We would like to invite investors who invested structured products (Pinnacle Notes, Minibonds, Jubilee, etc) through UOB Kay Hian to join our contact group. Many of us have a frustrating experience with UOB Kay Hian individually and we believe we can engage UOB Kay Hian more effectively as a group.
Please send us an email at uobkh.group@gmail.com, indicating your full name, email and phone contacts and type of products bought. Thank you.
Regards,
UOB Kay Hian Investors Group
Saturday, November 15, 2008
How I was misled (1)
Dear All,
I have written to H and MAS 3 weeks ago. Until now, I have not got any reply from them yet. I have bought Pinnacle series 6 & 7 from H. I felt that I am misled and I this was what happen to me.
Last year June 2007, I was looking around for banks that offered good fixed deposit rates. Through the website, I found out that H offered one of the highest interest fixed deposit rates.
My wife and I then went to H as it was near to our workplace. When we approached the counter staff on the intention of opening an fixed deposit account, she instead persuaded and recommended us the Pinnacle Notes Series 6 & 7. She told us that this product was as safe as fixed deposit but with a much higher interest paid out. Upon hearing this, we were quite excited and keen of learning more of this product. She then introduced us to the FM J, as she was busy assisting customers who had signed up for the Notes.
J started by showing us the brochures at the side of the counter. She told us that the response was overwhelming the H might stop accepting further applications as they had a lot of back log to process and clear.
The following was what she had told us during that short time :-
* The notes issued are invested in five leading banks, namely DBS, Citibank, UOB, OCBC, BOA and as well as SingTel.
* It pays between 5.2% and 5.0% interest per year for a 5.5 year tenure.
* Series 7 is tied to the share price of the mentioned 5 leading banks and SingTel.
* The risk is low and it operates just like the fixed deposit account.
* She did mention that the principal amount is not guaranteed but she assured us that the 5 leading banks and SingTel will not go bankrupt. She told us that even if you put your money in the fixed deposit account and the bank goes bankrupt, you will also stand to loose your principal amount.
* She further explained that as the money will be invested in the mentioned 5 leading banks and SingTel, even if you are so unlucky that one of the banks goes bankrupt, you will note loose all your principal amount, unless all the 5 banks go bankrupt a the same time.
* During the short time that she explained the product to us, she kept emphasizing the word "secured" credit linked notes. Hence, the product is extremely safe as it is linked to the 5 banks and SingTel.
* We were under a bit of pressure to sign up on the spot as she kept saying that due to the overwhelming response, H would stop accepting further applications these one or two days, before the closing date.
We were definitely being misled into believing that the Notes are used to invest in the 5 banks as well as SingTel. We invested $X Each in both Series 6 & 7 Pinnacle Notes.
Hastily, she filled up the application form for us, with brief explanation. Thereafter, she told us that she needed to do a simple survey of my profile. She said that this was required by her company. She flip through the survey form and randomly asked a few questions. She asked about our particulars, whether do we need the money in the next five years, and also did we purchase any similar products from other banks. The rest of the questions, she said she will tick "average/medium".
Before we left the bank, she handed a copy of the application form and survey form to us. Since then, we did not hear anything from H until 11 July 07. We received from DMG & Partners a confirmation notice that we had bought the Series 6 & 7 Pinnacle Notes. We have also received 2 payouts, on Jan 08 and July 08.
When we learnt of the collapse of the Lehman Brothers Bank and protest from investers of Pinnacle Notes, we decided to check it out from H.
On 9 Oct 08, I went to H to check if the Notes that we have invested are alright. Only then that I came to realise that our money are actually not invested in the 5 mentioned banks and SingTel. It was instead invested in 125 companies and 2 (Lehman Brothers and Washington Mutual) had already bankrupt. I was shocked and asked to see the list of the 125 companies. They were initially not very willing to show me but I insisted. I was even more shock when I received their email, as it is not only invested in the 125 companies but also used to buy credit card bills of Chase Bank.
I asked why we are not shown this list, prior to our purchase of these Notes. His explanation was that the list of companies which they have invested were only released after the offer period closed.
We were angry and fustrated that how can a Relationship Manager from such a reputable financial institution, deceived us into believing that the product is issued and invested in the 5 banks and SingTel, and that it is very safe, just like fixed deposit account.
Did the Financial Insitution do a risk assessment before they undertake to sell the product? Why are we not shown the list on what were invested. No clear and detailed explanation is provided before our purchase. Why H did not update us after the closing date on the list of companies that the notes invested. Why H did not update us when 2 of the 125 companies go bankrupt?
I have written to H and MAS 3 weeks ago. Until now, I have not got any reply from them yet. I have bought Pinnacle series 6 & 7 from H. I felt that I am misled and I this was what happen to me.
Last year June 2007, I was looking around for banks that offered good fixed deposit rates. Through the website, I found out that H offered one of the highest interest fixed deposit rates.
My wife and I then went to H as it was near to our workplace. When we approached the counter staff on the intention of opening an fixed deposit account, she instead persuaded and recommended us the Pinnacle Notes Series 6 & 7. She told us that this product was as safe as fixed deposit but with a much higher interest paid out. Upon hearing this, we were quite excited and keen of learning more of this product. She then introduced us to the FM J, as she was busy assisting customers who had signed up for the Notes.
J started by showing us the brochures at the side of the counter. She told us that the response was overwhelming the H might stop accepting further applications as they had a lot of back log to process and clear.
The following was what she had told us during that short time :-
* The notes issued are invested in five leading banks, namely DBS, Citibank, UOB, OCBC, BOA and as well as SingTel.
* It pays between 5.2% and 5.0% interest per year for a 5.5 year tenure.
* Series 7 is tied to the share price of the mentioned 5 leading banks and SingTel.
* The risk is low and it operates just like the fixed deposit account.
* She did mention that the principal amount is not guaranteed but she assured us that the 5 leading banks and SingTel will not go bankrupt. She told us that even if you put your money in the fixed deposit account and the bank goes bankrupt, you will also stand to loose your principal amount.
* She further explained that as the money will be invested in the mentioned 5 leading banks and SingTel, even if you are so unlucky that one of the banks goes bankrupt, you will note loose all your principal amount, unless all the 5 banks go bankrupt a the same time.
* During the short time that she explained the product to us, she kept emphasizing the word "secured" credit linked notes. Hence, the product is extremely safe as it is linked to the 5 banks and SingTel.
* We were under a bit of pressure to sign up on the spot as she kept saying that due to the overwhelming response, H would stop accepting further applications these one or two days, before the closing date.
We were definitely being misled into believing that the Notes are used to invest in the 5 banks as well as SingTel. We invested $X Each in both Series 6 & 7 Pinnacle Notes.
Hastily, she filled up the application form for us, with brief explanation. Thereafter, she told us that she needed to do a simple survey of my profile. She said that this was required by her company. She flip through the survey form and randomly asked a few questions. She asked about our particulars, whether do we need the money in the next five years, and also did we purchase any similar products from other banks. The rest of the questions, she said she will tick "average/medium".
Before we left the bank, she handed a copy of the application form and survey form to us. Since then, we did not hear anything from H until 11 July 07. We received from DMG & Partners a confirmation notice that we had bought the Series 6 & 7 Pinnacle Notes. We have also received 2 payouts, on Jan 08 and July 08.
When we learnt of the collapse of the Lehman Brothers Bank and protest from investers of Pinnacle Notes, we decided to check it out from H.
On 9 Oct 08, I went to H to check if the Notes that we have invested are alright. Only then that I came to realise that our money are actually not invested in the 5 mentioned banks and SingTel. It was instead invested in 125 companies and 2 (Lehman Brothers and Washington Mutual) had already bankrupt. I was shocked and asked to see the list of the 125 companies. They were initially not very willing to show me but I insisted. I was even more shock when I received their email, as it is not only invested in the 125 companies but also used to buy credit card bills of Chase Bank.
I asked why we are not shown this list, prior to our purchase of these Notes. His explanation was that the list of companies which they have invested were only released after the offer period closed.
We were angry and fustrated that how can a Relationship Manager from such a reputable financial institution, deceived us into believing that the product is issued and invested in the 5 banks and SingTel, and that it is very safe, just like fixed deposit account.
Did the Financial Insitution do a risk assessment before they undertake to sell the product? Why are we not shown the list on what were invested. No clear and detailed explanation is provided before our purchase. Why H did not update us after the closing date on the list of companies that the notes invested. Why H did not update us when 2 of the 125 companies go bankrupt?
KTS
Mibibond has return of 3 (on scale) and risk of 9
This contribution has been edited by TKL
Dear Mr. Tan
If we using the rating scale of 1 to 10 for the return and risk, then if the fixed deposit is rated at return of 1 with the risk of 1 , then minibond should be rated at return of 3 but with the risk of 9. OCBC 5.1% preference share should be rated at return of 3 and with the risk of 3.
Risk analysis for OCBC PS and minibond :
> We can sell the OCBC 5.1% PS anytime if we need cash
> We are locked up for 5 full years for minibond.
> The risk for losing everything for OCBC 5.1% PS is when OCBC bank go bankrupt
> The risk for losing everything for minibond is any one of the followings:
1) any one of the six major banks or Lehman brothers go bankrupt
2) some others credit events(out of 150 CDOs) occurred (very complex)
Under (1), the risk of minibond is already 7 times of OCBC PS. If we include (2), the risk will multiply, say 20 to 30 times. (I have the impression that the 150 CDOs are much more risky than the six banks)
Clearly, no one in the right mind will buy minibond for a return of 3 but with the risk of 9, if they are aware of the full risk.
Pang
Dear Mr. Tan
If we using the rating scale of 1 to 10 for the return and risk, then if the fixed deposit is rated at return of 1 with the risk of 1 , then minibond should be rated at return of 3 but with the risk of 9. OCBC 5.1% preference share should be rated at return of 3 and with the risk of 3.
Risk analysis for OCBC PS and minibond :
> We can sell the OCBC 5.1% PS anytime if we need cash
> We are locked up for 5 full years for minibond.
> The risk for losing everything for OCBC 5.1% PS is when OCBC bank go bankrupt
> The risk for losing everything for minibond is any one of the followings:
1) any one of the six major banks or Lehman brothers go bankrupt
2) some others credit events(out of 150 CDOs) occurred (very complex)
Under (1), the risk of minibond is already 7 times of OCBC PS. If we include (2), the risk will multiply, say 20 to 30 times. (I have the impression that the 150 CDOs are much more risky than the six banks)
Clearly, no one in the right mind will buy minibond for a return of 3 but with the risk of 9, if they are aware of the full risk.
Pang
Wayang Party
I wish to introduce you to another blog that contains information about developments on the credit-linked notes, and also about issues in Singapore.
http://wayangparty.com/
http://wayangparty.com/
Lesson from China: Hu Jintao
Chinese President Hu Jintao said China can help alleviate the impact of the financial crisis and slowing global growth by stoking its own economy.
Steady and relatively fast growth in China is in itself an important contribution to international financial stability and world economic growth.
China announced a $586 billion economic stimulus, focused on building low-rent housing, roads, railways and airports. The package also allows tax deductions for fixed assets such as machinery to stimulate investment. Farmers will also benefit from more subsidies.
China has taken an active part in the international cooperation to deal with the financial crisis and played a positive role in maintaining international financial stability and promoting the development of the world economy. Hu suggested that rich countries must take the lead in addressing the crisis.
Developed nations “should undertake their due responsibilities and obligations” by stabilizing their economies, restoring growth and taking steps to “safeguard investors’ interests”.
Steady and relatively fast growth in China is in itself an important contribution to international financial stability and world economic growth.
China announced a $586 billion economic stimulus, focused on building low-rent housing, roads, railways and airports. The package also allows tax deductions for fixed assets such as machinery to stimulate investment. Farmers will also benefit from more subsidies.
China has taken an active part in the international cooperation to deal with the financial crisis and played a positive role in maintaining international financial stability and promoting the development of the world economy. Hu suggested that rich countries must take the lead in addressing the crisis.
Developed nations “should undertake their due responsibilities and obligations” by stabilizing their economies, restoring growth and taking steps to “safeguard investors’ interests”.
Lesson from President-elect Obama
Extracted from bloomberg.com
Obama said he has assigned someone on his presidential transition team who interacts with Paulson (treasury secretary of Bush administration) daily.
"We are getting the information that's required, and we're making suggestions in some circumstances about how we think they might approach some of these problems,'' Obama said. Obama also said the government must do more to help distressed homeowners.
"We have not focused on foreclosures and what's happening to homeowners as much as I would like,'' Obama said, according to the excerpts. He called for setting up ``a negotiation between banks and borrowers so that people can stay in their homes.''
Translate into Singapore situation
The government and MAS must do more to help distressed investors of the credit linked notes.
They have not focused on helping the investors as much as is possible. There should be a negotiation between banks and investors so that fair compensation can be given to the investors for their losses.
Obama said he has assigned someone on his presidential transition team who interacts with Paulson (treasury secretary of Bush administration) daily.
"We are getting the information that's required, and we're making suggestions in some circumstances about how we think they might approach some of these problems,'' Obama said. Obama also said the government must do more to help distressed homeowners.
"We have not focused on foreclosures and what's happening to homeowners as much as I would like,'' Obama said, according to the excerpts. He called for setting up ``a negotiation between banks and borrowers so that people can stay in their homes.''
Translate into Singapore situation
The government and MAS must do more to help distressed investors of the credit linked notes.
They have not focused on helping the investors as much as is possible. There should be a negotiation between banks and investors so that fair compensation can be given to the investors for their losses.
Write directly to MAS and your MP
Dear Mr. Tan,
I am writing with a great deal of embarrassment. My husband and I are far from being uneducated. In fact, there are two phDs between us but that goes to show that stupidity doesn't discriminate against people with education. We sank $100 000 - half of it was with pinnacles 8.
I have the following questions:
(details deleted)
What we want to say is that there is definitely a history of misrepresentation in this case. However, we are also embarrassed by the fact that we were so gullible and trusting. In the news, much is made of the plight of retirees who couldn't have known better. However, the honest truth is - it is a very complex product and if we (someone like us) could not understand it, I suspect, many people will walk into this blindly.
My point - the law usually wouldn't allow anyone to sell lousy goods in bad faith. However, when it comes to banks - they can legitimately take millions off simple folks like us and walk away. This is what I find incomprehensible. Is MAS an innocent bystander?
Finally, I just want to thank your website for helping me understand the issues even though I feel more of a fool after reading what others are saying. What I want to say is that don't assume education is going to protect you from such blunders. (details deleted)
I hope this reaches your personal email account and not your blog. If for some reason it goes to your blog, I would be grateful if you could remove it.
REPLY
I advise you to write directly to the MAS and to your member of Parliament. I have a few hundred people writing to me on similar experiences. I do not have the power to do anything, except to post into my blog, speak at Hong Lim Park, and organise Petitions (which are ignored by MAS).
I am writing with a great deal of embarrassment. My husband and I are far from being uneducated. In fact, there are two phDs between us but that goes to show that stupidity doesn't discriminate against people with education. We sank $100 000 - half of it was with pinnacles 8.
I have the following questions:
(details deleted)
What we want to say is that there is definitely a history of misrepresentation in this case. However, we are also embarrassed by the fact that we were so gullible and trusting. In the news, much is made of the plight of retirees who couldn't have known better. However, the honest truth is - it is a very complex product and if we (someone like us) could not understand it, I suspect, many people will walk into this blindly.
My point - the law usually wouldn't allow anyone to sell lousy goods in bad faith. However, when it comes to banks - they can legitimately take millions off simple folks like us and walk away. This is what I find incomprehensible. Is MAS an innocent bystander?
Finally, I just want to thank your website for helping me understand the issues even though I feel more of a fool after reading what others are saying. What I want to say is that don't assume education is going to protect you from such blunders. (details deleted)
I hope this reaches your personal email account and not your blog. If for some reason it goes to your blog, I would be grateful if you could remove it.
REPLY
I advise you to write directly to the MAS and to your member of Parliament. I have a few hundred people writing to me on similar experiences. I do not have the power to do anything, except to post into my blog, speak at Hong Lim Park, and organise Petitions (which are ignored by MAS).
G20 and G8
The G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union.
The Netherlands and Spain were also represented, as were the IMF, World Bank, Financial Stability Forum and United Nations.
The G8 are Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States of America, and the President of the European Commission.
The Netherlands and Spain were also represented, as were the IMF, World Bank, Financial Stability Forum and United Nations.
The G8 are Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States of America, and the President of the European Commission.
There are still regulations in Singapore
I brought my small dog to Yio Chu Kang stadium. After two rounds the track, the attendant called to me. He said that "dogs are not allowed". It is posted in the regulation of the stadium. I checked and found "Animals, birds or reptiles are not allowed".
It is an irony. MAS registered more than 50 series of credit linked notes that are approved for sale to the public who are expected to invest "with their eyes open". It seems that dogs are not allowed in the stadium, but credit linked notes, with "first to default" swaps and 100 or more toxic CDOs are approved - even if you can lose a lifetime of savings.
It is an irony. MAS registered more than 50 series of credit linked notes that are approved for sale to the public who are expected to invest "with their eyes open". It seems that dogs are not allowed in the stadium, but credit linked notes, with "first to default" swaps and 100 or more toxic CDOs are approved - even if you can lose a lifetime of savings.
New swap counter party to replace Lehman Brothers
Many people asked me if a new swap counter party is found to replace Lehman Brothers, will they get their principal back on maturity (i.e. the full sum invested in the minibond)?
The answer is "I don't know". The investor still has to face the following risks during the remaining term:
> default of the 6 reference entity
> default of the underlying assets
> default of the new swap counter-party
For example, Morgan Stanley is the swap counter party for Pinnacle Notes 9 and 10. They are still intact. The reference entities under these notes have not defaulted. However, 5 of the underlying assets of these notes have defaulted. These notes now have zero value.
The fate of these pinnacle notes show that the minibond still have many risks down the road, even if a new swap counterparty is found.
The answer is "I don't know". The investor still has to face the following risks during the remaining term:
> default of the 6 reference entity
> default of the underlying assets
> default of the new swap counter-party
For example, Morgan Stanley is the swap counter party for Pinnacle Notes 9 and 10. They are still intact. The reference entities under these notes have not defaulted. However, 5 of the underlying assets of these notes have defaulted. These notes now have zero value.
The fate of these pinnacle notes show that the minibond still have many risks down the road, even if a new swap counterparty is found.
God help the righteous
Hi Mr Tan Kin Lian
Our family and friends are very appreciative of your good cause and perseverence to fight for justice for the oppressed. We thank God for your righteousness.
A few key things I would like to summarize here after a long episode of struggle since the fateful day of 15 Sep 08 of Lehman collapse for "a just and fair" resolution resulting in nothing but a fatal rejection. This case is "DBS" High Notes 5 mis-selling.
We feel so helpless and victimised because the product was a DBS product sold as a very safe and low risk product like a FD but later turned out to be such a complex product that we do not even understand, and how is it that we became the "insurer" of the bank?
I wrote letters to the CEO and MD of Consumer Banking, copied MAS and FIDReC. There was no reply to specific questions asked, including:
- The 31 Mar 08 letter to investors from Brandon Lam of DBS which "emphasise that none of the DBS High Notes has any direct exposure to US subprime mortgage-backed securities." Why did this contradict the event of Lehman Brothers.
- The 31 Mar 08 letter to investors from Brandon Lam of DBS stated that "it would take several underlying reference entities in the collateral to suffer Credit Events before investors suffer a loss to their principal amount." Why did a single event of Lehman Brothers lead to zero redemption when there are 8 reference entities?
- The 27 Jun 08 letter from Brandon Lam of DBS urging investors to hold "DBS" High Notes as he said "DBS High Notes are designed to be held to maturity". Why DBS did not uphold its due diligence to safeguard the investment of the people but misled us to hold the funds and later turned around and said that it's zero value? This is "DBS" High Notes, carried under its name.
- Why there is no explicit and clear explanation of the risks associated with this product during sales?
- Why pricing statement and prospectus were not given and explained during sales?
- Why did the RM still claim the product is low risk but the MD admitted that it is high risk in the scale of 8 out of 10?
- Why the product is so complex, yet the RM thought that it is a simple FD kind of investment?
MAS remains on the sideline without any comments. They said they cannot be involved in getting the bank to compensate for the loss or mis-representation. They said they can fine and warn the bank for wrong practice, but we lost our hard-earn money for them to correct their processes and practice?
We are not financially nor legally trained. We wish to know why the authority is also so helpless towards such mis-selling of a financial product that impact so many people.
God help us. For the eyes of the Lord are toward the righteous and His ears are open to their cry. When the righteous cry for help, the Lord hears and delivers them
from all their distresses and troubles.
You see, the Lord is close to those who have a broken heart, and saves such who are crushed with sorrow and are humbly penitent. We claim this promise. Amen.
JL
Our family and friends are very appreciative of your good cause and perseverence to fight for justice for the oppressed. We thank God for your righteousness.
A few key things I would like to summarize here after a long episode of struggle since the fateful day of 15 Sep 08 of Lehman collapse for "a just and fair" resolution resulting in nothing but a fatal rejection. This case is "DBS" High Notes 5 mis-selling.
We feel so helpless and victimised because the product was a DBS product sold as a very safe and low risk product like a FD but later turned out to be such a complex product that we do not even understand, and how is it that we became the "insurer" of the bank?
I wrote letters to the CEO and MD of Consumer Banking, copied MAS and FIDReC. There was no reply to specific questions asked, including:
- The 31 Mar 08 letter to investors from Brandon Lam of DBS which "emphasise that none of the DBS High Notes has any direct exposure to US subprime mortgage-backed securities." Why did this contradict the event of Lehman Brothers.
- The 31 Mar 08 letter to investors from Brandon Lam of DBS stated that "it would take several underlying reference entities in the collateral to suffer Credit Events before investors suffer a loss to their principal amount." Why did a single event of Lehman Brothers lead to zero redemption when there are 8 reference entities?
- The 27 Jun 08 letter from Brandon Lam of DBS urging investors to hold "DBS" High Notes as he said "DBS High Notes are designed to be held to maturity". Why DBS did not uphold its due diligence to safeguard the investment of the people but misled us to hold the funds and later turned around and said that it's zero value? This is "DBS" High Notes, carried under its name.
- Why there is no explicit and clear explanation of the risks associated with this product during sales?
- Why pricing statement and prospectus were not given and explained during sales?
- Why did the RM still claim the product is low risk but the MD admitted that it is high risk in the scale of 8 out of 10?
- Why the product is so complex, yet the RM thought that it is a simple FD kind of investment?
MAS remains on the sideline without any comments. They said they cannot be involved in getting the bank to compensate for the loss or mis-representation. They said they can fine and warn the bank for wrong practice, but we lost our hard-earn money for them to correct their processes and practice?
We are not financially nor legally trained. We wish to know why the authority is also so helpless towards such mis-selling of a financial product that impact so many people.
God help us. For the eyes of the Lord are toward the righteous and His ears are open to their cry. When the righteous cry for help, the Lord hears and delivers them
from all their distresses and troubles.
You see, the Lord is close to those who have a broken heart, and saves such who are crushed with sorrow and are humbly penitent. We claim this promise. Amen.
JL
High risk is not disclosed in Prospectus
Dear Mr Tan,
I am one of the Pinncle Note investors. As I am working in a Financial Institution, I can't be considered as a vunerable group. But honestly, I am not aware of the extremely high level of risk associated with such notes. The risk of default is way beyond the basket of blue-chip reference entities.
I received a letter from the bank that I bought the note, together with a letter from Pinncle Performance Limited informing that credit rating assigned by Fitch has been downgraded to "B-" (Rating Watch: Negative) due to the credit events occured in respect of Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf.
When I bought the note, I was told that the note is credit-linked to these reference entities: Standard Chartered bank, HSBC Bank PLC, Bank of China Limited, The Korea Development Bank, Malayan Banking Berhard, DBS Bank, United Overseas Bank Ltd.
I am really surprised to see Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf. appearing on the letter.
I looked through the Base Prospectus of the notes dated 7 Aug 2006 and I can't find the above toxic entities mentioned.
Is this sufficient ground to argue that the arranger or the FI has misold the product or have not fully disclosed the details of this products? Not sure how many other such toxic entities are associated with the notes. I would certainly have thought twice if the risk is beyond the 7 blue-chip banks as mentioned in the brochure.
REPLY
I believe that you have sufficient grounds. I suggest that you prepare a statutory declaration to support your complaint. Read the instructions in my blog:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.htmlhttp://tankinlian.blogspot.com/2008/10/affidavit-statement-made-under-oath.htmlhttp://tankinlian.blogspot.com/2008/10/individual-advice.html
I am one of the Pinncle Note investors. As I am working in a Financial Institution, I can't be considered as a vunerable group. But honestly, I am not aware of the extremely high level of risk associated with such notes. The risk of default is way beyond the basket of blue-chip reference entities.
I received a letter from the bank that I bought the note, together with a letter from Pinncle Performance Limited informing that credit rating assigned by Fitch has been downgraded to "B-" (Rating Watch: Negative) due to the credit events occured in respect of Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf.
When I bought the note, I was told that the note is credit-linked to these reference entities: Standard Chartered bank, HSBC Bank PLC, Bank of China Limited, The Korea Development Bank, Malayan Banking Berhard, DBS Bank, United Overseas Bank Ltd.
I am really surprised to see Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Glitnir banki hg, Kaupthing banki hf and Landsbanki Islands hf. appearing on the letter.
I looked through the Base Prospectus of the notes dated 7 Aug 2006 and I can't find the above toxic entities mentioned.
Is this sufficient ground to argue that the arranger or the FI has misold the product or have not fully disclosed the details of this products? Not sure how many other such toxic entities are associated with the notes. I would certainly have thought twice if the risk is beyond the 7 blue-chip banks as mentioned in the brochure.
REPLY
I believe that you have sufficient grounds. I suggest that you prepare a statutory declaration to support your complaint. Read the instructions in my blog:
http://tankinlian.blogspot.com/2008/10/general-advice-to-investors-of.htmlhttp://tankinlian.blogspot.com/2008/10/affidavit-statement-made-under-oath.htmlhttp://tankinlian.blogspot.com/2008/10/individual-advice.html
High risk of credit linked notes, inadequate return
Dear Mr. Tan,
Here are a few pointers you may want to use in your talk on Saturday about investors going in with their eyes open.
Any rational person if he is made aware of the risks in the Minibonds will never but it for the simple reason that the interest rate is only 5% compared with dual currency and equity Link investments which offers up to 22% with lower risks. In the worst scenario we just have to be converted to the foriegn currency or pick up the normally blue chips share. The risk is certainly less than that of minbond.
In short, we were hoodwink and MAS who is supposed to safeguard its citizens have allowed this toxic product to be sold through their negligence or ignorance. I have been told by unconfirmed sources that a certain rating agency refuses to rate the credit linked notes, but they received veiled threats.
I am quite sure the town councils who lost money did not understand what they were buying but are too embarassed to say so. After all it not their money but the taxpayers.
Keep up the good work
VK
Here are a few pointers you may want to use in your talk on Saturday about investors going in with their eyes open.
Any rational person if he is made aware of the risks in the Minibonds will never but it for the simple reason that the interest rate is only 5% compared with dual currency and equity Link investments which offers up to 22% with lower risks. In the worst scenario we just have to be converted to the foriegn currency or pick up the normally blue chips share. The risk is certainly less than that of minbond.
In short, we were hoodwink and MAS who is supposed to safeguard its citizens have allowed this toxic product to be sold through their negligence or ignorance. I have been told by unconfirmed sources that a certain rating agency refuses to rate the credit linked notes, but they received veiled threats.
I am quite sure the town councils who lost money did not understand what they were buying but are too embarassed to say so. After all it not their money but the taxpayers.
Keep up the good work
VK
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