Comment posted in my blog
The "investigation" consisted of the person telling me how I should have been smarter as a consumer. It was a lesson on how not to be stupid. No answers were documented or statements written down by them. Not even notes were taken I was also told that I would probably get nothing back. "Move on" was the message.
The tone was patronising and the body language hostile and bored in turns. It was a charade. It was tokenism at best. At worst it was arrogance and contempt for the customer. So much for care for the common investor and investigation of mis-selling! Shame on them!
Rachel
Friday, October 10, 2008
Hong Kong - selling of structured products
South China Morning Post (Hong Kong) - October 10, 2008
Author: Joyce Man and Peter So
The Hong Kong Monetary Authority is considering a ban on banks selling complex investment products such as minibonds. It is one of the possible measures to be taken to protect small investors from financial turmoil.
The authority may also raise the minimum investment in such products to a level that would deter unsophisticated investors.
The possible steps were revealed yesterday by its deputy chief executive, Choi Yiu-kwan, amid continuing calls for relief for small investors facing heavy losses on minibonds and other complex derivatives issued or guaranteed by bankrupt US bank Lehman Brothers.
Meanwhile DBS Bank (Hong Kong) became the first local bank to say it would consider full compensation for losses on one such investment product - but only if its investigations showed buyers had been misled by the bank's sales staff.
At the same time, banking sources said banks were inclined to accept a government proposal that they buy back such products at current market value but that some questions still needed answering, including whether a buy-back would be legal.
The Monetary Authority will submit recommendations for changes in policies covering the sale of complex investment products to Financial Secretary John Tsang Tsun-wah within three months.
"Whether banks should be an investment adviser on such products could be one of the issues," Mr Choi said. The authority could also consider raising the minimum investment in them to US$1 million, so that they were out of the reach of small investors who could not handle the risk.
Banks have been selling minibonds in lots of as little as HK$100,000.
The authority has received 7,730 complaints of mis-selling of minibonds and other products issued or guaranteed by Lehman Brothers.
It has opened investigations into 41 cases and is seeking more information before deciding whether to investigate a further 189. The cases under investigation involve nine banks.
Investors complain they were misled into believing the minibonds - sold as proxy investments in well-known companies - were low-risk and unaware of the Lehman Brothers link. In fact they are high-risk, credit-linked derivatives.
Mr Choi said the authority had contracted 45 people to join more than 70 full-time staff already working on the complaints.
He noted that the authority had told banks in 2006 that they must take special care when dealing with vulnerable customers such as the elderly, illiterate or visually impaired and assess their tolerance of risk.
More than 70 worried purchasers of one such complex investment - called structured notes - met DBS Bank executives yesterday to seek a full refund for their losses.
The notes, issued by Constellation Structured Retail Notes, included some linked to Lehman Brothers. The bank will appoint an independent accounting firm to assess the products' remaining value, allowing customers to redeem them early.
"If we find any case of misleading sales, we will not rule out repaying the client's full investment," Linda Wong, regional head of consumer banking, said. Each case would be considered separately. The bank said it would not buy back structured notes unconditionally.
Billy Mak Sui-choi, associate professor in the department of finance and decision science at Hong Kong Baptist University, said structured products were securities linked to a broad class of financial instruments and their value could move with changes in interest rates and the prices of stocks and other assets.
Lawmakers who accompanied the DBS customers to yesterday's meeting questioned the independence and transparency of its in-house investigation of sales tactics.
Audrey Eu Yuet-mee, leader of the Civic Party, said the investigation should be conducted by a third party.
Author: Joyce Man and Peter So
The Hong Kong Monetary Authority is considering a ban on banks selling complex investment products such as minibonds. It is one of the possible measures to be taken to protect small investors from financial turmoil.
The authority may also raise the minimum investment in such products to a level that would deter unsophisticated investors.
The possible steps were revealed yesterday by its deputy chief executive, Choi Yiu-kwan, amid continuing calls for relief for small investors facing heavy losses on minibonds and other complex derivatives issued or guaranteed by bankrupt US bank Lehman Brothers.
Meanwhile DBS Bank (Hong Kong) became the first local bank to say it would consider full compensation for losses on one such investment product - but only if its investigations showed buyers had been misled by the bank's sales staff.
At the same time, banking sources said banks were inclined to accept a government proposal that they buy back such products at current market value but that some questions still needed answering, including whether a buy-back would be legal.
The Monetary Authority will submit recommendations for changes in policies covering the sale of complex investment products to Financial Secretary John Tsang Tsun-wah within three months.
"Whether banks should be an investment adviser on such products could be one of the issues," Mr Choi said. The authority could also consider raising the minimum investment in them to US$1 million, so that they were out of the reach of small investors who could not handle the risk.
Banks have been selling minibonds in lots of as little as HK$100,000.
The authority has received 7,730 complaints of mis-selling of minibonds and other products issued or guaranteed by Lehman Brothers.
It has opened investigations into 41 cases and is seeking more information before deciding whether to investigate a further 189. The cases under investigation involve nine banks.
Investors complain they were misled into believing the minibonds - sold as proxy investments in well-known companies - were low-risk and unaware of the Lehman Brothers link. In fact they are high-risk, credit-linked derivatives.
Mr Choi said the authority had contracted 45 people to join more than 70 full-time staff already working on the complaints.
He noted that the authority had told banks in 2006 that they must take special care when dealing with vulnerable customers such as the elderly, illiterate or visually impaired and assess their tolerance of risk.
More than 70 worried purchasers of one such complex investment - called structured notes - met DBS Bank executives yesterday to seek a full refund for their losses.
The notes, issued by Constellation Structured Retail Notes, included some linked to Lehman Brothers. The bank will appoint an independent accounting firm to assess the products' remaining value, allowing customers to redeem them early.
"If we find any case of misleading sales, we will not rule out repaying the client's full investment," Linda Wong, regional head of consumer banking, said. Each case would be considered separately. The bank said it would not buy back structured notes unconditionally.
Billy Mak Sui-choi, associate professor in the department of finance and decision science at Hong Kong Baptist University, said structured products were securities linked to a broad class of financial instruments and their value could move with changes in interest rates and the prices of stocks and other assets.
Lawmakers who accompanied the DBS customers to yesterday's meeting questioned the independence and transparency of its in-house investigation of sales tactics.
Audrey Eu Yuet-mee, leader of the Civic Party, said the investigation should be conducted by a third party.
MAS publishes timeline for Minibond resolution process
10 October 2008
MAS publishes timeline for Minibond resolution process
The Monetary Authority of Singapore (MAS) has published a timeline for the resolution process for investors who bought Lehman Minibonds. The trustee (HSBC Institutional Trust Services Singapore), which is in charge of overseeing the Minibond products, has informed the MAS that it has not received any firm offers from potential new swap counterparties to replace the now bankrupt Lehman Brothers in the Minibond progamme. The MAS has said that the trustee does not expect any firm offers and will commence the selling of the underlying securities in two weeks.
If in the event of a swap counterparty being found the replacement swap proposal would require at least 75% of the votes cast by the noteholders at an extraordinary general meeting. However if a firm agreement is not reached within two weeks the trustee will commence the enforcement process for Series 5 and 6 of the Minibonds, which will ultimately entail selling the underlying securities in an orderly fashion and using the proceeds to pay the noteholders after deducting any other liabilities which are payable.
The total issue size of the Minibond programme was SG$508 million, of which S$375 million was sold to about 8,000 retail investors through nine distributors. Meanwhile SG$23 million of the total SG$28 million of Merrill Lynch Jubilee Series 3, which referenced Lehman Brothers, were sold to about 350 investors through six stockbroking firms. Over 80% of the Minibond programme and Merrill Lynch Jubilee Series 3 noteholders invested up to SG$50,000, with 28% having bought SG$10,000 or less. In the case of DBS High Notes 5, which also referenced Lehman Brothers, over 1,400 investors bought SG$103 million worth of notes. More than half of them invested SG$50,000 or less.
As of 10 October 2008, the ten distributors of the Minibond programme, Merrill Lynch Jubilee Series 3, and the DBS High Notes 5 have received 680 formal complaints from investors.
http://www.structuredproductsonline.com/public/showPage.html?page=819778
MAS publishes timeline for Minibond resolution process
The Monetary Authority of Singapore (MAS) has published a timeline for the resolution process for investors who bought Lehman Minibonds. The trustee (HSBC Institutional Trust Services Singapore), which is in charge of overseeing the Minibond products, has informed the MAS that it has not received any firm offers from potential new swap counterparties to replace the now bankrupt Lehman Brothers in the Minibond progamme. The MAS has said that the trustee does not expect any firm offers and will commence the selling of the underlying securities in two weeks.
If in the event of a swap counterparty being found the replacement swap proposal would require at least 75% of the votes cast by the noteholders at an extraordinary general meeting. However if a firm agreement is not reached within two weeks the trustee will commence the enforcement process for Series 5 and 6 of the Minibonds, which will ultimately entail selling the underlying securities in an orderly fashion and using the proceeds to pay the noteholders after deducting any other liabilities which are payable.
The total issue size of the Minibond programme was SG$508 million, of which S$375 million was sold to about 8,000 retail investors through nine distributors. Meanwhile SG$23 million of the total SG$28 million of Merrill Lynch Jubilee Series 3, which referenced Lehman Brothers, were sold to about 350 investors through six stockbroking firms. Over 80% of the Minibond programme and Merrill Lynch Jubilee Series 3 noteholders invested up to SG$50,000, with 28% having bought SG$10,000 or less. In the case of DBS High Notes 5, which also referenced Lehman Brothers, over 1,400 investors bought SG$103 million worth of notes. More than half of them invested SG$50,000 or less.
As of 10 October 2008, the ten distributors of the Minibond programme, Merrill Lynch Jubilee Series 3, and the DBS High Notes 5 have received 680 formal complaints from investors.
http://www.structuredproductsonline.com/public/showPage.html?page=819778
Climate of fear and intimidation
Someone sent a warning to me that I may be a risk of being sued for defamation - because I organise a petition to ask the Government, especially the Commercial Affairs Department, to conduct an investigation into the credit linked securities.
He reasoned that this petition implies that there were wrong doing by the parties involved in the credit linked securities, and they may consider that I have defamed them.
I rejected this reasoning. But a few other people seem to think that this is a possibility and advised me to "be careful".
This reflects a very sad state of affairs in Singapore. There is a climate of fear, even of speaking out against injustice and wrong doing. It is so easy for big business and powerful people to intimidate the weak with the threat of lawsuit.
He reasoned that this petition implies that there were wrong doing by the parties involved in the credit linked securities, and they may consider that I have defamed them.
I rejected this reasoning. But a few other people seem to think that this is a possibility and advised me to "be careful".
This reflects a very sad state of affairs in Singapore. There is a climate of fear, even of speaking out against injustice and wrong doing. It is so easy for big business and powerful people to intimidate the weak with the threat of lawsuit.
Risky to trade on leverage
Dear Mr. Tan,
The various major newspaper are now flooded with many advertisments about "Good Money, sure profits" for various financial products such as Forex, option and futures etc.
These products are highly leveraged and they is no way that it is "Sure profit and easy money" as advertised, which would be disaster for innocent layman trying to beat the market. For one, these markets are played by the most experience trader/banker with extremely deep pocket and definitely not simple as advertised.
From my wild guess, these advertisement would try to get innocent laymen to come to their course to collect course fees. Laymen without good knowlege would only end up paying for the course fee plus the loss for sure.
I hope you could also bring these issues to the hugh readers of yr blog to be wary before getting into these trading.
MOST IMPORTANTLY, these advertisment must state warning "Leverage products are highly risky and could result in hugh financial loss" which seem that the people in ST does not require the advertiser to do so.
The various major newspaper are now flooded with many advertisments about "Good Money, sure profits" for various financial products such as Forex, option and futures etc.
These products are highly leveraged and they is no way that it is "Sure profit and easy money" as advertised, which would be disaster for innocent layman trying to beat the market. For one, these markets are played by the most experience trader/banker with extremely deep pocket and definitely not simple as advertised.
From my wild guess, these advertisement would try to get innocent laymen to come to their course to collect course fees. Laymen without good knowlege would only end up paying for the course fee plus the loss for sure.
I hope you could also bring these issues to the hugh readers of yr blog to be wary before getting into these trading.
MOST IMPORTANTLY, these advertisment must state warning "Leverage products are highly risky and could result in hugh financial loss" which seem that the people in ST does not require the advertiser to do so.
Feedback on complaint handling process
MAS advises investors who feel that they have been mis-informed about the structured product to lodge a complaint with the financial institution that sold the product.
If you wish to give your feedback on your experience in lodging the complaint, please send an email to atans1@hotmail.com with the following information:
1. Your name, age, occupation, telephone, e-mail
2. Date of complaint, financial institution, name of offices who attended to you
3. Did the officer explain the process? What did they say?
4. Did they listen to you and record the details of your complaints fairly? Did they help you to record the complaint?
5. Were they defensive? Did you challenge you about the facts of your complaints?
6. Are you satisfied with the process? If not, why?
7. Do you get the impression that your complaint will be attended to fairly?
If you wish to give your feedback on your experience in lodging the complaint, please send an email to atans1@hotmail.com with the following information:
1. Your name, age, occupation, telephone, e-mail
2. Date of complaint, financial institution, name of offices who attended to you
3. Did the officer explain the process? What did they say?
4. Did they listen to you and record the details of your complaints fairly? Did they help you to record the complaint?
5. Were they defensive? Did you challenge you about the facts of your complaints?
6. Are you satisfied with the process? If not, why?
7. Do you get the impression that your complaint will be attended to fairly?
Difficulty with travel insurance claim
Dear Mr Tan,
Recently I was holidaying in New York and had travelled to Niagra Falls by road where my hand bag together with my travel documents were stolen. Hence, without any travel documents I was refused entry into New York. I had to fly to Vancouver to get my temporary passport made at the Singapore Consulate and flew home from there. As a result, my luggage was left behind in New York.
I had a travel insurance with a leading insurance Company. I sought advice from the insurance Company's claim officer regarding my luggage that was still in New York. I was told to do what is necessary to bring back my luggage first and to follow up with the details later. I arranged for Fedex to send my luggage back and then submitted a claim for the freight cost. Three weeks have gone past and have not heard from the insurance Company. I gave them a call and was told that I cannot make any claim for the cost of sending back my luggage; the reason given was that my travel insurance does not cover freight cost.
Please advise if I am entitled to make this claim and to whom can I turn to for assistance if I were to pursue this matter.
REPLY
I think that you are entitled to claim for the freight cost as you have done it at the request of the insurance company in connection with your claim. It is bad that they now reject your claim for the freight cost. If they do not pay your claim, you can lodge a complaint with FiDREC (www.fidrec.com.sg).
I find the claim handling of this insurance company to be deplorable.
If the claim is not paid, you can send a formal complaint to the CEO of the insurance company. If it is still rejected, you can file a complaint with FiDREC (www.fidrec.com.sg)
Recently I was holidaying in New York and had travelled to Niagra Falls by road where my hand bag together with my travel documents were stolen. Hence, without any travel documents I was refused entry into New York. I had to fly to Vancouver to get my temporary passport made at the Singapore Consulate and flew home from there. As a result, my luggage was left behind in New York.
I had a travel insurance with a leading insurance Company. I sought advice from the insurance Company's claim officer regarding my luggage that was still in New York. I was told to do what is necessary to bring back my luggage first and to follow up with the details later. I arranged for Fedex to send my luggage back and then submitted a claim for the freight cost. Three weeks have gone past and have not heard from the insurance Company. I gave them a call and was told that I cannot make any claim for the cost of sending back my luggage; the reason given was that my travel insurance does not cover freight cost.
Please advise if I am entitled to make this claim and to whom can I turn to for assistance if I were to pursue this matter.
REPLY
I think that you are entitled to claim for the freight cost as you have done it at the request of the insurance company in connection with your claim. It is bad that they now reject your claim for the freight cost. If they do not pay your claim, you can lodge a complaint with FiDREC (www.fidrec.com.sg).
I find the claim handling of this insurance company to be deplorable.
If the claim is not paid, you can send a formal complaint to the CEO of the insurance company. If it is still rejected, you can file a complaint with FiDREC (www.fidrec.com.sg)
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