Dear Mr. Tan,
After reading your blog, I am really impressed by your untiring effort to help us, the poor retail investors who are 'cheated' by our financial institutions.
In my case it is not the structured products, but in forex trading by a foreign bank. Please advise how I could form a group of interested parties who may have suffered the same problem as me in taking a class action against this particular bank which I will not name.
REPLY
I have created this Petition for customers in similar situation to give their particulars.
http://www.petitiononline.com/PCFXT1/petition.html
Sunday, October 12, 2008
SCMP: Banks risked reputations, watchdog says
South China Morning Post (Hong Kong) - October 12, 2008
Author: Loretta Fong, Celine Sun and Eva Wu
The controversy over the sale of minibonds to small investors held a lesson for banks, the Hong Kong Monetary Authority's executive director said yesterday.
"A bank's reputation can easily be jeopardised when it sells high-risk derivative products to small investors. I think we need to review this practice in future," said Raymond Li Ling-cheung.
The authority has received 8,300 complaints from investors in minibonds issued or guaranteed by bankrupt US bank Lehman Brothers.
Hongkongers bought HK$15.7 billion of minibonds and related complex derivatives from banks and brokerages and stand to lose much or all their money. Many claim banks mis-sold the products as low-risk.
Of the complaints it has received, the authority has so far assessed 600 and found 71 require investigation.
Banks or their staff found to have misled customers may be fined or censured or may have their business licences suspended.
Minibond buyers seeking to recover their investments held fresh talks yesterday with some of the banks that sold them. HKMA deputy chief executive Choi Yiu-kwan said the government's proposal that banks buy back minibonds at current value was the best way for them to recover some of their losses.
The authority is preparing a report for the government on the sale of minibonds.
Meanwhile, Hong Kong Exchanges and Clearing chairman Ronald Arculli admitted its board of directors did not study an internal report drafted five years ago that warned of a lack of oversight of the sale of complex derivatives such as minibonds.
"Colleagues passed the report to the management. But it was found that the worries exposed by the report would not affect much the operations of HKEx. Thus there was no follow-up afterwards," he said.
Author: Loretta Fong, Celine Sun and Eva Wu
The controversy over the sale of minibonds to small investors held a lesson for banks, the Hong Kong Monetary Authority's executive director said yesterday.
"A bank's reputation can easily be jeopardised when it sells high-risk derivative products to small investors. I think we need to review this practice in future," said Raymond Li Ling-cheung.
The authority has received 8,300 complaints from investors in minibonds issued or guaranteed by bankrupt US bank Lehman Brothers.
Hongkongers bought HK$15.7 billion of minibonds and related complex derivatives from banks and brokerages and stand to lose much or all their money. Many claim banks mis-sold the products as low-risk.
Of the complaints it has received, the authority has so far assessed 600 and found 71 require investigation.
Banks or their staff found to have misled customers may be fined or censured or may have their business licences suspended.
Minibond buyers seeking to recover their investments held fresh talks yesterday with some of the banks that sold them. HKMA deputy chief executive Choi Yiu-kwan said the government's proposal that banks buy back minibonds at current value was the best way for them to recover some of their losses.
The authority is preparing a report for the government on the sale of minibonds.
Meanwhile, Hong Kong Exchanges and Clearing chairman Ronald Arculli admitted its board of directors did not study an internal report drafted five years ago that warned of a lack of oversight of the sale of complex derivatives such as minibonds.
"Colleagues passed the report to the management. But it was found that the worries exposed by the report would not affect much the operations of HKEx. Thus there was no follow-up afterwards," he said.
Nadya "Speaker" Zagarodnova
My second grand-daugher Nadya was borne at 6 p.m. on Saturday 11 October. I will nickname her as "Speaker" as this was the same time that I was giving the speech to 1,000 people at Speaker's Corner.
She was 4.5 kg (10 lbs) at birth. This makes her the biggest baby that was borne within my family. She is also the biggest baby delivered by the gynaecologist looking after my daughter Su Ling.
My son-in-law Vitali came from Russia. He teaches in Nanyang Technological University.
She was 4.5 kg (10 lbs) at birth. This makes her the biggest baby that was borne within my family. She is also the biggest baby delivered by the gynaecologist looking after my daughter Su Ling.
My son-in-law Vitali came from Russia. He teaches in Nanyang Technological University.
Send this message to your Member of Parliament
Dear (Member of Parliament)
We are a group of residents in you constituencey who are affected by the recent default of the structured products. Our names are shown below (provide a list of affected residents).
We wish to meet you tell you about our grievances. Please click on the link below to hear a recording of the grievance of the investors at yesterday Speaker Corner.
http://www.youtube.com/watch?v=ZzpYO2NunEY
We are a group of residents in you constituencey who are affected by the recent default of the structured products. Our names are shown below (provide a list of affected residents).
We wish to meet you tell you about our grievances. Please click on the link below to hear a recording of the grievance of the investors at yesterday Speaker Corner.
http://www.youtube.com/watch?v=ZzpYO2NunEY
Weekly meetings at Hong Lim Green?
An investor suggested that Hong Lim Green is a suitable place for investors to meet each week on Saturday at 6 to 7 pm.
It is big enough for many several group meetings (by distributor or product) to be held. It is also useful for the investors to exchange notes. It is quite convenient as it is within walking distance of the Clarke Quay and Raffles Place MRT stations.
The meeting can be with, or without, speeches.
Do you think that this is a good idea?
It is big enough for many several group meetings (by distributor or product) to be held. It is also useful for the investors to exchange notes. It is quite convenient as it is within walking distance of the Clarke Quay and Raffles Place MRT stations.
The meeting can be with, or without, speeches.
Do you think that this is a good idea?
Why the credit linked notes are highly risky
Some anonymous postings claimed that the structured products are linked to six entities that are rated A or higher at the time of issue, and are therefore safe. Nobody could have forseen that these companies could get into bankrupcy.
This argument is not correct. These structured products are highly risky for the following reasons:
1. The structured products take a bet on the six reference entities. The failure (or credit event) on any one entity could cause the loss of the entire capital. The presence of six entities (i.e. swaps) increases the risk six-fold.
2. The money received under the structure is invested in lower quality assets, such as collateralised debt obligations (CDO) to earn a high rate of return. Additional bets (i.e. swaps) could be taken on the failures of these underlying assets.
I estimate that the income stream of the structure could be 10% or more each year. If so, this will classify the structure as a junk bond, which is highly risky. However, it seems that only 5% is given to the investors for the high risk that they are shouldering.
These figures are just my guess. I hope that the Monetary Authority of Singapore will carry out the investigation, as asked by the Petition, to will look into the actual accounts of the structure, i.e. the income stream, the expenses and profits that are taken out, and if the parties had observed their fiduciary duty to the investors.
This argument is not correct. These structured products are highly risky for the following reasons:
1. The structured products take a bet on the six reference entities. The failure (or credit event) on any one entity could cause the loss of the entire capital. The presence of six entities (i.e. swaps) increases the risk six-fold.
2. The money received under the structure is invested in lower quality assets, such as collateralised debt obligations (CDO) to earn a high rate of return. Additional bets (i.e. swaps) could be taken on the failures of these underlying assets.
I estimate that the income stream of the structure could be 10% or more each year. If so, this will classify the structure as a junk bond, which is highly risky. However, it seems that only 5% is given to the investors for the high risk that they are shouldering.
These figures are just my guess. I hope that the Monetary Authority of Singapore will carry out the investigation, as asked by the Petition, to will look into the actual accounts of the structure, i.e. the income stream, the expenses and profits that are taken out, and if the parties had observed their fiduciary duty to the investors.
Speaker's Corner - 11 October 2008
Coverage in The Online Citizen, including special video interviews and comments by readers:
http://theonlinecitizen.com/2008/10/more-than-1000-people-at-speakers-corner/#comments
http://theonlinecitizen.com/2008/10/more-than-1000-people-at-speakers-corner/#comments
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