Comments posted by ming in CNA Forum:
On a case-by-case basis, with a breezy wave of his hand like some Jedi knight the Minister for Finance wants the crowds at Hong Lim now gathering in strength to disperse. Have faith in the MAS. As the former Managing Director of MAS, Tharman would be in the position to tell us that MAS can be your advocate, prosecutor, judge and juror because they are staffed by so many talented and handpicked scholars. It is superior and efficient because everything is fused into one body just like Singapore.
Let the scales fall from your eyes and you will see that the trust which so many Singaporeans have placed in this system is unjustified. We have been fooled by the decades of prosperity and lulled into believing that obedience is all that is needed to perpetuate the good life. Those who remember their duties as citizens are called mad and suffer the indignity of ostracism. But when the reality hits and you realize that the system is not right, and by virtue of having awakened you become mad, the colossal blunder we have made as a people will chill you to the bone.
Note to the Minister of Finance:
Unless people like Tan Kin Lian are included in an independent investigation to be conducted by a special body that is separate from any governmental group because the investigation must cover how these products were regulated, no one will accept what is concluded. If you want closure Tharman, do the right thing. As the putative Prime Minister, I urge you now to set our country on the course to long term peace and prosperity. As a citizen and a member of the Cabinet, you swore oaths that you would. Now I ask that you make good on it.
http://forum.channelnewsasia.com/viewtopic.php?p=2387433#2387433
Monday, November 17, 2008
George Washington and the cherry tree
A legend is told about George Washington as a boy. Young George had a new hatchet and with it he cut down a small cherry tree. When his father saw the tree, he was angry. "George," he said. "Did you do that?" George was afraid to admit that he did.
Nevertheless, the boy decided to tell the truth. "Yes, Father," he said, "I cut down the cherry tree with my hatchet. I cannot tell a lie." George Washington's father was proud of George for telling the truth.
Moral of this story
1. No investor would have bought the credit linked notes, if they were told that the real risk is 10 to 15 times of the risk of default of a single entity.
2. The financial institution would not have sold this type of product, if they know that it was toxic and very high risk.
3 The authority would have not "registered" the product for sale.
I hope that the moral of George Washington's story will encourage the parties to come forward and say, "I cannot tell a lie. I made a mistake to buy/ sell / register the product."
Nevertheless, the boy decided to tell the truth. "Yes, Father," he said, "I cut down the cherry tree with my hatchet. I cannot tell a lie." George Washington's father was proud of George for telling the truth.
Moral of this story
1. No investor would have bought the credit linked notes, if they were told that the real risk is 10 to 15 times of the risk of default of a single entity.
2. The financial institution would not have sold this type of product, if they know that it was toxic and very high risk.
3 The authority would have not "registered" the product for sale.
I hope that the moral of George Washington's story will encourage the parties to come forward and say, "I cannot tell a lie. I made a mistake to buy/ sell / register the product."
Revosave and Vivolife
Someone continues to post comments to attack the new products- Revosave and Vivolife, launched by NTUC Income. I have blocked these comments.
If this person submits a fair analysis of the products, I will post them here.
Here are some of my post postings giving general comments about these products:
http://tankinlian.blogspot.com/2008/09/unable-to-pay-premium-till-70-revosave.html
http://tankinlian.blogspot.com/2008/09/twisting-of-ilp-to-revosave.html
http://tankinlian.blogspot.com/2008/02/comparing-anticipation-and-revosave.html
http://tankinlian.blogspot.com/2008/09/advice-on-vivolife.html
If this person submits a fair analysis of the products, I will post them here.
Here are some of my post postings giving general comments about these products:
http://tankinlian.blogspot.com/2008/09/unable-to-pay-premium-till-70-revosave.html
http://tankinlian.blogspot.com/2008/09/twisting-of-ilp-to-revosave.html
http://tankinlian.blogspot.com/2008/02/comparing-anticipation-and-revosave.html
http://tankinlian.blogspot.com/2008/09/advice-on-vivolife.html
Pinnacle Notes 9 and 10
Read my blog dated November 2007, when the product was first advertised:
http://tankinlian.blogspot.com/2007/11/pinnacle-notes-series-9-10.html
http://tankinlian.blogspot.com/2007/11/pinnacle-notes-series-9-10.html
Asians fail to join class action claims
Dear Kin Lian,
I am not one of those affected investors, but I think this class action in US could be something for our institutional investors to think about. Thank you.
Asian investors are missing out on billions of dollars by not taking part in class action lawsuits against US companies whose managers have been accused of improper corporate behaviour, according to a study.
Pension and asset managers in the region failed to claim a combined $1.5bn in compensation between 2000 and 2007, said Goal Group, a class action services specialist.
This article can be found at:
http://www.ft.com/cms/s/0/a74a4388-b409-11dd-8e35-0000779fd18c,_i_email=y.html
I am not one of those affected investors, but I think this class action in US could be something for our institutional investors to think about. Thank you.
Asian investors are missing out on billions of dollars by not taking part in class action lawsuits against US companies whose managers have been accused of improper corporate behaviour, according to a study.
Pension and asset managers in the region failed to claim a combined $1.5bn in compensation between 2000 and 2007, said Goal Group, a class action services specialist.
This article can be found at:
http://www.ft.com/cms/s/0/a74a4388-b409-11dd-8e35-0000779fd18c,_i_email=y.html
Local Banks still focused on garnering new sales at this time!
Dear Mr Tan,
With the recent saga over the few structured products and mini-bonds, we would assumed that the banks' role will be focusing on providing assurance to their existing customers and customer retention.
Yesterday, I received a call from a personal banker from a local bank. He was telling me about a fixed deposit promotion and that I should meet him at the branch as the promotion will be ending soon. Fair enough, I went down to check it out but to my surprise, the banker starts to sell me their insurance plans!
Upon further subtle probing, I realised that the bank are still pressuring their staff to sell and to maintain certain target or they may be the next to go. Is this what the local banks should focus on at this point of time? Is it just another convenient excuse to axe their staff? Or is it trying to compete with rival banks for business?
I read in a recent article that most foreign banks have channelled their sales force to focus entirely on customer service and handling all the related enquries. I believed that this is the correct approach and the least that the banks can do now for their customers.
I cannot even imagine that there are still banks imposing targets on their staffs at this time. Are they encouraging them to mis-sell or misrepresent their products to secure their jobs? Does it matter to them what product they are selling to the customers or if the product is suitable? Will history repeats itself all over again when the customers complained about the products they buy at this time?
As more products are being affected, I believed that the whole episode is here to stay thus I sincerely hope that the local banks will know their priority, have more compassion and adopt the correct approach. It would definitely be better if the MAS can intervene and developed a policy to control the industry.
This is an extremely difficult time for Singaporeans, especially so for many uneducated and unsavvy customers who do not know the avenue to check about their current products.
Mr Seow
With the recent saga over the few structured products and mini-bonds, we would assumed that the banks' role will be focusing on providing assurance to their existing customers and customer retention.
Yesterday, I received a call from a personal banker from a local bank. He was telling me about a fixed deposit promotion and that I should meet him at the branch as the promotion will be ending soon. Fair enough, I went down to check it out but to my surprise, the banker starts to sell me their insurance plans!
Upon further subtle probing, I realised that the bank are still pressuring their staff to sell and to maintain certain target or they may be the next to go. Is this what the local banks should focus on at this point of time? Is it just another convenient excuse to axe their staff? Or is it trying to compete with rival banks for business?
I read in a recent article that most foreign banks have channelled their sales force to focus entirely on customer service and handling all the related enquries. I believed that this is the correct approach and the least that the banks can do now for their customers.
I cannot even imagine that there are still banks imposing targets on their staffs at this time. Are they encouraging them to mis-sell or misrepresent their products to secure their jobs? Does it matter to them what product they are selling to the customers or if the product is suitable? Will history repeats itself all over again when the customers complained about the products they buy at this time?
As more products are being affected, I believed that the whole episode is here to stay thus I sincerely hope that the local banks will know their priority, have more compassion and adopt the correct approach. It would definitely be better if the MAS can intervene and developed a policy to control the industry.
This is an extremely difficult time for Singaporeans, especially so for many uneducated and unsavvy customers who do not know the avenue to check about their current products.
Mr Seow
High risk of credit linked notes
When we invest in a corporate bond, we take the credit risk of one company. If the company goes bust, we lose our invested sum.
When we buy a credit-linked note, we take the risk of 6 to 8 reference entities. If any reference entity goes bust, we lose our invested sum. The risk is mutiplied 6 to 8 times.
In addition, we take the risk of 100 or 150 underlying assets. If a certain number goes bust, we lost our invested sum. This may double the risk of the reference entities.
In all, the risk of losing our invested sum can be 10 to 15 times of the risk of 1 corporate bond. What do we get for this high risk? 5.1% per annum.
Did the sales materials and propectus describe the risks transparently and fully? They did not. In fact, the sales materials were written to mislead the investor. The propectus was not intelligible to the ordinary investor.
The only statement that is readable is "You can lose some or all of your investments on a credit event". This statement applies to most types of investments. It failed to disclose that the risk is 10 to 15 times (or whatever is the correct level of the risk) of the failure of one bond.
Under the Securities & Futures Act, it is an offence to give misleading statements or to hide relevant facts when selling securities to the public. I hope that the authority will take the financial insitution to task for breach of this Act.
When we buy a credit-linked note, we take the risk of 6 to 8 reference entities. If any reference entity goes bust, we lose our invested sum. The risk is mutiplied 6 to 8 times.
In addition, we take the risk of 100 or 150 underlying assets. If a certain number goes bust, we lost our invested sum. This may double the risk of the reference entities.
In all, the risk of losing our invested sum can be 10 to 15 times of the risk of 1 corporate bond. What do we get for this high risk? 5.1% per annum.
Did the sales materials and propectus describe the risks transparently and fully? They did not. In fact, the sales materials were written to mislead the investor. The propectus was not intelligible to the ordinary investor.
The only statement that is readable is "You can lose some or all of your investments on a credit event". This statement applies to most types of investments. It failed to disclose that the risk is 10 to 15 times (or whatever is the correct level of the risk) of the failure of one bond.
Under the Securities & Futures Act, it is an offence to give misleading statements or to hide relevant facts when selling securities to the public. I hope that the authority will take the financial insitution to task for breach of this Act.
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