FAQ from investors (1)

Here are some frequently asked questions. I shall speak on these points at Speaker's Corner on Saturday 18 October at 6 p.m.

1. Can I lodge a complaint?
Some investors ask if they can lodge a complaint, if they have signed certain forms, or if they had bought in a different mode (e.g. by responding to a mail). Each case has to be considered on its own merits. It is impossible for me to give this type of advice.

Generally, you can lodge a complaint if you have been misled into buying the product. This misleading sitaution could occur in various ways, e.g. from the advertisements, brochure, verbal statement and assurances and other forms. You must get the facts and write a sworn statement (i.e. statutory declaration or affidavit).

2. How to get advice
It is best that you get advice from your fellow investors in similar situation. You should join a group and keep in touch with them. You should also read my blog, www.tankinlian.blogspot.com.

I am not able to give individual advice. Each day, 20 people write to me, expecting me to understand their situation. It is impossible for me to perform this role. You are not the only person that needs help. I do not have the time to give proper advice.

3. Gather the facts
Many investors asked me, "Should I sell or hold on to this investment?". This type of question can only be answered, if you get the facts. You cannot expect anyone to give you the answer without the facts.

If the facts are not available, no one can answer them. If you ask about the future, no one knows the answer (except God).

4. To hold or sell?
Many people are uncertain and frightened. They ask for advice on whether to sell or hold to a certain structured product. They have to find out the facts about the product. What is the current price now. What are the quality of the underlying assets?

There are more than 50 different types of structured products in the market. Each product is complicated and different from the other products. Even the financial institutions marketing the product do not know what they are.

The best is for you to ask the financial institution and get the facts. Do not expect someone else to know the answer. If the facts are not available, you should not expect any outsider to be able to get the answers for you.

Here are my general advice:

a) If you sell any structured product now, you are likely to get a bad price. The market is very bad. It is generally better to keep the product and hope for the best.

b) Nobody knows if the situation will get worse. You cannot expect anyone to help you to know the future. You have to make the decision on your own. It is your own money.

c) If things are uncertain, I will wait and not sell now. I hold shares and are losing money. I decide to keep them and wait for things to recover.

5. Financial institution to pressure their sales representatives
Some investors said that the financial institutions are putting pressure on their sales representative to tell lies, so that they will protect the institution. This is unethical, but it cannot be helped. If the representatives tell lies, they are committing a crime of cheating. This can be serious.

6. DBS to compensate on case by case basis
Some investors said that DBS has agreed to compensate the investors on a case by case basis. This is the correct apporach.

Any claim for compensation has to be decided on a case by case basis. Some people are misled and need to be compensated. Other people are not misled and cannot claim for the same type of compensation.

7. Fair compensation
I hope that the financial institution will offer a fair compensation to investors who have been misled. A fair compensation is for the loss to be shared equally between the investor and the distributor.

Some investors expect 100% compensation. This is unreasonable. The distributor expects to get away with no compensation. This is unreasonable also.

Tan Kin Lian