Dear Mr. Tan,
Here are some links to CBS videos (10-15 mins) on derivatives, CDS, etc. They are eye openers to lay people. These derivatives are more like scams to defraud the investing public. We need to persist to get the authorities to get to the bottom of the matter. Hope you can help in this matter.
Video 1: Derivatives (July 1995)
http://www.cbsnews.com/video/watch/?id=4501762n
Video 2: Credit Default Swaps (Oct. 26, 2008)
http://www.cbsnews.com/video/watch/?id=4546583n
Video 3: Wall Street Shadow Markets (Oct. 5, 2008)
http://www.cbsnews.com/video/watch/?id=4502673n
Report 1: The Bet That Blew Up Wall Street http://www.cbsnews.com/stories/2008/10/26/60minutes/main4546199.shtml
Report 2: A Look At Wall Street's Shadow Market
http://www.cbsnews.com/stories/2008/10/05/60minutes/main4502454.shtml
Monday, November 10, 2008
Obama's Speech at Election Night
Please click here to see President-elect Obama's
speech on Election Night:
http://my.barackobama.com/page/community/post/stateupdates/gGx3Kc
Barack Obama and Joe Biden are hopeful about the opportunities and
clear-eyed about the challenges our nation faces. They look forward to
working with all Americans, regardless of who they voted for, in the great
project of American renewal. Enlisting the energy and ingenuity of the
American people is the only way we will create the changes that so many
people want to see, so we hope you'll be involved.
speech on Election Night:
http://my.barackobama.com/page/community/post/stateupdates/gGx3Kc
Barack Obama and Joe Biden are hopeful about the opportunities and
clear-eyed about the challenges our nation faces. They look forward to
working with all Americans, regardless of who they voted for, in the great
project of American renewal. Enlisting the energy and ingenuity of the
American people is the only way we will create the changes that so many
people want to see, so we hope you'll be involved.
Did the RM explain "first to default" ?
Dear Mr Tan,
Thank you for taking the time and effort to help the unfortunate minibond investors.
I am disheartened to find out that some of our banks have "thrown out" many cases. Perhaps the "vulnerable" investors could not effectively submit a proper case. Perhaps they could not effectively present the argument that they were misled by the Managers (Relationship) of the banks.
The argument I am presenting is based on the structure of the minibond product, not the companies (i.e, Lehman Brothers) underlying it.
In such cases whereby the minibond investors attempted to demostrate that they had been misled in buying high risk would likely be countered by bank's argument like "Have our sale staffs explain the risks to you?", "The rating of the companies behind minibonds has been AAA, AAB, therefore this is a very safe investment". Indeed, the staffs might have taken efforts to explain the risks but what were the exact risks explained? Who is to argue a rating of AAA and AAB is not safe? And who is to argue a 100+ year old investment bank has no firm foundation? As such, when banks present such facts, how can one not deduce that the minibond is a safe investment?
The case of the minibond is not a case on the companies behind the structured product sold. The high risk was the structure / architecture / design of the minibond itself. This is the risk: FIRST TO DEFAULT BASIS. This means any of the eight underlying entitles fails, the minibond will be terminated and investor receives zero payout in the worst case scenario. This is the reason why it is a risky investment.
So what can the minibond investors do now? Perhaps what they can do now is to answer these 2 questions:
> Had the Relationship Manager explained clearly the risks due to the structure / architecture / design of the minibond?
> Had the Relationship Manager fully and clearly explained the worst case scenario?
If the answers to both questions are "No", the investor may possibly have a better case. The "higher" risk came from the structure / architecture / design of the minibond and not the underlying companies.
Mr Tan, much has been discussed about the fate of the minibond and their investors, I do have a question. What happened to the $500 million dollars (cold hard cash) invested in the minibond?
Regards,
REPLY
The financial institutions are only interested to find any excuse to reject the claim, so as to avoid paying any compensation.
The Monetary Authority of Singapore has asked them to treat their customers fairly. Unfortunately, MAS has not provided specific guidelines and leave it to the discretion of the financial institutions. The outcome is to be expected.
Thank you for taking the time and effort to help the unfortunate minibond investors.
I am disheartened to find out that some of our banks have "thrown out" many cases. Perhaps the "vulnerable" investors could not effectively submit a proper case. Perhaps they could not effectively present the argument that they were misled by the Managers (Relationship) of the banks.
The argument I am presenting is based on the structure of the minibond product, not the companies (i.e, Lehman Brothers) underlying it.
In such cases whereby the minibond investors attempted to demostrate that they had been misled in buying high risk would likely be countered by bank's argument like "Have our sale staffs explain the risks to you?", "The rating of the companies behind minibonds has been AAA, AAB, therefore this is a very safe investment". Indeed, the staffs might have taken efforts to explain the risks but what were the exact risks explained? Who is to argue a rating of AAA and AAB is not safe? And who is to argue a 100+ year old investment bank has no firm foundation? As such, when banks present such facts, how can one not deduce that the minibond is a safe investment?
The case of the minibond is not a case on the companies behind the structured product sold. The high risk was the structure / architecture / design of the minibond itself. This is the risk: FIRST TO DEFAULT BASIS. This means any of the eight underlying entitles fails, the minibond will be terminated and investor receives zero payout in the worst case scenario. This is the reason why it is a risky investment.
So what can the minibond investors do now? Perhaps what they can do now is to answer these 2 questions:
> Had the Relationship Manager explained clearly the risks due to the structure / architecture / design of the minibond?
> Had the Relationship Manager fully and clearly explained the worst case scenario?
If the answers to both questions are "No", the investor may possibly have a better case. The "higher" risk came from the structure / architecture / design of the minibond and not the underlying companies.
Mr Tan, much has been discussed about the fate of the minibond and their investors, I do have a question. What happened to the $500 million dollars (cold hard cash) invested in the minibond?
Regards,
REPLY
The financial institutions are only interested to find any excuse to reject the claim, so as to avoid paying any compensation.
The Monetary Authority of Singapore has asked them to treat their customers fairly. Unfortunately, MAS has not provided specific guidelines and leave it to the discretion of the financial institutions. The outcome is to be expected.
Sued for misleading investors
Nov 10, 2008
Suit against Lehman, UBS seeks an order certifying it as a class-action.
LEHMAN Brothers Holdings Inc's Chief Executive Officer Richard Fuld and UBS AG's US brokerage were accused in a lawsuit of misleading investors who bought Lehman's 'principal protected notes' before its September bankruptcy.
The complaint, filed on Nov 6 in federal court in Manhattan, claims Mr Fuld and 10 other past and current Lehman directors deceived investors about the risks of buying notes that are now almost worthless, Bloomberg news reported on Monday.
The suit seeks unspecified damages and an order certifying it as a class-action, or group lawsuit, on behalf of other investors.
Sales documents for the securities 'contained untrue statements of material fact and omitted other material facts', according to the complaint filed by Girard Gibbs LLP in San Francisco.
Lehman didn't disclose that repayment of the debt might be threatened by 'exposure to losses from its real estate and mortgage portfolio', and UBS Financial Services should have 'diligently' investigated the disclosures before helping sell the notes, the complaint said.
Mr George Sard, a spokesman for Mr Fuld, didn't respond to a message seeking comment.
Suit against Lehman, UBS seeks an order certifying it as a class-action.
LEHMAN Brothers Holdings Inc's Chief Executive Officer Richard Fuld and UBS AG's US brokerage were accused in a lawsuit of misleading investors who bought Lehman's 'principal protected notes' before its September bankruptcy.
The complaint, filed on Nov 6 in federal court in Manhattan, claims Mr Fuld and 10 other past and current Lehman directors deceived investors about the risks of buying notes that are now almost worthless, Bloomberg news reported on Monday.
The suit seeks unspecified damages and an order certifying it as a class-action, or group lawsuit, on behalf of other investors.
Sales documents for the securities 'contained untrue statements of material fact and omitted other material facts', according to the complaint filed by Girard Gibbs LLP in San Francisco.
Lehman didn't disclose that repayment of the debt might be threatened by 'exposure to losses from its real estate and mortgage portfolio', and UBS Financial Services should have 'diligently' investigated the disclosures before helping sell the notes, the complaint said.
Mr George Sard, a spokesman for Mr Fuld, didn't respond to a message seeking comment.
Sunday, November 9, 2008
Joseph Stiglitz
Joseph Stiglitz shared the Nobel prize in Economics in 2001 for helping to develop a theory of assymetrical information which showed that only under exceptional circumstances are markets efficient.
Prof Stiglitz argued that inadequate regulation has caused the global financial crisis. He argued for stronger regulation relating to corporate governance, pay, lending practices, etc.
Here are some of his remarks in a debate organised by the Economist magazine.
> The current crisis is caused, in part, by inadequate regulation.
> Financial crisis has occurred quite regularly in recent decades. They have occured in developed and developed countries. The only countries that have been spared so far are thsoe with strong regulatory frameworks.
> In each case, the crisis has affected not just the lenders and borrowers, but also innocent bystanders. Workers have been thrown out of jobs. Governments had to intervene.
> Regulations are necessary to restore confidence.
Prof Stiglitz argued that inadequate regulation has caused the global financial crisis. He argued for stronger regulation relating to corporate governance, pay, lending practices, etc.
Here are some of his remarks in a debate organised by the Economist magazine.
> The current crisis is caused, in part, by inadequate regulation.
> Financial crisis has occurred quite regularly in recent decades. They have occured in developed and developed countries. The only countries that have been spared so far are thsoe with strong regulatory frameworks.
> In each case, the crisis has affected not just the lenders and borrowers, but also innocent bystanders. Workers have been thrown out of jobs. Governments had to intervene.
> Regulations are necessary to restore confidence.
Quality of financial advice and fact find
Sunday Times 9 Nov 2008
Under the Financial Advisers Act (FAA), financial institutions and their representatives or financial advisers (FAs) are required to have a reasonable basis for recommending investment products to their customers.
The Act states that an FA must collect and document from the client information such as his financial objectives; risk tolerance; employment status; financial situation including assets, liabilities, cash flow and income; and current investment portfolio.
However, clients may choose not to provide the above information or choose to opt out from receiving advice. In such cases, the FA has to highlight to the client that it is the latter's responsibility to ensure that the product selected is suitable.
The FA may then proceed with his request for the transaction.
The Monetary Authority of Singapore (MAS) has encouraged the industry to improve the quality of advice and extent of fact-find.
It also expects FAs to have additional safeguards when dealing with clients with limited knowledge of investment products and who may find it difficult to understand the features of complex investment products.
Whether there is a breach of the FAA would depend on the facts and circumstances of a particular case.
Breaches of the FAA are punishable by a range of actions, including fines and imprisonment.
In particular, Section 27 of the Act provides that an FA is liable to pay damages to an investor who suffers loss or damage arising from advice that was not supported by a reasonable basis for recommending a certain product.
In addition, MAS may also take other regulatory actions such as issuing a prohibition order to bar the contravening person from providing financial advisory service for a fixed period.
Under the Financial Advisers Act (FAA), financial institutions and their representatives or financial advisers (FAs) are required to have a reasonable basis for recommending investment products to their customers.
The Act states that an FA must collect and document from the client information such as his financial objectives; risk tolerance; employment status; financial situation including assets, liabilities, cash flow and income; and current investment portfolio.
However, clients may choose not to provide the above information or choose to opt out from receiving advice. In such cases, the FA has to highlight to the client that it is the latter's responsibility to ensure that the product selected is suitable.
The FA may then proceed with his request for the transaction.
The Monetary Authority of Singapore (MAS) has encouraged the industry to improve the quality of advice and extent of fact-find.
It also expects FAs to have additional safeguards when dealing with clients with limited knowledge of investment products and who may find it difficult to understand the features of complex investment products.
Whether there is a breach of the FAA would depend on the facts and circumstances of a particular case.
Breaches of the FAA are punishable by a range of actions, including fines and imprisonment.
In particular, Section 27 of the Act provides that an FA is liable to pay damages to an investor who suffers loss or damage arising from advice that was not supported by a reasonable basis for recommending a certain product.
In addition, MAS may also take other regulatory actions such as issuing a prohibition order to bar the contravening person from providing financial advisory service for a fixed period.
Leadership styles
Hi Mr. Tan KL
President elect Obama is a good speaker. But he has no experience at leading a country or even a state. Will be make an effective president? What are your views?
REPLY
I do not wish to comment about President elect Obama specifically.
I like to view my general about leadership. I shall describe them as the "democratic" style and the "authoritarian" style.
The democratic style has the following characteristics:
> the leader has a clear vision with strong values and principles
> is able to attract capable people
> listens to diverse views and make the best balanced decision
> is ready to monitor the implementation and adapt according to the circumstances
The authoritian stlye hs the following characteristics:
> a strong and capable leader
> makes most of the decisions
> attracts loyal followers and implementators
> able to make major decisions and moves fast
Each style of leadership has its strengths and shortcomings. I believe that both style can succeed.
President elect Obama is a good speaker. But he has no experience at leading a country or even a state. Will be make an effective president? What are your views?
REPLY
I do not wish to comment about President elect Obama specifically.
I like to view my general about leadership. I shall describe them as the "democratic" style and the "authoritarian" style.
The democratic style has the following characteristics:
> the leader has a clear vision with strong values and principles
> is able to attract capable people
> listens to diverse views and make the best balanced decision
> is ready to monitor the implementation and adapt according to the circumstances
The authoritian stlye hs the following characteristics:
> a strong and capable leader
> makes most of the decisions
> attracts loyal followers and implementators
> able to make major decisions and moves fast
Each style of leadership has its strengths and shortcomings. I believe that both style can succeed.
Subscribe to:
Posts (Atom)