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Meeting at Speaker's Corner 18 Oct, 6-7 pm

Speaker's Corner, 27 Dec 2008 - Speech

Saturday, December 27, 2008
Speaker's Corner, 27 Dec 2008 - Speech

1. Meetings at Hong Lim Park
The first meeting for investors of the credit linked notes was held on 11 October 2008. This was followed by another 9 meetings. The first 8 meetings were held at weekly intervals while the last two meeting was held at fortnightly intervals. Today’s meeting is the 10th and final meeting to be held at Hong Lim Park for the credit linked notes.

You may wonder why Hong Lim Park was chosen to be the venue for the meeting. The most important reason is that it is free and is available at any time. However, it is not quite convenient, due to the lack of facilities. There is no sound system and everyone had to stand. On a few occasions, we had to share the use of the park with other activities. It rained on one meeting.

Still, it is a wonderful experience for us to meet at Hong Lim Park and to get to know each other.

2. Petitions
During the past three months, a total of four petitions sent organised, of which three petitions were presented to the Monetary Authority of Singapore.

The first petition dated 10 October and signed by 983 people, asked the Government to look into any possible wrong doings by the financial institutions that created and marketed the credit linked notes.

The second petition dated 17 October and signed by 277 people, asked the MAS to investigate the sales training given by the financial institutions to their representatives who sold the credit linked notes.

The fourth petition dated 31 October and signed by 1,073 people, asked the MAS to review the complaint handling process of the financial institutions, to set up an independent unit to receive the complaints and to encourage the financial institutions to adopt a collective approach in offering fair compensation to the investors.

These petitions were presented to the chairman and executive director of MAS and were acknowledged. My requests to meet with the chairman or senior management of MAS were declined. I received replies that any development would be communicated to the public through media releases.

Up to now, we have not received any communication on whether the specific requests contained in the petitions had been considered or implemented.

3. Complaint Handling Process
We have received reports that about 5,000 complaints had been received by the financial institutions that sold the credit linked notes. The MAS had issued a statement that the complaint handling processes of these institutions had generally met their expected standard.

We have not been provided with information on the number of people that have received full or partial compensation for the alleged mis-selling of the product. A small number of the so-called vulnerable investors had been compensated. Although the actual number is not disclosed, this is estimated to account for less than 2 percent of the investors.

The perception of the investors is quite different from the MAS. Many investors found the complaint handling process to be carried out in an unfair and unsatisfactory manner.

The anecdotal reports from any investors are that their complaints of alleged mis-selling were rejected by the financial institutions.

MAS had required the financial institutions to give their decision on each complaint within four weeks. This deadline appeared to have been not met. There are many reports from investors that they had not received any decision after six weeks or longer.

The next step for the investors is to lodge a complaint with the dispute resolution center, called FIDREC. From our survey, a small number of investors had taken this second step to lodge their complaints. Most of the investors intend to take this second step, but the process has been extremely slow and difficult.

4. Collective legal action
Many investors had indicated that they will join in a collective legal action against the financial institutions. It will be correct for me to say, on their behalf, they had taken this decision with great reluctance and difficulty. They would have preferred a more amicable way to get fair compensation for their financial loss.

I like to ask the investors to join the different groups representing the different types of credit linked notes, namely the Minibonds, High Notes, Jubilee Notes and the Pinnacle Notes.

The leaders of these groups will be holding separate meetings next year for the investors. As each group is smaller, it is easier to arrange a more conducive place to hold an indoor meeting.

Each investor group is also setting up a website and an e-mail list to communicate with their members. The key activities of these groups are to educate their members, provide assistance and advice, and to organise the collective legal action.

I shall be in touch with the leaders of these groups and to co-ordinate the activities of the various groups, if required.

5. My blog
I will continue to keep all investors updated through my blog, www.tankinlian.blogspot.com.

I wish to thank a few volunteers who had been providing me with daily updates of news and articles from other sources. I have put the relevant articles in my blog. I encourage the investors to the postings in my blog to keep in touch with the developments.

6. Conclusion
I am sorry that there was little progress in getting fair compensation for your financial losses, in spite of the great efforts that were put in by many people. We have tried many different approaches, but keep hitting a stone wall – even tough we keep our eyes “wide open”.

During the past three months, we have made many friends from among the investors and volunteers. Let us continue our friendship and continue our efforts to seek fair compensation for the investors, although the future efforts will be done outside of Hong Lim Park.

Let me wish all of you, all the best for 2009.

Tan Kin Lian
Posted by Tan Kin Lian at 6:00 PM
 
Tan Kin Lian's speech at Hong Lim Park, 27 December 2008, (Part 1)

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Tan Kin Lian's speech at Hong Lim Park, 27 December 2008 (Part 2)

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Tan Kin Lian's speech at Hong Lim Park, 27 December 2008 (Part 3)

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Tan Kin Lian's speech at Hong Lim Park, 27 December 2008 (Part 4)

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Lawyer Mr Leonard Loo's speech to investors at Hong Lim Park, 27 Dec 2008

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Satisfaction with Life Index

Sunday, December 28, 2008
Satisfaction with Life Index

http://en.wikipedia.org/wiki/Satisfaction_with_Life_Index#International_Ranking_.282006.29


Rank Country SWL

1 Denmark 273.4
2 Switzerland 273.3
8 Canada 253.3
16 Malaysia,
New Zealand
United States 246.7
25 Australia 243.3
33 Germany 240.0
41 United Kingdom 236.7
48 Singapore 230.0
61 France
Hong Kong
Indonesia 220.0
71 Thailand 216.7
77 Philippines 213.3
81 China 210.0
88 Japan 206.7
100 South Korea 193.3
122 India 180.0
177 Zimbabwe 110.0

Singapore rank below Malaysia (surprising!), USA and UK but ahead of Hong Kong, Japan (surprising!) and France.

Posted by Tan Kin Lian at 10:29 AM
 
Survey on Distribution Cost of Life Insurance Policy

Monday, December 29, 2008
Survey on Distribution Cost of Life Insurance Policy

If you have bought a life insurance policy (i.e. whole, life, endowment, investment linked, or variation) during the past two years, you can participate in this survey:

http://www.surveymonkey.com/s.aspx?sm=AaicemJhQmUXu8DitwJm8Q_3d_3d
Posted by Tan Kin Lian at 8:49 AM
 
Re: Survey on Distribution Cost of Life Insurance Policy

2 Comments

Anonymous Anonymous said...

Hi Mr Tan,

Just wanted to know why buying Insurance policies must go thru' an agent (Assuming that the potential policyholder knows what he wants and does not need the services provided by the insurance agent) whereas unit trust can purchase via on-line? (without any agent to represent).

Can the potential policyholders who wanted to purchase policies avoid going thru an agent and make the purchases directly thru the Insurance company.

In this case, the potential policyholders can SAVE a substantial amount by reducing the distribution costs.

Thank you,

YM

December 29, 2008 9:56 AM
Anonymous Anonymous said...

The FSA UK will remove commission by 2011 as a means of remuneration. It will be substituted by fees.In other words insurance products will not carry a commission or a small nominal commission for product pushers or a deep discount.The consumers will benefit from this change by paying a fee and they get responsible advice at lower cost than the embedded commission.
Cost is inversely related to return. Higher cost means your return and protection is low .This is the reason today Whole life and endowment are NOT value for money.
The operating cost of the company has gone up very much, especailly when CEO asking million dollar salary, senior management paid 3 times higher than before and every staff demanding higher pay. Who pays for them? You the consumers. Cost is high, investment return is low, where can can you get value for money for whole life or endowment?
You must as well invest on your own by using BTITR.
Nowdays,to hide the low protection and return the insurance company covers up with a lot of rubbish like retrenchment benefit, annuity conversion, 3times death beneift from accident, and OTHER CRAPS TO FOOL the customers.Customers don't buy craps.The basic benefits to look at are protection and return.
These 2 will give the peace of mind.

December 29, 2008 10:14 AM
 
HK: More frustration for minibond investors at tribunal

Monday, December 29, 2008
HK: More frustration for minibond investors at tribunal
http://www.thestandard.com.hk/breaking_news_detail.asp?id=11349&icid=3&d_str=20081229
Lehman Brothers minibond investors have had their hearing at the Small Claims Tribunal in Wan Chai adjourned to March 23.

More than 10 investors who had bought products from banks such as DBS, Bank of China and CITIC Ka Wah filed cases with the tribunal, which has the power to claim compensation up to a ceiling of HK$50,000.

At the hearing, DBS representatives applied for cases against their bank to be heard in the District Court, citing complications in the case and the bank's need for legal representation. Cases needing legal representation cannot be heard at the tribunal.

Posted by Tan Kin Lian at 3:09 PM
3 comments:

Concerned said...

DBS strategy is that the cost of the legal fees will discourage investors from filing their claims in a district court.
December 29, 2008 4:10 PM
Concerned said...

"At the hearing, DBS representatives applied for cases against their bank to be heard in the District Court, citing complications in the case and the bank's need for legal representation."

So now DBS admits that the structure of those credit linked notes are complicated and needs legal representation. It is not a simple product that can be understood and sold to their customers over the counter. If the sellers need legal advice to settle claims in a tribunal, what about the buyers who just walk in and bought the product in about 30 minutes. Can they understand the structure, risk, rewards and legal complications of the products, with their eyes and ears opened.
December 29, 2008 4:26 PM
Wayangnologist said...

if i hadnt expected the poster as feeling possibly 'victimised', i'd have been misled by misleading statements that were actually meant so!


The FIs said complications in the case, they didnt say the case is complicated.


Yes, English is helpful if you want try investing and avoid claiming being misled.

Now i have suspicions about how prospectus are read. Or misread ahem.
December 29, 2008 4:59 PM
 
Results - helping Singaporeans to cope with recession

Monday, December 29, 2008
Results - helping Singaporeans to cope with recession
Here are the updated results based on 49 replies (shown in brackets) compared to the earlier results based on2 5 replies. In most cases, the results are quite close. This suggest that the results based on 25 replies is quite reliable.

1. What do you think about the relief loan for Singaporeans to cover loss of earnings caused by reduction or a shorter work week?

It is a good idea 32.0% (29.2%)
It is worth a try 56.0% (52.1%)
It is not practical 12.0% (18.8%)

2. Is there a big risk that the relief loan can be abused?

It is a big risk that cannot be managed 12.0% (16.7%)
There is a risk, but it can be managed 84.0% (77.1%)
The risk is small, and worth taking 4.0% (6.3%)

3. If a business faces reduced demand, what is the best way for the business to cope?

retrench employees 4.0% (6.3%)
cut wages 36.0% (31.3%)
ask the employees to take no-pay leave 60.0% (62.5%)

4. Many countries have unemployment insurance. Is it time for Singapore to introduce such as scheme?

Most countries find it difficult to prevent abuses 20.0% (18.4%)
The abuses are small and can be managed 40.0% (39.5%)
It is better to start offering a relief loan along the lines proposed 40.0% (44.7%)

5. Should Goods & Services Tax (GST) be reduced temporarily to cope with the recession?

Yes - to encourage consumer spending 75.0% (78.3%)
No - people should reduced spending in hard times 12.5% (13.0%)
No - there are better ways to encourage spending 12.5% (8.7%)

6. How much should GST be reduced to encourage spending?

reduce by 7% replies: 8.0% (6.4%)
reduce by 4% replies: 48.0% (59.6%)
reduce by 2% replies: 20.0% (14.9%)
0% - do not reduce GST replies: 24.0% (19.1%)

7. How should the Government cope with a reduction in GST revenues?

Increase personal income tax 8.7% (6.5%)
Reduce government spending 30.4% (37.0%)
Draw down on past reserves 60.9% (56.5%)

8. What is the best way to encourage consumer spending?

Give cash handouts 29.2% (21.3%
Give food and other coupons 16.7% (19.1%)
Reduce GST and charges 54.2% (59.6%)

Posted by Tan Kin Lian at 3:47 PM
2 comments:

ym said...

hi Mr Tan,
havent had time recently to post in this blog but i found the results of this survey rather interesting..

my views are :
- more credit (if via fractional-reserve lending aka couterfeit money with the blessing of our gahmens) will furhter collapse the global economy..

- more spending is not the answer to our problems, in fact, it is more savings.. most ppl understand the economic collapse/depression as lack of demand, but it's actually a lack of real savings thats the root of the problem..
fractional reserve credit we have plenty of, but real money, we have little.. most was wasted on bubble activities (casinos, property, watches, comtemporary art, structured prods etc..)

- yes reduce gst... and income tax needs to be more skewed ie high income earners taxed significantly more..
December 26, 2008 5:32 PM
Anonymous said...

Haha. The biggest % choice in each of the survey questions are to be expected.

But unfortunately all these will not be implemented, also to be expected. Want to bet?

The PAP gahmen only wants to help you cope in piecemeal manner or on a case by case basis, just like what the FIs are doing in the Minibond fiasco.
December 26, 2008 6:17 PM
 
SCMP:Mis-selling of minibonds had 1980s precedent in Britain

Monday, December 29, 2008
SCMP:Mis-selling of minibonds had 1980s precedent in Britain
http://www.pressdisplay.com/pressdi...9ab1cf136f74&pdaffid=8HM4kDzWViwfc7AqkYlqIQ==

29 Dec 2008
Jimmy Chow, Cheung Sha Wan

The controversy over the minibond saga does not only relate to compensation. It is about [alleged] mis-selling.

Instead of paying investors of Lehman’s minibonds back, local banks have come up with a complex way by providing a pool of HK$100 million to help the minibond trustee to perform its duty to protect the “interest of minibond investors” (“Deduction decision in legal fight irks Lehman investors”, December 19).

If a retired taxi driver did not seem to understand the minibond in which he had invested his life savings, he can hardly be expected to grasp this legal game [unfolding in the US]. Neither can I.

So far, only a limited number of people have received compensation from the banks, a small percentage of total claimants.

The mis-selling of securities in Hong Kong, which mostly occurred over the last two years, is reminiscent of the mis-selling in Britain between 1988 and 1994.

In 1988 the British government encouraged people to make private provision for retirement in addition to the state pension by purchasing personal pension plans.

It turned out that fast-talking salesmen misled people into buying retirement pension products they did not really need.

Realising there had been mis-selling on a huge scale, in 1994 the British financial services regulator “instructed” banks and insurers to stop these practices and review all cases.

By 1997 only 5 per cent of the cases were cleared up.

That year, the newly-elected Labour government decided to “name and shame” and to fine the laggards.

Disciplinary action was taken against 349 firms which resulted in fines totalling £11million (HK$126.3 million). Nearly £12 billion was paid in compensation to policyholders.

I hope I am wrong, but if our government remains reluctant to conduct a radical review on both the minibond scandal and the city’s regulatory framework, the saga will drag on indefinitely.

Posted by Tan Kin Lian at 4:08 PM
2 comments:

Anonymous said...

Yes, if an elected government does not intervene when its citizens have been abused and are shortchanged then what do these government people do except make nice sounding speeches and collect their salary? All countries make it their business to look after their citizens as a primary responsibility. Are we leading the world again towards a new paradigm to show that asians can think?
December 29, 2008 4:42 PM
Anonymous said...

Our present government is thinking too much for theie own salary packages rather than the well being of its citizens. It is really sad indeed.
December 29, 2008 5:19 PM
 
Thought for the day - make an exception of myself

Monday, December 29, 2008
Thought for the day - make an exception of myself
Contributed by Ho Cheow Sent

"The essence of immorality is the tendency to make an exception of myself: Jane Addams
(An example is a ruler who passes laws for his people and exempts himself from those very laws)
 
Re: HK: More frustration for minibond investors at tribunal

Monday, December 29, 2008
HK: More frustration for minibond investors at tribunal
http://www.thestandard.com.hk/breaking_news_detail.asp?id=11349&icid=3&d_str=20081229
Lehman Brothers minibond investors have had their hearing at the Small Claims Tribunal in Wan Chai adjourned to March 23.

More than 10 investors who had bought products from banks such as DBS, Bank of China and CITIC Ka Wah filed cases with the tribunal, which has the power to claim compensation up to a ceiling of HK$50,000.

At the hearing, DBS representatives applied for cases against their bank to be heard in the District Court, citing complications in the case and the bank's need for legal representation. Cases needing legal representation cannot be heard at the tribunal.

Posted by Tan Kin Lian at 3:09 PM
3 comments:

Concerned said...

DBS strategy is that the cost of the legal fees will discourage investors from filing their claims in a district court.
December 29, 2008 4:10 PM
Concerned said...

"At the hearing, DBS representatives applied for cases against their bank to be heard in the District Court, citing complications in the case and the bank's need for legal representation."

So now DBS admits that the structure of those credit linked notes are complicated and needs legal representation. It is not a simple product that can be understood and sold to their customers over the counter. If the sellers need legal advice to settle claims in a tribunal, what about the buyers who just walk in and bought the product in about 30 minutes. Can they understand the structure, risk, rewards and legal complications of the products, with their eyes and ears opened.
December 29, 2008 4:26 PM
Wayangnologist said...

if i hadnt expected the poster as feeling possibly 'victimised', i'd have been misled by misleading statements that were actually meant so!


The FIs said complications in the case, they didnt say the case is complicated.


Yes, English is helpful if you want try investing and avoid claiming being misled.

Now i have suspicions about how prospectus are read. Or misread ahem.
December 29, 2008 4:59 PM

3 Comments

Close this window Jump to comment form
Blogger Concerned said...

DBS strategy is that the cost of the legal fees will discourage investors from filing their claims in a district court.

December 29, 2008 4:10 PM
Blogger Concerned said...

"At the hearing, DBS representatives applied for cases against their bank to be heard in the District Court, citing complications in the case and the bank's need for legal representation."

So now DBS admits that the structure of those credit linked notes are complicated and needs legal representation. It is not a simple product that can be understood and sold to their customers over the counter. If the sellers need legal advice to settle claims in a tribunal, what about the buyers who just walk in and bought the product in about 30 minutes. Can they understand the structure, risk, rewards and legal complications of the products, with their eyes and ears opened.

December 29, 2008 4:26 PM
Blogger Wayangnologist said...

if i hadnt expected the poster as feeling possibly 'victimised', i'd have been misled by misleading statements that were actually meant so!


The FIs said complications in the case, they didnt say the case is complicated.


Yes, English is helpful if you want try investing and avoid claiming being misled.

Now i have suspicions about how prospectus are read. Or misread ahem.

December 29, 2008 4:59 PM
 
Re: SCMP:Mis-selling of minibonds had 1980s precedent in Britain

Monday, December 29, 2008
SCMP:Mis-selling of minibonds had 1980s precedent in Britain
http://www.pressdisplay.com/pressdi...9ab1cf136f74&pdaffid=8HM4kDzWViwfc7AqkYlqIQ==

29 Dec 2008
Jimmy Chow, Cheung Sha Wan

The controversy over the minibond saga does not only relate to compensation. It is about [alleged] mis-selling.

Instead of paying investors of Lehman’s minibonds back, local banks have come up with a complex way by providing a pool of HK$100 million to help the minibond trustee to perform its duty to protect the “interest of minibond investors” (“Deduction decision in legal fight irks Lehman investors”, December 19).

If a retired taxi driver did not seem to understand the minibond in which he had invested his life savings, he can hardly be expected to grasp this legal game [unfolding in the US]. Neither can I.

So far, only a limited number of people have received compensation from the banks, a small percentage of total claimants.

The mis-selling of securities in Hong Kong, which mostly occurred over the last two years, is reminiscent of the mis-selling in Britain between 1988 and 1994.

In 1988 the British government encouraged people to make private provision for retirement in addition to the state pension by purchasing personal pension plans.

It turned out that fast-talking salesmen misled people into buying retirement pension products they did not really need.

Realising there had been mis-selling on a huge scale, in 1994 the British financial services regulator “instructed” banks and insurers to stop these practices and review all cases.

By 1997 only 5 per cent of the cases were cleared up.

That year, the newly-elected Labour government decided to “name and shame” and to fine the laggards.

Disciplinary action was taken against 349 firms which resulted in fines totalling £11million (HK$126.3 million). Nearly £12 billion was paid in compensation to policyholders.

I hope I am wrong, but if our government remains reluctant to conduct a radical review on both the minibond scandal and the city’s regulatory framework, the saga will drag on indefinitely.

Posted by Tan Kin Lian at 4:08 PM


Anonymous said...

Yes, if an elected government does not intervene when its citizens have been abused and are shortchanged then what do these government people do except make nice sounding speeches and collect their salary? All countries make it their business to look after their citizens as a primary responsibility. Are we leading the world again towards a new paradigm to show that asians can think?
December 29, 2008 4:42 PM
Anonymous said...

Our present government is thinking too much for theie own salary packages rather than the well being of its citizens. It is really sad indeed.
December 29, 2008 5:19 PM

8 Comments

Anonymous Anonymous said...

Yes, if an elected government does not intervene when its citizens have been abused and are shortchanged then what do these government people do except make nice sounding speeches and collect their salary? All countries make it their business to look after their citizens as a primary responsibility. Are we leading the world again towards a new paradigm to show that asians can think?

December 29, 2008 4:42 PM
Anonymous Anonymous said...

Our present government is thinking too much for theie own salary packages rather than the well being of its citizens. It is really sad indeed.

December 29, 2008 5:19 PM
Anonymous Anonymous said...

We have given the full trust to them for so many years but endup we got playout. Look at other countries, there are no parties can stay that long. Only the lighting Logo.

Pretty sad thing.

December 29, 2008 6:07 PM
Anonymous Anonymous said...

Only when the ruling party get kick out of parliament, then you got hope. One party is not a bad thing provided she is not selfish, self-centred, self esteem (too big, too high). Can this happen in S'pore? Dun think so, because of 40+ years of comfort which lead to complacency. Only thing that will not change is when the next boom time come, a big salary increase and big bonus will be brought up. Oh good time you have is because of us, the elite people. You object also no use, because there is no Congress or Senate to throw it out. Instead count yourself lucky, you are rule by the "elitism". Sounds a bit like those CEO of Walls Street companies??

December 29, 2008 6:44 PM
Anonymous Anonymous said...

Maybe in uniquely Singapore, the banks and other big or monopoly businesses are so interconnected with the gahmen that if they take action (hurt) against one, the other will also feel it. Only you folks are left out. If you feel hurt, they don't.

That's why the Gahmen behave the way they do and also of course not convenient to tell you why. That's why the silence and lack of a proper response.

December 29, 2008 7:16 PM
Anonymous Anonymous said...

You think MAS dares to do that, fine the banks and the insurers? There had been many cases of misconduct by insurance agents, did MAS discipline them severely/ Just massage them for a few months and these agents were back again disguised as better sounding titles like financial consultants to plan bigger heist and to fleece this time more carefully and legally.
In mature markets people like these agents would be in the coffins awaiting burial for good.The insurers would be fined until their underwear left.

December 29, 2008 7:32 PM
Anonymous Anonymous said...

When so many such products are in the market, sooner or later u will kena. Very hard to escape one.

December 29, 2008 7:56 PM
Anonymous Anonymous said...

a lot of people already kena revosave
locked for life for a return of only 1.35%. This is madness. It only shows how stupid consumers are and how insurance are ruthless agents are. One is an idiot and one is without conscience and this is how mis-selling is born.
Hope FISCA can be formed as soon as possible to stop all these. FISCA can also play the regulator's role, watchdog and whistle blower.

December 29, 2008 8:55 PM
 
Hong Kong: Lehman dozen feeling bullied

Tuesday, December 30, 2008
Hong Kong: Lehman dozen feeling bullied
http://www.thestandard.com.hk/news_detail.asp?pp_cat=11&art_id=76374&con_type=1&d_str=20081230

Tuesday, December 30, 2008

A dozen investors in Lehman Brothers products suffered a further setback yesterday when the Small Claims Tribunal adjourned until March a hearing on their demands for refunds. Adjudicator Anthony Chow Siu- wo told the tribunal that a further 100 claims needed to be processed, while one of the banks being sued, DBS, as well as an employee of Chong Hing Bank, had asked for their cases to be transferred to the District Court since they needed legal representation.
Legal representatives are not permitted at a hearing by the tribunal, which is limited to dealing with claims not exceeding HK$50,000.

Investors suing DBS complained of being bullied, saying they could not afford the fees in the District Court.

Chow told the 12 individual claimants seeking refunds from six banks that they will have to wait for another three months before the hearing can be continued.
Four claimants who bought DBS' Constellation products were told by a representative of the bank at the tribunal that their products had zero value.

Chow said the problem with some of the cases was that no one, including the banks, knew the value of the financial products that had been sold, though they may have been valued at zero for a certain period. Thus, one could not calculate the amount of money lost by investors, Chow said. ADELE WONG

Posted by Tan Kin Lian at 7:45 AM
 
HK Standard: Lehman minibond values up in air

Tuesday, December 30, 2008
HK Standard: Lehman minibond values up in air
30 Dec 2008

The Hong Kong Association of Banks announced yesterday that leftover values of Lehman Brothers minibonds are as much as 78.31 percent.

However, a source from the banking sector said the pricing, set as at November 21, is no longer applicable because of fundamental uncertainties following a legal challenge from Lehman liquidators.

"There have been no attempts to update the valuation," the source said.

The pricing of the minibonds will continue once the legal issue is settled, the source said.

However, "there will be potentially additional costs to be incurred as a result of the legal challenge.''

The banking association also said: ``If this claim [from Lehman's liquidators] is upheld, the value of the minibonds will significantly decrease.''

According to a Legislative Council document submitted by the association's Lehman task force yesterday, prices, as at November 21, of the minibonds ranged from 0.82 percent to 64.03 percent on average.

Series 11, tranche A, was worth the most among all the series and its price was 78.31 percent, after calculating the value of the underlying collateral. Those who bought the product for US$100 (HK$780) would get US$78.31. Remaining values of series five to nine of the minibonds were only 0.82 percent.

The pricing information no longer represents the current market value of the minibonds and the banks cannot assess how much a minibond investor may recover from the proceeds of the collateral underlying the minibonds, the association added.

A Legco meeting relating to the government buyback proposal for the minibonds will be held this morning.

Late last month, the minibond trustee, a US unit of HSBC (0005), received a letter from legal advisers to Lehman in the United States that the proceeds from any sale of the underlying collateral for the minibonds should be paid to the collapsed US investment bank before the issuer of the minibonds and in turn the investors.

The banks are still circulating the documents for the provision of up to HK$100 million to the trustee and expect it will not only be used for paying legal fees.

"The precise terms of the proposed funding have not yet been agreed between the banks and the trustee," the association said.
Posted by Tan Kin Lian at 10:53 AM
 
Pinnacle Notes: Website should be more free with info

Tuesday, December 30, 2008
Pinnacle Notes: Website should be more free with info

Published in Straits Times, Dec 30, 2008

I WAS directed to the Morgan Stanley website for Pinnacles Notes by the Monetary Authority of Singapore (MAS) website. When I entered the Morgan Stanley website, I was welcomed by a long legal disclaimer that required the answer 'yes' before I was granted further access. As a result, I was discouraged from entering the website for more information.

May I ask Morgan Stanley to consider removing this legalistic disclaimer and making access free for the following reasons:

- Pinnacle Notes is of public interest, and basic information such as redemption value should be freely available.For example, a bank website provides information on fixed deposits and exchange rates. In another example, unit trust investments are quoted daily via normal marketing channels.

- Morgan Stanley should not impose such a legalistic disclaimer because it is merely allowing access and not providing professional advice. Its exposure is next to zero. Members of the public who want access are looking for information and not professional advice.

It would be fair for Morgan Stanley to allow public access to general information without agreeing to a disclaimer. However, if professional advice is solicited, it is free to give it.

Leong Kok Ho


Posted by Tan Kin Lian at 10:57 AM
 
Honest mistake: Bank should not penalise customer

MY WIFE made a genuine banking mistake and as a result, her bank, POSB, has pocketed a so-called administration fee of $40 from her savings account. We feel the charge is too high and not justified or reasonable.

Last Tuesday, I accompanied my wife to Hong Leong Finance in Jurong West to open a fixed deposit account. She wrote a POSB cheque for a certain amount and intended to keep the deposit for two years at 1.18 per cent under current market conditions. Unfortunately, she forgot she would have to transfer a sum of money from her DBS savings account to her POSB saving account, which is linked to her current account. She has two separate accounts with both banks which were opened before POSB was absorbed by DBS.

As a result, the cheque did not clear and POSB has deducted $40 from her savings account. She was surprised POSB did not even contact her to clarify the situation.

On Thursday, she made a fund transfer from her DBS savings account to her POSB savings account and re-submitted a cheque to Hong Leong Finance on Saturday.

She would like to appeal to POSB to waive the administration fee, given that she already pays a monthly fee of $2 for her current account.

Humans make mistakes, no matter how careful they are and banks should understand this.

Goh Kian Huat

http://www.straitstimes.com/ST+Forum/Online+Story/STIStory_319726.html
 
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