MAAss Dunno or Dun Want to Handle Minibomb Mess?

[makapaaa]

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Oct 14, 2008
MINIBONDS FIASCO
</TR><!-- headline one : start --><TR>Questions unanswered
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>




<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SINCE Lehman Brothers filed for bankruptcy protection, there has been endless discourse on the Minibond series, given that many Singaporeans are affected. Many questions remain unanswered. Will investors be able to recoup some, if not all, of their losses? When will this issue be resolved? Who is ultimately responsible? Will the Monetary Authority of Singapore (MAS), in its role as financial regulator, arbitrate?
I invested in Minibond Series 2 and 3, made through ABN Amro Bank, on strong recommendation from my former relationship manager.
I was assured that the Minibond was an extremely safe investment, akin to a Singapore dollar time deposit. This, I took in good faith, as was the case in all my other investments made through ABN Amro. Otherwise, it would have been pointless to have a relationship manager.
Minibond Series 2 was sold on the strength of seven reference entities, namely, American Express Company, Bank of America Corporation, DBS Bank Ltd, HSBC Bank PLC, JP Morgan Chase & Co., Singapore Telecommunications Ltd and Standard Chartered Bank. All these entities had very high credit ratings from Moody, S&P and Fitch.
In the investment advisory issued by ABN Amro, the investment objective reads: 'For defensive investors seeking exposure to high grade assets that provide steady and enhanced yields.'
Seven benefits of Minibonds were stated, including 'Low risk and easy to understand' and 'High quality and low risk entities have been selected'.
In the section on Risk To Investor, it was mentioned that investors would be at risk where one of the selected entities experienced a Credit Event, which was defined as either bankruptcy, or failure to make payment of US$1 million (S$1.47 million) or more under its borrowing obligations, or an entity adversely restructures its obligations as a result of a deterioration in its credit-worthiness. Nowhere was Lehman Brothers mentioned, in relation to the risk to the investor. In fact, the only mention of Lehman Brothers in the two-page advisory was that it was the offeror of the Minibond.
Similarly, Minibond 3 was sold on the strength of the six major banks, as reference entities.
Even though I was given the prospectus and had the opportunity to scan through it, the voluminous information, coupled with unfamiliar financial jargon, rendered it an incomprehensible exercise. So the phrase 'caveat emptor' (buyer beware) cannot even be applied.
I asked the relationship manager a few questions but she was unable to answer them, except to assure me there was nothing to fear. But, it would be unfair to blame her, as I imagine her knowledge and confidence in the product were gleaned from the briefing by ABN Amro or Lehman Brothers. Hence, with the demise of Lehman Brothers, ABN Amro should bear responsibility for misleading customers. Lawrence Loh


[FONT=Verdana,Courier,Monaco][SIZE=-1]Who gets what [/SIZE][/FONT][FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1](without performance bouses)[/SIZE][/FONT]
<TABLE cellSpacing=2 cellPadding=0 width=64 align=right border=0><TBODY><TR><TD>

</TD></TR><TR><TD>

[FONT=Verdana,Courier,Monaco][SIZE=-1]President Nathan, a Japanese collaborator during WWII.[/SIZE][/FONT]​

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[FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Singapore President's Basic Salary raised to S$3,187,100 (24.9% increase), Singapore's current President, Nathan, was a member of the dreaded Japanese Kampeti (uniform, sword and all) during the Japanese occupation of Singapore.[/SIZE][/FONT]

• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Singapore Prime Minister's Basic Salary raised to S$3,091,200 (25.5% increase). This is US$2.04 million, or about five times more than U.S. President George W. Bush, who currently takes home US$400,000 [/SIZE][/FONT]
• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Senior Minister � S$3,043,300 (13.5% increase) or US$2.01 million. [/SIZE][/FONT]
• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Minister Mentor � S$3,043,300 (13.5% increase) or US$2.01 million[/SIZE][/FONT]
• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Deputy Prime Minister � S$2,452,500 (18.8% increase) US$1.62 million.[/SIZE][/FONT]
• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Minister and Senior Perm Sec � S$1,593,500 (32.5% increase) or US$1.06 million . [/SIZE][/FONT]
• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Entry Superscale Grade � S$384,000 (3.3% increase) [SR9 Grade][/SIZE][/FONT]
• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Member of Parliament � S$216,300 (23.2% increase) [/SIZE][/FONT]
• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Average Singaporean: US$26,000 (S$43,104 or S$3,592 per mo) Source: Singapore Ministry of Manpower[/SIZE][/FONT]
• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]The poorest 10% in Singapore earn S$3,600, or S$300 a month.[/SIZE][/FONT]
• [FONT=Verdana,Century Schoolbook,Georgia][SIZE=-1]Welfare payments to the needy S$290 a month.[/SIZE][/FONT]

 

[makapaaa]

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>MAS should assume role of trustee
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>




<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->IN LAST Saturday's report, the response to the Minibonds saga by the Monetary Authority of Singapore (MAS) was described as 'tepid' compared to that of the Hong Kong authorities.
Perhaps it is time MAS did something more proactive as substantial assets have been frozen by the collapse of Lehman Brothers. I suggest it takes immediate steps to assume the role of trustee (from HSBC) and seize all underlying assets backing the Minibonds series.
Only by stepping into the shoes of the trustees can MAS fully understand whether the assets are what they were purported to be at the time of inception, that is, AA rated. It can then decide whether to proceed with criminal charges under Section 253 of the Securities & Futures Act, for giving false or misleading statements in the prospectus, if assets were not all AA rated at time of inception.
Next, MAS can then take civil proceedings under Section 254 of the same Act to get compensation for investors, if they have indeed been misled on the most crucial aspect of the Minibonds - the quality of the underlying assets. These underlying assets determine how the payout, even when they are liquidated.
Typically, these assets are of the highest quality - in this case, AA rated. But it is not unknown for a clever asset manager to acquire lower quality assets to extract a higher yield for himself, while locking in a lower yield for the Noteholder. The asset manager than asks the rating agency he has paid a fee, to do a 'simulation', using Monte Carlo and other statistical techniques, to come up with a fictional credit rating of AA for the whole basket and claim the assets (perhaps a mixture of AA and BB) are AA rated. In other words, one gets a 'cocktail' drink that purports to be 'whisky, neat'.
The time to act and open the Pandora's box is now. Noteholders will almost certainly prefer MAS to become the new trustee as it will have the official authority to institute and organise criminal and civil proceedings. Lim Chin Siew

Mai kar cheow me lah! My wife's kar chng already kena burnt chao tar in US oready and I bz helping to save her See Bee! *hee*hee*​

 

[makapaaa]

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>My Point
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>




<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->Minibonds
'Why did MAS allow such high risk products?'
MS Very Kind Lady: 'Much has been said about the role of the banks in their selling of Minibonds. What about the role of the Monetary Authority of Singapore (MAS)? Why did MAS allow such high risk products to be sold to retail investors? I understand the MAS had restricted the sale of products such as tradeable insurance to high net worth investors, owing to the higher risks of such products. Why wasn't the same applied to Minibonds?'
One loan, many savings
'The financial consultant who 'educates' us never fails to highlight the 'security' implied.'
MR DANIEL CHAN WAI PIEW: 'The financial turmoil, or tsunami, has revealed many things many of which we simply did not know. There are so many ways money can be 'processed' and 'packaged' and promoted as products. When we borrow money from a bank, it is simply called a loan. The very word serves to remind us constantly we are in debt. However, when we put money in the bank, it is not just savings. It is bonds, equities, securities and trusts. The financial planner who 'enlightens' us or the financial consultant who 'educates' us never fails to highlight the 'security' implied by all these words. How can we be any poorer with products bearing such assuring labels? Sadly, some have found out the answer in a very painful way.'
Hard-earned savings
'Buyers of investment products deserve greater protection.' MR NG KWONG YEE: 'The recent saga of linked products such as Minibonds, High Notes, Pinnacle Notes and Jubilee Notes has caused many investors in such products to lose most, if not all, of their investment. Buyers of investment products are not like buyers of lifestyle goods and services. Many invest their hard-earned savings for retirement. They deserve greater protection. It seems the current disclosures serve more to indemnify financial institutions than inform investors in their very complicated and technical method.''

 

[DerekLeung]

Cannot any type oor say the word "ponk".

You be investigated and tracked !

 

[Zombie]

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Oct 14, 2008
MINIBONDS FIASCO



</TR><!-- headline one : start --><TR>Questions unanswered



</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>




<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SINCE Lehman Brothers filed for bankruptcy protection, there has been endless discourse on the Minibond series, given that many Singaporeans are affected. Many questions remain unanswered. Will investors be able to recoup some, if not all, of their losses? When will this issue be resolved? Who is ultimately responsible? Will the Monetary Authority of Singapore (MAS), in its role as financial regulator, arbitrate?
I invested in Minibond Series 2 and 3, made through ABN Amro Bank, on strong recommendation from my former relationship manager.
I was assured that the Minibond was an extremely safe investment, akin to a Singapore dollar time deposit. This, I took in good faith, as was the case in all my other investments made through ABN Amro. Otherwise, it would have been pointless to have a relationship manager.
Minibond Series 2 was sold on the strength of seven reference entities, namely, American Express Company, Bank of America Corporation, DBS Bank Ltd, HSBC Bank PLC, JP Morgan Chase & Co., Singapore Telecommunications Ltd and Standard Chartered Bank. All these entities had very high credit ratings from Moody, S&P and Fitch.
In the investment advisory issued by ABN Amro, the investment objective reads: 'For defensive investors seeking exposure to high grade assets that provide steady and enhanced yields.'
Seven benefits of Minibonds were stated, including 'Low risk and easy to understand' and 'High quality and low risk entities have been selected'.
In the section on Risk To Investor, it was mentioned that investors would be at risk where one of the selected entities experienced a Credit Event, which was defined as either bankruptcy, or failure to make payment of US$1 million (S$1.47 million) or more under its borrowing obligations, or an entity adversely restructures its obligations as a result of a deterioration in its credit-worthiness. Nowhere was Lehman Brothers mentioned, in relation to the risk to the investor. In fact, the only mention of Lehman Brothers in the two-page advisory was that it was the offeror of the Minibond.
Similarly, Minibond 3 was sold on the strength of the six major banks, as reference entities.
Even though I was given the prospectus and had the opportunity to scan through it, the voluminous information, coupled with unfamiliar financial jargon, rendered it an incomprehensible exercise. So the phrase 'caveat emptor' (buyer beware) cannot even be applied.
I asked the relationship manager a few questions but she was unable to answer them, except to assure me there was nothing to fear. But, it would be unfair to blame her, as I imagine her knowledge and confidence in the product were gleaned from the briefing by ABN Amro or Lehman Brothers. Hence, with the demise of Lehman Brothers, ABN Amro should bear responsibility for misleading customers. Lawrence Loh

Look at first page of the pricing statement and prospectus of Minibond.

http://www.lioninvestor.com/code/uploads/minibond-series-2-pricing-statement.pdf
http://www.lioninvestor.com/code/uploads/minibond-limited-base-prospectus.pdf

You will find these words:
"There will be no guarantee from any entity to you that you will recover any amount payable under the Notes and you could lose all or a substantial part of your investment in the Notes."

You should find out more before you commit.