Khoo and his colleagues on 9 October to hand over the Petition, which was addressed to Mr. Goh Chok Tong, chairman of MAS. I briefed Dr. Khoo and his colleagues about the possible areas of breaches of the existing laws.
I have not heard from MAS subsequently on the outcome of this Petition. I have sent two rerquests to Mr. Goh Chok Tong and to Dr. Andrew Khoo for a meeting to discuss the progress. So far, I have not been successful in getting this meeting.
Petition #2 was sent to MAS on 17 October 2008. It was signed by 277 investors. It asked MAS to investigate the sales training and marketing processes of the financial institutions that distributed these securities. Specifically, the investigation should examine if the sales representatives that distributed the securities were trained about the correct features of the securities and on the content of the prospectus, so that they can give the correct information to the investing public.
I have received an acknowledgment to this Petition. I do not know if the MAS intend to carry out any investigation as requested in the Petition.
Petition #4 was sent to MAS on 31 October 2008. It was signed by 1,017 investors. It asked MAS to review the complaint handling process of the financial institutions that distributed the credit linked securities. It asked MAS to set up an independent unit to receive the complaints and to encourage the financial institutions to adopt a collective approach in offering fair compensation to the investors who were misled into investing in these securities.
I have asked for a meeting with a senior official in MAS to discuss this petition and to follow up on the progress of the earlier petitions. My request was declined.
I reminded MAS that I am speaking on behalf of about 1,000 investors. They should not ignore my request for a meeting or to treat me like any single individual with a grievance. Even a single voice should be heard. If 1,000 voices are not loud enough, I wonder what will make our officials hear?
I will continue with my efforts.
2. Letter from an investor
I wish to share with you the views of an investor called SB. It is posted in my blog. This investor is willing to share some responsibility for investing in the credit linked securities carelessly, but is unhappy with the response of the Government leaders. I read his letter to you:
http://www.blogger.com/posts.g?blogID=11702093
I replied to SB that his approach is along the same lines that have been covered in Petition #1. So far, I have not heard from MAS if they intend to carry out an independent investigation into this matter.
3. Statutory declaration
A few weeks ago, I suggested that each investor should get a lawyer to help you to write a statutory declaration. This statement should explain how you were advised into making the investment. If you were given the wrong information or were misled about the credit linked notes, this fact should be stated in the statutory declaration. The lawyer will help you to state this fact properly.
You should make the statutory declaration truthfully and honestly. If you tell a lie, you can be prosecuted under the law. However, if you tell the truth, your statement under oath will have a stronger impact.
If many investors make similar statements about how they were sold or mis-sold on the credit linked notes by the sales representatives from the same financial institution, these declarations taken together will establish a pattern of mis-selling by the financial institution. It will convince an independent and impartial judge about the mis-selling.
The Monetary Authority of Singapore and FIDREC said that the statutory declaration is not necessary.
Subsequently, we learn that many of the financial institutions have rejected the claims of mis-selling made by the investors.
If your claim has been rejected, I advise you to make a statutory declaration now and lodged your complaint again with the financial institution. If they reject it again, you can use your statutory declaration to lodge your complaint to FIDREC.
You have lost many tens or hundred of thousand dollars in making these investments. It is better for you to send $120 to make the statutory declaration and lodge your complaint again.
If the statutory declaration is still rejected by FIDREC, you can join the collective legal action. The statutory declaration can be used for this third step.
4. Collective legal action
My committee is discussing with a few lawyers on the approach to take on a collective legal action.
Our Government leaders and MAS have advised that this should be avoided, and that other avenues are open for the investors to seek their redress.
Many investors have lost faith in their recommended approach.
My committee will help the investors to prepare for collective legal action, but we still advice that the legal action should be taken only as the last resort.
I hope that the MAS will respond to my requests for a meeting to discuss how the matter can be resolved fairly and that a costly legal action can be avoided.
We are still keen to seek an outcome that is fair to the investors and preserve Singapore’s reputation as a financial hub that can be trusted to take care of the interest of the ordinary people.
Tan Kin Lian
1 wish to give you an update of the progress of the three Petitions sent to the Monetary Authority of Singapore.
Petition #1 was sent to MAS on 9 October 2008. It was signed by 983 investors of the credit linked securities. It asked the Government to investigate into possible wrong-doings by the financial institutions that created and marketed these securities to the retail investors.
If there were possible wrong doings or breaches of the existing laws, specifically the Securities and Futures Act and the Financial Advisers Act, the Petition ask the Government to take appropriate action against the financial institutions and to seek fair compensation for the investors for their losses.
I met with Dr. Andrew Khoo and his colleagues on 9 October to hand over the Petition, which was addressed to Mr. Goh Chok Tong, chairman of MAS. I briefed Dr. Khoo and his colleagues about the possible areas of breaches of the existing laws.
I have not heard from MAS subsequently on the outcome of this Petition. I have sent two rerquests to Mr. Goh Chok Tong and to Dr. Andrew Khoo for a meeting to discuss the progress. So far, I have not been successful in getting this meeting.
Petition #2 was sent to MAS on 17 October 2008. It was signed by 277 investors. It asked MAS to investigate the sales training and marketing processes of the financial institutions that distributed these securities. Specifically, the investigation should examine if the sales representatives that distributed the securities were trained about the correct features of the securities and on the content of the prospectus, so that they can give the correct information to the investing public.
I have received an acknowledgment to this Petition. I do not know if the MAS intend to carry out any investigation as requested in the Petition.
Petition #4 was sent to MAS on 31 October 2008. It was signed by 1,017 investors. It asked MAS to review the complaint handling process of the financial institutions that distributed the credit linked securities. It asked MAS to set up an independent unit to receive the complaints and to encourage the financial institutions to adopt a collective approach in offering fair compensation to the investors who were misled into investing in these securities.
I have asked for a meeting with a senior official in MAS to discuss this petition and to follow up on the progress of the earlier petitions. My request was declined.
I reminded MAS that I am speaking on behalf of about 1,000 investors. They should not ignore my request for a meeting or to treat me like any single individual with a grievance. Even a single voice should be heard. If 1,000 voices are not loud enough, I wonder what will make our officials hear?
I will continue with my efforts.
2. Letter from an investor
I wish to share with you the views of an investor called SB. It is posted in my blog. This investor is willing to share some responsibility for investing in the credit linked securities carelessly, but is unhappy with the response of the Government leaders. I read his letter to you:
http://www.blogger.com/posts.g?blogID=11702093
I replied to SB that his approach is along the same lines that have been covered in Petition #1. So far, I have not heard from MAS if they intend to carry out an independent investigation into this matter.
3. Statutory declaration
A few weeks ago, I suggested that each investor should get a lawyer to help you to write a statutory declaration. This statement should explain how you were advised into making the investment. If you were given the wrong information or were misled about the credit linked notes, this fact should be stated in the statutory declaration. The lawyer will help you to state this fact properly.
You should make the statutory declaration truthfully and honestly. If you tell a lie, you can be prosecuted under the law. However, if you tell the truth, your statement under oath will have a stronger impact.
If many investors make similar statements about how they were sold or mis-sold on the credit linked notes by the sales representatives from the same financial institution, these declarations taken together will establish a pattern of mis-selling by the financial institution. It will convince an independent and impartial judge about the mis-selling.
The Monetary Authority of Singapore and FIDREC said that the statutory declaration is not necessary.
Subsequently, we learn that many of the financial institutions have rejected the claims of mis-selling made by the investors.
If your claim has been rejected, I advise you to make a statutory declaration now and lodged your complaint again with the financial institution. If they reject it again, you can use your statutory declaration to lodge your complaint to FIDREC.
You have lost many tens or hundred of thousand dollars in making these investments. It is better for you to send $120 to make the statutory declaration and lodge your complaint again.
If the statutory declaration is still rejected by FIDREC, you can join the collective legal action. The statutory declaration can be used for this third step.
4. Collective legal action
My committee is discussing with a few lawyers on the approach to take on a collective legal action.
Our Government leaders and MAS have advised that this should be avoided, and that other avenues are open for the investors to seek their redress.
Many investors have lost faith in their recommended approach.
My committee will help the investors to prepare for collective legal action, but we still advice that the legal action should be taken only as the last resort.
I hope that the MAS will respond to my requests for a meeting to discuss how the matter can be resolved fairly and that a costly legal action can be avoided.
We are still keen to seek an outcome that is fair to the investors and preserve Singapore’s reputation as a financial hub that can be trusted to take care of the interest of the ordinary people.
Tan Kin Lian
Pinnacle Notes value as at 14 Nov 2008
Bid Side Valuation (including Accrued Interest) based on Morgan Stanley’s discretion
as 14 Nov 2008:
as 14 Nov 2008:
Pinnacle Series 9 0%
Pinnacle Series 10 0%
USD SGD
Pinnacle Series 1 1.83% 1.47%
Pinnacle Series 2 3.79% 3.26%
Pinnacle Series 3 10.32% 10.03%
Pinnacle Series 5 8.61% 8.35%
Pinnacle Series 6 2.95% 1.26%
Pinnacle Series 7 1.67% 1.48%
The above notes lost more than 89% of value
USD SGD
Pinnacle Series 8 69.50% 66.28%
Pinnacle Series 12 79.97% 80.28%
Pinnacle Series 15 84.87%
Pinnacle Series 16 82.15%
Check the weekly prices of your credit linked notes
Here is a tip.
Ask you distributor to show you the website that you can check the weekly prices of the credit linked notes that you have bought.
If you find that the notes have dropped in value, you should ask for an explanation from the distributor or the product issuer.
You can make your request verbally. If you do not get a satisfactory answer, you can send your request in writing. If it is still not answered, you can lodge a complaint with MAS.
It is the duty of the distributor to advice you on how you can get this important piece of information. As the value of many series of notes are dropping seriously, you should monitor these values regularly.
Ask you distributor to show you the website that you can check the weekly prices of the credit linked notes that you have bought.
If you find that the notes have dropped in value, you should ask for an explanation from the distributor or the product issuer.
You can make your request verbally. If you do not get a satisfactory answer, you can send your request in writing. If it is still not answered, you can lodge a complaint with MAS.
It is the duty of the distributor to advice you on how you can get this important piece of information. As the value of many series of notes are dropping seriously, you should monitor these values regularly.
Ask for your risk analysis form
Here is a tip.
Write to the financial institution to ask for a copy of the risk analysis form that you signed at the time that you bought the credit linked notes.
Check if the answers in the form are based on what you told the sales representative. If the answers are not taken from you, you can write a letter immediately to point out any wrong facts.
A few investors have asked for and received the signed form. They found statements written by the sales representative (of the distributor) without their permission. If the wrong facts are entered with fraudalent intent, you can lodge a police report.
You can consult a knowledgeable fellow investor about the implications of the facts contained in the risk analysis form.
Views posted by an investor
To: All Investors,
Please ask your FI for a copy of ALL documents that you signed, preferabky BEFORE going for the interview. There have been some cases where the FI's copy of the risk profile form contain additions and/or modifications that were not reflected in the investor's copy. This is highly irregular.
During application time, the RM typically asked some random questions which were ticked on the form. The investor then signed the form, and the RM gave investor his copy on the spot. Later on, the RM filled up the balance of the form with info in his favour. This additional info was not made known to investor upon signup.The investor has unknowingly signed a "blank check".
The RM should get the agreement of the investor for any additional notes he plans to add, but he did not.From a legal standpoint, can one argue that the risk analysis form is invalid, and hence the entire purchase agreement in null and void?
Write to the financial institution to ask for a copy of the risk analysis form that you signed at the time that you bought the credit linked notes.
Check if the answers in the form are based on what you told the sales representative. If the answers are not taken from you, you can write a letter immediately to point out any wrong facts.
A few investors have asked for and received the signed form. They found statements written by the sales representative (of the distributor) without their permission. If the wrong facts are entered with fraudalent intent, you can lodge a police report.
You can consult a knowledgeable fellow investor about the implications of the facts contained in the risk analysis form.
Views posted by an investor
To: All Investors,
Please ask your FI for a copy of ALL documents that you signed, preferabky BEFORE going for the interview. There have been some cases where the FI's copy of the risk profile form contain additions and/or modifications that were not reflected in the investor's copy. This is highly irregular.
During application time, the RM typically asked some random questions which were ticked on the form. The investor then signed the form, and the RM gave investor his copy on the spot. Later on, the RM filled up the balance of the form with info in his favour. This additional info was not made known to investor upon signup.The investor has unknowingly signed a "blank check".
The RM should get the agreement of the investor for any additional notes he plans to add, but he did not.From a legal standpoint, can one argue that the risk analysis form is invalid, and hence the entire purchase agreement in null and void?
Barclays AREIT
Hi Mr Tan,
What can you tell me about Barclays AREIT. I bought this product from DBS. The officer told me it is a safe product with little risk and it is gives dividends. Since I joined in 2006, at $1, I have now lost about half of the investment.
Can you advise?
LT
REPLY
You should ask DBS and get them to reply in writing. If you do not understqnd the product, you should ask them to explain in terms that you can understand.
What can you tell me about Barclays AREIT. I bought this product from DBS. The officer told me it is a safe product with little risk and it is gives dividends. Since I joined in 2006, at $1, I have now lost about half of the investment.
Can you advise?
LT
REPLY
You should ask DBS and get them to reply in writing. If you do not understqnd the product, you should ask them to explain in terms that you can understand.
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