<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published September 11, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Investors sue RBS, Lehman S'pore
By CONRAD TAN
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(SINGAPORE) A group of investors has filed a High Court suit against Lehman Brothers' Singapore unit and Royal Bank of Scotland (RBS), alleging that they were misled about the true risks of Minibond structured notes they bought that suffered heavy losses when Lehman collapsed.
The group, which calls itself the Minibond Investors Action Group or MIAG, said in a statement last night that the suit, filed on Wednesday, 'is the first in a series of cases to seek resolution by the Singapore courts on several issues, including whether the Minibond programme was mis-sold in terms of its nature and risks, and the extent to which investors can access recovery of the collateral'.
Some $508 million worth of Minibond notes were sold in 10 series from April 2006 to July 2008. Another $147 million of structured notes similar to the Minibonds sold here also suffered heavy losses when Lehman collapsed last September.
MIAG said it represents over 165 investors who had bought more than $20 million worth of Minibonds from various financial firms here. Its suit relates to the Minibond Series 2 notes sold in 2006, and names Minibond Ltd - the legal issuer of the notes - Lehman Brothers Singapore Pte Ltd, and RBS as defendants. MIAG members are seeking damages for the loss of capital they suffered on the notes.
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</TD></TR></TBODY></TABLE>MIAG argues that RBS, which sold the notes to retail investors through ABN Amro, 'owed them a duty of care, and that they breached the standard of care, when they failed to properly understand the product, failed to check that information given to investors were accurate, and relied on faulty training materials to train their relationship managers, which then reinforced the misconception of the product'.
A spokesman for RBS could not be reached for comment last night.
When contacted by BT, James Tan, a member of MIAG, confirmed that the group also plans to sue other firms that sold Lehman-linked notes 'in time to come'.
'This is our first case,' he said.
MIAG argues that investors who bought the Minibonds were misled into thinking that they would earn interest on the notes and recover their principal in exchange for bearing the risk of default of seven well-known firms referenced in promotional materials for the notes. The reference firms for the Series 2 Minibonds were American Express, Bank of America, DBS Bank, HSBC, JPMorgan Chase, SingTel and Standard Chartered Bank.
But MIAG said investors found that they were in fact exposed mainly to separate underlying securities consisting of collateralised debt obligations. 'Unanimously, investors say that they would not have purchased the product if they had known its true nature and risk,' it said. Given the complexity of the product and its target audience of retail investors, 'the fault lies squarely on the shoulders of the issuer, the arranger and the distributor' for investors' misunderstanding the risks they were taking on, MIAG said.
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Investors sue RBS, Lehman S'pore
By CONRAD TAN
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>(SINGAPORE) A group of investors has filed a High Court suit against Lehman Brothers' Singapore unit and Royal Bank of Scotland (RBS), alleging that they were misled about the true risks of Minibond structured notes they bought that suffered heavy losses when Lehman collapsed.
The group, which calls itself the Minibond Investors Action Group or MIAG, said in a statement last night that the suit, filed on Wednesday, 'is the first in a series of cases to seek resolution by the Singapore courts on several issues, including whether the Minibond programme was mis-sold in terms of its nature and risks, and the extent to which investors can access recovery of the collateral'.
Some $508 million worth of Minibond notes were sold in 10 series from April 2006 to July 2008. Another $147 million of structured notes similar to the Minibonds sold here also suffered heavy losses when Lehman collapsed last September.
MIAG said it represents over 165 investors who had bought more than $20 million worth of Minibonds from various financial firms here. Its suit relates to the Minibond Series 2 notes sold in 2006, and names Minibond Ltd - the legal issuer of the notes - Lehman Brothers Singapore Pte Ltd, and RBS as defendants. MIAG members are seeking damages for the loss of capital they suffered on the notes.
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A spokesman for RBS could not be reached for comment last night.
When contacted by BT, James Tan, a member of MIAG, confirmed that the group also plans to sue other firms that sold Lehman-linked notes 'in time to come'.
'This is our first case,' he said.
MIAG argues that investors who bought the Minibonds were misled into thinking that they would earn interest on the notes and recover their principal in exchange for bearing the risk of default of seven well-known firms referenced in promotional materials for the notes. The reference firms for the Series 2 Minibonds were American Express, Bank of America, DBS Bank, HSBC, JPMorgan Chase, SingTel and Standard Chartered Bank.
But MIAG said investors found that they were in fact exposed mainly to separate underlying securities consisting of collateralised debt obligations. 'Unanimously, investors say that they would not have purchased the product if they had known its true nature and risk,' it said. Given the complexity of the product and its target audience of retail investors, 'the fault lies squarely on the shoulders of the issuer, the arranger and the distributor' for investors' misunderstanding the risks they were taking on, MIAG said.
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