Saturday, September 27, 2008
My blog will hit 500,000 visitors by 5 Oct 2008
Earlier, I projected that the 500,000 mark will be reached on 11-11-2008. With the crisis caused by the credit-linked securities, the visitors to my blog trebled in recent days. The target of 500,000 is likely to be reached by 5 October, 1 month ahead of schedule.
Action to be taken on CLS
My team met this morning and decided on the following:
1. To submit a petition to the Singapore Government by 12 October
2. To hold a meeting of investors at the Speakers Corner on 11 October
3. To encourage investors to contact other investors in their list of 50 names
4. To identify investors who are willing to volunteer in this effort
5. To collect evidence of negligent or dishonest acts by the financial institutions
6. To identify lawyers who are willing to act on behalf of the investors for a fee.
If you have any suggestions, please send them to me at kinlian@gmail.com or post in this blog.
1. To submit a petition to the Singapore Government by 12 October
2. To hold a meeting of investors at the Speakers Corner on 11 October
3. To encourage investors to contact other investors in their list of 50 names
4. To identify investors who are willing to volunteer in this effort
5. To collect evidence of negligent or dishonest acts by the financial institutions
6. To identify lawyers who are willing to act on behalf of the investors for a fee.
If you have any suggestions, please send them to me at kinlian@gmail.com or post in this blog.
Negligent or dishonest acts
I need to find some examples of negligent or dishonest acts of the financial institutions that create or sell the financial products. Here are some of my views:
1. The adviser fail to inform the investor about the risk of the product
2. The adviser recommend the product (with high risk) to investors who are not aware or do not understand the risk
3. The adviser did not understand the risk of the product that they were selling
4. The adviser failed to give the prospectus and other pricing information
5. The adviser get the investor to sign documents, without explaining what the documents were
6. The adviser failed to advise the investor to diversify the risk, and recommend a large sum to be invested in a single product.
7. The product creator failed to disclose the charges that are taken away from the investors
8. The product creator has conflict of interest as they are also the counter party for some of the swap and other transactions
9. The trustee or product creator failed in their duty to take care of the interest of the investor
10. The product has high risk as they need to earn sufficient income to pay the high charges, and this is not disclosed to the investor.
11. The adviser or the managers of the financial institution did not buy the product that they are selling to the investors (consumers)
Any more angles?
Please give supporting evidence to back up the above allegations of negligent or dishonest conduct of the advisers or the product creators.
1. The adviser fail to inform the investor about the risk of the product
2. The adviser recommend the product (with high risk) to investors who are not aware or do not understand the risk
3. The adviser did not understand the risk of the product that they were selling
4. The adviser failed to give the prospectus and other pricing information
5. The adviser get the investor to sign documents, without explaining what the documents were
6. The adviser failed to advise the investor to diversify the risk, and recommend a large sum to be invested in a single product.
7. The product creator failed to disclose the charges that are taken away from the investors
8. The product creator has conflict of interest as they are also the counter party for some of the swap and other transactions
9. The trustee or product creator failed in their duty to take care of the interest of the investor
10. The product has high risk as they need to earn sufficient income to pay the high charges, and this is not disclosed to the investor.
11. The adviser or the managers of the financial institution did not buy the product that they are selling to the investors (consumers)
Any more angles?
Please give supporting evidence to back up the above allegations of negligent or dishonest conduct of the advisers or the product creators.
Unable to give individual advice
Some investors send their personal situation and ask me to give advice.
I am not able to handle this type of request. It requires time, and I am not able to find the time. Many of the questions asked cannot be answered anyway. I like to ask investors to avoid giving me this additional burden.
Here are what you can do:
1. Read this blog for general information that may be helpful to you.
2. Contact your fellow investors and get their views (at least, the work is spread out).
I am not able to handle this type of request. It requires time, and I am not able to find the time. Many of the questions asked cannot be answered anyway. I like to ask investors to avoid giving me this additional burden.
Here are what you can do:
1. Read this blog for general information that may be helpful to you.
2. Contact your fellow investors and get their views (at least, the work is spread out).
Call for volunteers - action on credit link securities
I wish to call for volunteers who are willing to help me in contacting investors of the credit linked securities. The duties of the volunteers are:
1. You are to contact the other investors in your list
2. Get their views
3. Carry out research among these investors
4. Pass useful information to me or my team.
If you are willing to help, please send an e-mail to kinlian@gmail.com.
1. You are to contact the other investors in your list
2. Get their views
3. Carry out research among these investors
4. Pass useful information to me or my team.
If you are willing to help, please send an e-mail to kinlian@gmail.com.
Fixed deposits are safe
Hi Mr. Tan
I have placed some fixed deposits in Hong Leong Finance and UOB bank. If MAS were to sue these advisers for neglience, will my FDs go bust like what my Minibonds did?
Do you think I should withdraw the amounts before maturity as I understand that FDs are not capital guaranteed if the bank or finance company goes bust?
REPLY
The fixed deposits should be safe. Read para 2 of this webpage
http://www.mas.gov.sg/news_room/letters_to_editors/2008/Response_to_do_more_to_protect_policy_holders.html
I have placed some fixed deposits in Hong Leong Finance and UOB bank. If MAS were to sue these advisers for neglience, will my FDs go bust like what my Minibonds did?
Do you think I should withdraw the amounts before maturity as I understand that FDs are not capital guaranteed if the bank or finance company goes bust?
REPLY
The fixed deposits should be safe. Read para 2 of this webpage
http://www.mas.gov.sg/news_room/letters_to_editors/2008/Response_to_do_more_to_protect_policy_holders.html
Experience of investor (1)
Dear Mr Tan
Thank you for compiling this list of affected parties and the advice that you have rendered thus far. I like to take this opportunity to share my experience with others and hopefully more will be prompted to share about how they have dealt with this matter and the results obtained.
Over the last few days, I have written to my distributor and also to MAS regarding this matter. My letter is attached so you may have a better idea of how this fiasco has affected me.
Since sending out the letter on Thursday, I have received 2 seperate calls from MAS regarding the matter. I have been invited to attend an informal meeting with the authorities this coming Monday for them to better understand my situation.
Although they have stressed that the meeting should not be construed as MAS having started an investigation, they have assured me that they are closely monitoring the situation and that they would be getting in touch with the Bank head for her response and action.
I have also spoken to staff of the distributors about this matter and during those conversation, I was still provided with mis-information regarding my investment. I have documented the miscommunications and have written to the distributor again to highlight the present lack of knowledge by their staff and how they are continuing to twist and bend the truth about the investment with total disregard to the accuracy of information that is being dispensed to customers. The note to the distributor is also attached for your reference in understanding this issue better.
This being the case with my distributor, I am wondering whether other affected parties have also been subjected to such misinformation. If so, please share your experience so we can learn from each other.
I read in the papers that the respective distributors are supposed to set up seperate and independent bodies to investigate this matter. It was thus disturbing that I received a call from the branch manager informing me that they have received my letter and were looking into the matter. If the branch itself is involved in the such an investigation, I have serious doubts on how consumer interest can be protected. I will be following up with another letter to the distributor on this matter and seek their clarification.
Mr Tan, if you do have any other suggestion or advice on what can be done further, do let me know. Once again, I am deeply grateful for your assistance in this matter.
REPLY
Let me think over this matter. I think that it is better for MAS to appoint an independent party to receive the complaints, rather than let it be handled by the distributor.
Thank you for compiling this list of affected parties and the advice that you have rendered thus far. I like to take this opportunity to share my experience with others and hopefully more will be prompted to share about how they have dealt with this matter and the results obtained.
Over the last few days, I have written to my distributor and also to MAS regarding this matter. My letter is attached so you may have a better idea of how this fiasco has affected me.
Since sending out the letter on Thursday, I have received 2 seperate calls from MAS regarding the matter. I have been invited to attend an informal meeting with the authorities this coming Monday for them to better understand my situation.
Although they have stressed that the meeting should not be construed as MAS having started an investigation, they have assured me that they are closely monitoring the situation and that they would be getting in touch with the Bank head for her response and action.
I have also spoken to staff of the distributors about this matter and during those conversation, I was still provided with mis-information regarding my investment. I have documented the miscommunications and have written to the distributor again to highlight the present lack of knowledge by their staff and how they are continuing to twist and bend the truth about the investment with total disregard to the accuracy of information that is being dispensed to customers. The note to the distributor is also attached for your reference in understanding this issue better.
This being the case with my distributor, I am wondering whether other affected parties have also been subjected to such misinformation. If so, please share your experience so we can learn from each other.
I read in the papers that the respective distributors are supposed to set up seperate and independent bodies to investigate this matter. It was thus disturbing that I received a call from the branch manager informing me that they have received my letter and were looking into the matter. If the branch itself is involved in the such an investigation, I have serious doubts on how consumer interest can be protected. I will be following up with another letter to the distributor on this matter and seek their clarification.
Mr Tan, if you do have any other suggestion or advice on what can be done further, do let me know. Once again, I am deeply grateful for your assistance in this matter.
REPLY
Let me think over this matter. I think that it is better for MAS to appoint an independent party to receive the complaints, rather than let it be handled by the distributor.
Sales Materials and Prospectus
I urge all investors of the credit linked securities to identify the sales materials, prospectus and other documents that you were given at the point of sale. You can also identify the documents that you were NOT GIVEN, such as the prospectus and other essential information.
This document will be helpful when you have to lodge a formal complaint or take legal action.
Please don't ask me what you have to do, if you do not have the document - because the answer is, "Do what you can".
This document will be helpful when you have to lodge a formal complaint or take legal action.
Please don't ask me what you have to do, if you do not have the document - because the answer is, "Do what you can".
Prospectus for the Credit Linked Securities
When you invested in the credit linked securities (i.e. mini bond, high notes, pinnacle notes), did the distributor give you the prospectus and pricing statement?
Please share your experience in this blog.
Please share your experience in this blog.
Regulation by the Dubai International Financial Center
I met my Singapore friend who now works in Dubai. He wanted to create a new product and get the approval of the Dubai International Financial Center (DIFC) to market the product to retail investors.
The DIFC asked many questions. They are hesitant about allowing the product to be sold to the retail investors, as the investors may not understand the risk. My friend decided to withdraw the application.
I believe that the DIFC approach is correct. It is difficult for retail investors to understand complex products that are designed by "financial enginners" with the aim to make profit for the financial institutions. The retail investors are likely to be "taken for a ride" by these "financial engineers".
This is a different approach from that taken by the Monetary Authority of Singapore.
The DIFC asked many questions. They are hesitant about allowing the product to be sold to the retail investors, as the investors may not understand the risk. My friend decided to withdraw the application.
I believe that the DIFC approach is correct. It is difficult for retail investors to understand complex products that are designed by "financial enginners" with the aim to make profit for the financial institutions. The retail investors are likely to be "taken for a ride" by these "financial engineers".
This is a different approach from that taken by the Monetary Authority of Singapore.
A view: Investors should bear bigger responsibility
Dear Kin Lian,
How's the going? I just heard you are leading the charge on the minibond issue. Its a good issue to take up.
However, there is a catch in this whole issue which I may draw your attention to. Although the instruments' name such as High Note or minibond are pretty misleading (well, even for an financial economics trained person like me got the wrong idea at the first look), but investors who are invited to invest in such instruments should be sophisticated enough to look beyond the high return without questioning the risks involved. Thus in my view, the investors should bear bigger responsibility for their investment decisions. I mean, when they are making money, they would not share with others right? They would not even bother about how complicated the instruments are. But when the instruments go bust, on what basis could they demand compensation?
Misselling? Hmm... there would be a big debate here. I believe the financial institutions that sold these instruments should have their backsides all covered by disclaimers and such.
The only direction to go is investor education as well as taking MAS to task. MAS as a regulator, should know the risks involved. It should, as a regulator, makes specific demand on the financial instituition to highlight the all risks and implications involved in all the marketing tools and documented agreements, in BOLD and not in fine prints.
Maybe it would be good for you to raise these few points along with your present direction of fighting for the investors' interests at hand.
Regards
MS
How's the going? I just heard you are leading the charge on the minibond issue. Its a good issue to take up.
However, there is a catch in this whole issue which I may draw your attention to. Although the instruments' name such as High Note or minibond are pretty misleading (well, even for an financial economics trained person like me got the wrong idea at the first look), but investors who are invited to invest in such instruments should be sophisticated enough to look beyond the high return without questioning the risks involved. Thus in my view, the investors should bear bigger responsibility for their investment decisions. I mean, when they are making money, they would not share with others right? They would not even bother about how complicated the instruments are. But when the instruments go bust, on what basis could they demand compensation?
Misselling? Hmm... there would be a big debate here. I believe the financial institutions that sold these instruments should have their backsides all covered by disclaimers and such.
The only direction to go is investor education as well as taking MAS to task. MAS as a regulator, should know the risks involved. It should, as a regulator, makes specific demand on the financial instituition to highlight the all risks and implications involved in all the marketing tools and documented agreements, in BOLD and not in fine prints.
Maybe it would be good for you to raise these few points along with your present direction of fighting for the investors' interests at hand.
Regards
MS
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