Product issuers were probably cheating

The standard of honesty has deteriorated so much in recent years, that many people do not understand what is "cheating".

The seller of a gold ornament is cheating, if he knowingly mis-represents the ornament to be made of gold, when it is actually fake.

The seller of a property is cheating if he knowingly mis-represents the property to be freehold, when it is actually a leasehold.

The financial institution that creates a credit linked note is cheating, if it writes the prospectus in a manner to mislead the investors about the true nature of the product. If the creator is aware that some of the underlying assets have already turned bad (as reflected in a severe drop in value), but they continue to mis-represent the product based on its outdated credit rating, they are cheating.

The top people in the financial institution may not be aware that the product was created to generate profits by misleading the investors. But the financial institution should take the responsibility for the actions of its employees.

The standard of honesty has become so low, that cheating is now tolerated as being part of the free market. But this is a mistaken belief. A free market can only operated if there is a climate of honesty and trust.

There is a duty on the Government to investigate cases of suspected cheating and to bring the culprits to court. The judges can decide on these cases. Quite often, the court case may not be necessary as the party may be willing to settle the matter by paying appropriate compensation without admitting liability. This approach is practiced in America.

Tan Kin Lian