Friday, October 24, 2008

SCMP: Angry investors protest

http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=DNB3L2CAL132&linkid=b7a97cb4-e18d-4fe7-a5c8-f27afb0432d2&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d

SCMP:Angry investors protest
25 Oct 2008
Peter So

About 100 desperate investors who bought retail structured notes and equity-linked notes from local banks linked to the bankrupt US investment bank Lehman Brothers protested to the Hong Kong Monetary Authority and the Securities and Futures Commission yesterday morning.

They said the authorities had only paid attention to the victims of Lehman-linked minibonds but ignored those who bought other structured products. Minibonds are not corporate bonds but consist of high-risk creditlinked derivatives.

The protesters included customers of Citic Ka Wah Bank, Chong Hing Bank, DBS Bank, Citibank, Standard Chartered Bank, ABN Amro, Royal Bank of Scotland and Dai Sang Bank.
They said the banks had deceived them into putting their life savings into the high-risk investment products and urged the banks to make full repayments. DBS said it would notify clients yesterday of the value of their structured products linked to Lehman, and would compensate the customers for losses if mis-selling was found.

But protester Wong Kam-chuen, who invested more than HK$2 million in the bank’s retail structured notes, said he had heard nothing from DBS.

“The bank staff couldn’t tell me when the investigation [into alleged mis-selling] will finish. I really have no idea of when I can have my money back,” said Mr Wong.

Speaker's Corner - 25 October 2008

I have registered to speak at Speaker Corner from 5 to 7 pm on Saturday 25 October.

Some investors are very angry at the action by the Government regarding investors outside of the "vulnerable" group. They sent strong messages to me in my blog and by e-mail.

I agree with your views. I receive more than 100 of these messages. I suggest that some of these investors should come forward and speak at Speaker's Corner. You can register quite easily at:

http://www.nparks.gov.sg/cms/index.php?option=com_chronocontact&chronoformname=honglim_park_speakers_corner

If you have registered, send your particulars to me. I will get the host to call the speakers to talk in an orderly manner.

A serious recession in the months ahead

We have to prepare for a serious recession in the months ahead. Here are the likely trend of events:

a) Banks reduce their credit
b) Businesses do not have the operating capital
c) Consumers reduce their spending
d) Businesses cannot meet their operating expenses
e) They reduce the size of their offices, shops and factories and retrench employees
f) They cannot pay their rentals - so the landlords have to evict them (but they cannot find new tenants)

This will be a downward spiral.

What can be done?

Call for Public Inquiry - some views

Anonymous said...
There should be a PUBLIC INQUIRY held which should be initiated by the Govt on this matter. Do not let them sweep this matter 'under the carpet'.

Issues include:
1. MAS role as a regulator in this matter. Why there was an oversight over this matter? Who was the head of the division who oversaw this?

2. Why MAS did not further investigate when complaints as far back as 2003/04 began regarding mis-selling of structured products? How many complaints of mis-selling had been brought to MAS attention?

3. Can the Finance Ministry also look into their role to provide a higher level overview over MAS responsibilities?

4. Can those who bought structured investment products sold by Lehman/Merrill Lynch via local banks go to their MP and raise the issue with them. Go every day or week - go pester them as much as possible! They should be working for you - Spore citizens & not the govt! Go in a collective group but behave yourselves first! Agitate for a PUBLIC INQUIRY via a petition! A govt cannot refuse the public's request!

5. Organize collective groups to go to the MAS & Banks to protest & demand a PUBLIC INQUIRY. Do not fear the riot police squad because it's your money that is at risk. There is a fine line between political protest & personal protest. If you keep quiet & don't agitate, then you won't see your money! Better to go to jail than not see your money! What can they do to you as a collective group? It is not a time to be passive. Assert your rights as citizens to be heard!
2:01 PM

Donald said...
I agree with 2.01 pm. A PUBLIC INQUIRY is definitely required. If MAS failed in their role, they people responsible should be removed. FIs being the 'main mastermind' if found guilty should be penalised. Very sad, hard to find independance in Singapore. I am not surprised the minibond issue will drag to 2009, as FIs need their books to look good for 2008 to justify their bonuses.

Anonymous said...
From the way MAS is handling this issue, it is obvious to me that it is trying to side-step responsibility.

I suspect that there could be wrong-doings or careless decisions being made by MAS when they "registered" (which is as good as giving consent) for such dubious toxic entrapping products to be sold by the Financial Institutions.

Therefore, I fully agree and support the call for a Commission of Inquiry to be conducted by an independent neutral body convened by the Govt. Either the PM or the Finance Minister should initiate the Commission of Inquiry to address likely injustice, fraudulent dealings, breaches of regulations, cunning manipulations of the laws as well as to draw lessons from such a fiasco so that MAS and FIs would be put into their proper shoes in order to bring confidence back to Singapore as a financial centre.

by Neutral Observer, 24 Oct 2008.
2:43 AM

No compensation from ABN AMRO

Dear Mr Tan,
My mother and I are joint account holders for minibond series 2 from ABN AMRO. My mum is 68 years old, attended only a few years of schooling, does not read or write English, stayed in a 4 room HDB flat that is more than 25 years old, and has been a frugal housewife all her life. Two years old, my mother's fixed deposit of S$170,000 matured and she put the entire amount of her hard-earned savings into the minibond series 2, thinking that she was investing in a safe bond as explained by the RM.

My mother clearly falls into the vulnerable investor group as described by MAS, and such risky product should never have been recommended to her. In fact, the RM did not even carry out a Financial Needs Analysis on my mother. When I asked for her profile report, the bank replied that they only need to do one profile. I told them that it is ridiculous for a bank and a gross negligent on the bank's part to assume that my risk profile and my mother's risk profile are the same.

This morning I just received a call from ABN AMRO that there will be no compensation for our minibond investment. I was so shocked to hear that since local FIs are already making the right steps to compensate the vulnerable investors. My mother was clearly a vulnerable investor sold on a product totally not suitable for her. The bank officer on the phone could not give a reason why there was no compensation, but only to say that the decision was made by a committee. After demanding to meet the committee, the officer came back to say that the bank will review the case again and get back to me.

I would like to caution other investors that some banks will try to get away with the compensation if they can. Do not give up, fight for what is rightfully ours.

Isabel Tan

Just One Year

During the past 12 months, the stockmarkets dropped as follows:

S&P (USA) 45%
Nikkei (Japan) 60%
STI (Singapore) 60%

I cannot imagine the scale of this drop in just 1 year. It is unimaginable. Earlier this year, the Singapore Government was projecting good economic growth. Now, we are likely to see a serious recession.

Previously, I thought that the hedge funds should be blamed for short selling the market to make a speculative gain. Maybe, this is not the reason.

It is possible that the hedge funds are invested to the full, with borrowings of 10 times of their capital. During this crisis, the lenders pulled back their credit lines. This forced the hedge funds to sell their holdings. This could be the reason for the massive falls in the stockmarkts of 10% a day.

Lesson: All hedge funds should be regulated. They are not allowed to operate on leverage. They should only invest their capital.

Investors want open forum with DBS

By Francis Chan

INVESTORS of DBS High Notes 5 went to the bank's Shenton Way headquarters yesterday to ask that an open forum be held for customers caught up in the debacle.
DBS said last night it was considering the request.
An investor, who wanted to stay anonymous, said she and two others gave a letter to DBS' consumer banking group head, Mr Rajan Raju, during the afternoon visit.
She said the letter contained signatures of 166 High Notes 5 investors identifying themselves as 'DBS's valued customers who have placed explicit trust in you and your organisation'.
The letter asked the bank's top brass to 'provide investors with a detailed statement of account for each series of the High Notes, from the inception until the latest available date' and to produce 'a valuation of each series of the notes at the latest available date'.
The group also asked the bank to organise a meeting with investors to help clarify various issues.
The letter, which was copied to the Monetary Authority of Singapore, also stated that the investors wanted Mr Gerard Ee to attend the meeting.
Mr Ee is the independent person appointed by DBS to oversee the bank's handling of complaints related to the sale of High Notes 5.
Over the last month, DBS has been accused of mis-selling the structured product, which went bad after the collapse of bankrupt US investment bank, Lehman Brothers.
But despite bearing the brunt of its customers' anger over the past month, the bank has been open to meeting investors.
'I must say that the senior management were very positive when they met us,' said the investor who handed over the letter.
'They even asked us if it would be better to hold a few meetings so that they could cater to more investors. I think that is a good sign.'
DBS officials met a small group of investors at its headquarters last Wednesday.


http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20081023-95689.html