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http://theonlinecitizen.com/2008/09/protecting-the-small-investors/#comment-22959
65)--> question on September 30th, 2008 12.57 am
there is one thing i am very curious about mr tan kin lian. you are the ceo of insurance company for many years and yet now you warn people about bad insurance. it really something special or different. will those people in insurance hate you very much. because it is something like last time you are on same boat with them now you are against them. something like betrayal.\\\\\
REPLY
There are good insurance products and bad insurance products.
A good insurance product offers protection at a fair premium. There is a fair margin to pay the sales person, cover the expenses of the insurance company and give a fair profit margin.
There are bad insurance products that over-charge the customer and pay excessive commission to the sales person and make excessive profit for the insurance company.
I want to encourage insurance companies to sell good products that are fair to customers.
I also want to encourage the banks to sell good financial products. The structured products are bad products because they give poor value to the customers in relation to the risk. The product creators and sales people take away too much in charges, and leave the investors to take big risks (like the minibonds, high notes, etc). These products are like high cost insurance policies, but many times worse.
I hope that more people will come forward and speak about business ethics. Business should not cheat customers to make profits. They should give fair value to customers.
More people should also tell the regulator and the Government - look after the interest of ordinary people, the retirees, uncles and aunties and also the young people. Do not allow these ordinary people to be cheated out of their hard earned savings.
Monday, September 29, 2008
File a Police report
If you feel that you have been cheated into investing in a structured product (e.g. the distributor is aware that the product is bad and still push it to you), you can file a Police report against the distributor.
Read this instruction:
http://thinkhappiness.blogspot.com/2008/09/report-investment-cheats-to-police.html
Read this instruction:
http://thinkhappiness.blogspot.com/2008/09/report-investment-cheats-to-police.html
Prospectus is too complicated
Dear Mr Tan
I think one of the key contentious point in this whole saga is that we should have read the prospectus for the issue ourselves to assess whether the product is suitable for us or not.
But the problem is the way the prospectus had been written. There's simply too much technical jargon for us to understand all the contents written in it. Although we have a responsibility to read it, is it actually reasonable for laymen like us to understand it? Because of this complexity, we have to depend on the integrity and expertise of the RMs or the bank officers selling the product to advise us properly on the risks. There must be a fundamental change in the way these prospectus are written so that the general public can understand them.
I believe the MAS has a duty to oversee this especially if the issue is to be offered to the general public for subscription. I am not an expert on how this can be done but surely they can tell if a prospectus has been written for a targeted audience or general public? If former, then the issue should not be allowed to be sold to the general public. If latter, then the prospectus must be written in a way that the general public can understand it. After all, the general public are not financial gurus.
I think the MAS has the duty to prevent such products from flooding the retail market by "testing" the suitability of the prospectus for digestion by the general public.
Thanks, KK
REPLY
I hope that the Government will investigate the following:
2.1 Was there any fraudulent intent in the creation of these products? Were the products created with the aim of defrauding the investing public? Were the drafting of the prospectus, advertisements and other documents carried out with the intent of hiding the true facts from the investing public? Were the lawyers and other professionals involved in this activity?
I think one of the key contentious point in this whole saga is that we should have read the prospectus for the issue ourselves to assess whether the product is suitable for us or not.
But the problem is the way the prospectus had been written. There's simply too much technical jargon for us to understand all the contents written in it. Although we have a responsibility to read it, is it actually reasonable for laymen like us to understand it? Because of this complexity, we have to depend on the integrity and expertise of the RMs or the bank officers selling the product to advise us properly on the risks. There must be a fundamental change in the way these prospectus are written so that the general public can understand them.
I believe the MAS has a duty to oversee this especially if the issue is to be offered to the general public for subscription. I am not an expert on how this can be done but surely they can tell if a prospectus has been written for a targeted audience or general public? If former, then the issue should not be allowed to be sold to the general public. If latter, then the prospectus must be written in a way that the general public can understand it. After all, the general public are not financial gurus.
I think the MAS has the duty to prevent such products from flooding the retail market by "testing" the suitability of the prospectus for digestion by the general public.
Thanks, KK
REPLY
I hope that the Government will investigate the following:
2.1 Was there any fraudulent intent in the creation of these products? Were the products created with the aim of defrauding the investing public? Were the drafting of the prospectus, advertisements and other documents carried out with the intent of hiding the true facts from the investing public? Were the lawyers and other professionals involved in this activity?
Why did the banks continue to sell these products?
Dear Mr Tan,
Firstly, thanks for your blog very much!
I‘d like to highlight one point on your appeal for minibond holders. I am Pinnacle Note 1 investor. The issuer is Morgan Stanley. It is exactly same product as minibond. So, I have same worry as minibond holders’.
I bought Pinnacle Note 1 in 2006 because the newspaper advertisement keep saying it is some kind of bond. As an experienced bond investor, I took it as another alternative. For example, LTA 4.17% bond, we were paid every half year and I can cash out anytime as the price hardly change. The Pinnacle Note 1 is linked to 4 countries which are China, Malaysia, Thailand, and Korea. My understanding is unless these 4 counties have credit issue then I will have trouble. It is some kind of government bond.
However, I realized I made a big mistake one month later. I found the price of this product keep dropping at a very fast speed. It didn’t perform as my other government bonds at all. It is too late to read your opinion from your blog one year later.
My point is, if we are the first batch people cheated by this kind of product, so are the dealers if they do not know this kind of product before, I can accept their excuse. However, how could they continues market these kinds of product and promote it as safe bond to other investors when they have already known it is not safe at all from the experience of the first note?
The dealers also can not answer why the price dropped so much but only explained it should be penalty for early redemption. They do not fully understand their product also.
I am not sure Pinnacle Note’s future. The dealer told me I can get back my principle if I hold it until mature, but I do not know how true it is?
DD
REPLY
I hope that the Government will investigate the following:
2.2 Were the financial institutions that marketed the product aware about the real risks of the products? Did they train their front line advisers to hide the true facts? Were they negligent in not understanding the true risk? Did they monitor the conduct of their front line advisers to ensure that the products are sold to the right people, based on their risk profile and preference?
Firstly, thanks for your blog very much!
I‘d like to highlight one point on your appeal for minibond holders. I am Pinnacle Note 1 investor. The issuer is Morgan Stanley. It is exactly same product as minibond. So, I have same worry as minibond holders’.
I bought Pinnacle Note 1 in 2006 because the newspaper advertisement keep saying it is some kind of bond. As an experienced bond investor, I took it as another alternative. For example, LTA 4.17% bond, we were paid every half year and I can cash out anytime as the price hardly change. The Pinnacle Note 1 is linked to 4 countries which are China, Malaysia, Thailand, and Korea. My understanding is unless these 4 counties have credit issue then I will have trouble. It is some kind of government bond.
However, I realized I made a big mistake one month later. I found the price of this product keep dropping at a very fast speed. It didn’t perform as my other government bonds at all. It is too late to read your opinion from your blog one year later.
My point is, if we are the first batch people cheated by this kind of product, so are the dealers if they do not know this kind of product before, I can accept their excuse. However, how could they continues market these kinds of product and promote it as safe bond to other investors when they have already known it is not safe at all from the experience of the first note?
The dealers also can not answer why the price dropped so much but only explained it should be penalty for early redemption. They do not fully understand their product also.
I am not sure Pinnacle Note’s future. The dealer told me I can get back my principle if I hold it until mature, but I do not know how true it is?
DD
REPLY
I hope that the Government will investigate the following:
2.2 Were the financial institutions that marketed the product aware about the real risks of the products? Did they train their front line advisers to hide the true facts? Were they negligent in not understanding the true risk? Did they monitor the conduct of their front line advisers to ensure that the products are sold to the right people, based on their risk profile and preference?
Loss of life savings
If you have lost most of your life savings in the credit linked product, please send your story to me at kinlian@gmail.com. Your story should state the following:
1. Your name, contact number and age
2. How much did you invest, name of product, bank and branch
3. Circumstances in which you invested in the product
4. Details of any misleading statements or assurances given to you
5. Was your risk profile given to the seller?
6. Does your investment represent a substantial part of your lifetime savings
7. Will this loss cause great financial hardship to you?
8. Any additional information
I will compile your reports and pass them to Mr. Goh Chok Tong.
1. Your name, contact number and age
2. How much did you invest, name of product, bank and branch
3. Circumstances in which you invested in the product
4. Details of any misleading statements or assurances given to you
5. Was your risk profile given to the seller?
6. Does your investment represent a substantial part of your lifetime savings
7. Will this loss cause great financial hardship to you?
8. Any additional information
I will compile your reports and pass them to Mr. Goh Chok Tong.
Goh Chok Tong's comments on minibonds, high notes
Some investors have expressed disappointments at the comments made by Mr. Goh Chok Tong on minibonds and high notes.
I believe that Mr. Goh made the comments while in China. He may not be aware that many investors are retirees with low risk profile and were misled into investing in these high risk products by the advisers.
I suggest that investors should prepare the Petition letter to your Member of Parliament. You should see your MP to tell the MP about how you were misled into the investment. If the MPs hear the story from many of their constituents, they may be moved into taking this matter up in Parliament.
You can also sign the Petition letter to the Singapore Government. I will include my report on the possible wrong doings for the Government to investigate.
I believe that Mr. Goh made the comments while in China. He may not be aware that many investors are retirees with low risk profile and were misled into investing in these high risk products by the advisers.
I suggest that investors should prepare the Petition letter to your Member of Parliament. You should see your MP to tell the MP about how you were misled into the investment. If the MPs hear the story from many of their constituents, they may be moved into taking this matter up in Parliament.
You can also sign the Petition letter to the Singapore Government. I will include my report on the possible wrong doings for the Government to investigate.
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