Dear Mr. Tan,
I like to tell you about my personal experience concerning the practice of opt-out Sales Tactics.
Recently, I upgraded my mobile hand-phone with a leading local telecommunication provider.
I have been a loyal customer of this provider for more than 12 years and have been upgrading my phones at each regular cycle of 2 years.
This time round, I noticed that since the upgrading I have been receiving a barrage of SMS such as Gaming results, CNA news flash , ringtones etc.
After this recent financial fiasco, of which I am a victim of the MiniBond mis-selling, I am more wiser and call up the Service Provider hotline representative.
I was told these SMS messages form part of the upgrading contractual package and will be charged at $xxx after the 30th day from purchased date, unless I opt-out during this period.
Further, I was told by this representative that the Provider shop sales person has made this fact known to me during the sales. It was not made known to me ! Of course like the MInibond, I was made to sign some documents, which was quit routine like the previous upgrading I had.
I like to draw some parallel in this episode to the MiniBond selling procedure. Sales people did not disclosed all hidden costs and risks to their customer but only emphasis the unique selling point.
Mr Tan, I Fully support your efforts in educating the public and getting the authorities to review and investigate into the current selling procedures of these Institutions. These Institutions have become more profit focus and lose touch with their loyal customers (we placed too much trust in them) over the years.
In the name of efficiency, Institutions seems to heading this path of “Express Sales “ with fine prints embedded in the contract. Some Day our Life may also be opt-out !
Martho2008
REPLY
I suggest that you bring this matter to the Consumer Association of Singapore , www.case.org.sg. They will be able to act on this matter more effecitively than me.
Sunday, November 30, 2008
Thoughts for the Day - Ho Cheow Seng
The form of law which I propose would be as follows: In a state which is desirous of being saved from the greatest of all plagues -- not faction, but rather distraction -- there should exist among the citizens neither extreme poverty nor, again, excessive wealth, for both are productive of great evil . . . Now the legislator should determine what is to be the limit of poverty or of wealth.": Plato (427-347 B.C.):
By 'distraction' Plato means that the 'citizens' are seduced by matters of no real importance so as to lose focus on issues that are crucial to their real well-being.
Appeal to the President of Singapore
Dear Mr. Tan,
The government is also not supportive to the investors, even sacrifice the Town Councils $16 millions. Shall we appeal to The President of Singapore?
We conduct another petition which include the age of the investors, the amount invested and also the % of the investment compare to all their saving. To include the age is to let every Singaporeans and especially the government knows that those who are above age of 45 may not have another 20 or 30 years to accumulate the same amount of saving again. The % is to show every Singaporeans and especially the government that how important these amount of money is to us.
The few ten thousands that we have invested, though this maybe some people 1 or 2 months salary or the few hundred thousands that we have invested, though this maybe just a peanut to some people, BUT they are all accumulated by us, cents by cents, over many years of hard work and sweats.
The situation now is seems to be only the top down instruction from MAS/Govt will make FIs to compensate. These CDOs related credit –linked investments amounted to billions, it is definitely very difficult for the FIs to settle the compensation by themselves. (There may be more products bust.)
The MAS should hold some responsibility (approving these products) and thus the government should step in.
LK
REPLY
I wish to invite volunteers to step forward and lead this project. I need volunteers who are convinced that this is worth the effort.
I will not be able to handle this additional project, as I already have too many things to do.
The government is also not supportive to the investors, even sacrifice the Town Councils $16 millions. Shall we appeal to The President of Singapore?
We conduct another petition which include the age of the investors, the amount invested and also the % of the investment compare to all their saving. To include the age is to let every Singaporeans and especially the government knows that those who are above age of 45 may not have another 20 or 30 years to accumulate the same amount of saving again. The % is to show every Singaporeans and especially the government that how important these amount of money is to us.
The few ten thousands that we have invested, though this maybe some people 1 or 2 months salary or the few hundred thousands that we have invested, though this maybe just a peanut to some people, BUT they are all accumulated by us, cents by cents, over many years of hard work and sweats.
The situation now is seems to be only the top down instruction from MAS/Govt will make FIs to compensate. These CDOs related credit –linked investments amounted to billions, it is definitely very difficult for the FIs to settle the compensation by themselves. (There may be more products bust.)
The MAS should hold some responsibility (approving these products) and thus the government should step in.
LK
REPLY
I wish to invite volunteers to step forward and lead this project. I need volunteers who are convinced that this is worth the effort.
I will not be able to handle this additional project, as I already have too many things to do.
Legal action against the Issuers and Distributors
If the noteholders take legal action against the issuers and/or distributors of the credit linked notes and win the case, it is possible to get the contracts rescinded and the noteholders will receive a full refund of the invested money.
I heve spoken to several lawyers. They advised that the noteholders have a good case against the issuers and/or distributors on the following grounds:
1) There are possible misrepresentations, omissions and inconsistencies in the prospectus and pricing documents. Under the principle of "contract of adhesion", these inconsistencies will be interpreted against the financial institutions as they provided the legal wordings to the contracts.
2) The documents require more than 1 day to read and understand, even for an educated and financially savvy person. How is it possible for the securities to be sold over the counter to an ordinary layman withon one hour?
3) The actual risks of these securities clearly do not fit the risk profile of the people that are marketed to. This is sufficient grounds for the contracts to be rescinded.
I will be talking to two or three senior lawyers to go through the legal documents and the above arguments. If we find sufficient evidence, we can get the written opionion from a Queens Counsel or other suitable experts. This will strengthen the case and help to get the noteholders to join a class action.
I will find someone to fund the cost of the expert legal opinion, so that the noteholders do not need to wrry about this matter now. If the case proceed, those joining the class action can reimburse this cost.
I am still keen to avoid a costly legal battle and have a negotiated settlement with the financial institutions. I hope that they will come forward to offer a fair compensation to the notebolders, so that this matter does not need to be taken to the courts.
I heve spoken to several lawyers. They advised that the noteholders have a good case against the issuers and/or distributors on the following grounds:
1) There are possible misrepresentations, omissions and inconsistencies in the prospectus and pricing documents. Under the principle of "contract of adhesion", these inconsistencies will be interpreted against the financial institutions as they provided the legal wordings to the contracts.
2) The documents require more than 1 day to read and understand, even for an educated and financially savvy person. How is it possible for the securities to be sold over the counter to an ordinary layman withon one hour?
3) The actual risks of these securities clearly do not fit the risk profile of the people that are marketed to. This is sufficient grounds for the contracts to be rescinded.
I will be talking to two or three senior lawyers to go through the legal documents and the above arguments. If we find sufficient evidence, we can get the written opionion from a Queens Counsel or other suitable experts. This will strengthen the case and help to get the noteholders to join a class action.
I will find someone to fund the cost of the expert legal opinion, so that the noteholders do not need to wrry about this matter now. If the case proceed, those joining the class action can reimburse this cost.
I am still keen to avoid a costly legal battle and have a negotiated settlement with the financial institutions. I hope that they will come forward to offer a fair compensation to the notebolders, so that this matter does not need to be taken to the courts.
Clash of events at Speakers Corner on 29 November
Dear Mr. Tan,
Do you think that the Indian cultural event held on 29 November at Hong Lim Park was arranged to make it difficult for you to use Speaker's Corner?
REPLY
I do not think so. This type of event probably takes a few months to organise. If anyone is suspicious, perhaps you can check the facts for me.
It appears that Hong Lim Park is not used exclusively for Speaker's Corner. In the future, I will check if there are competing events on Saturdays. I am also considering to move my regular meeting at Speaker's Corner to Wednesday at 6 p.m. There is less likelihood of a clash of events during the weekdays.
Do you think that the Indian cultural event held on 29 November at Hong Lim Park was arranged to make it difficult for you to use Speaker's Corner?
REPLY
I do not think so. This type of event probably takes a few months to organise. If anyone is suspicious, perhaps you can check the facts for me.
It appears that Hong Lim Park is not used exclusively for Speaker's Corner. In the future, I will check if there are competing events on Saturdays. I am also considering to move my regular meeting at Speaker's Corner to Wednesday at 6 p.m. There is less likelihood of a clash of events during the weekdays.
Saturday, November 29, 2008
Speech at Speaker's Corner, 29 Nov 2008
Speaker’s Corner – 29 November 2008
Speech by Tan Kin Lian
1. Investors should see their Member of Parliament
I suggest that you should see your Member of Parliament, together with other investors living in your area. If you aleady saw your MP before, you can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you. You can ask your MP to ask MAS:
1. What is the outcome of petition #1 which ask MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? Did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act?
2. How many investors had their cases resolved by the financial institutions? How many cases were rejected by the financial institutions or have made offers that were rejected by the investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?
3. How many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?
It is the duty of the MP to ask these questions on your behalf. Your MP can also raise them in Parliament.
2. Material facts should be disclosed in Prospectus
Investors have been told that they the prospectus contained a warning ‘you could lose all or a substantial part of your investment’ in bold print, on the page 1 or 2”. But what if the prospectus did not disclose material facts?
The New Paper’s Doctor Money wrote on 4 November 2008:
“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.
They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.
Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”
You can ask a lawyer whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act. This section reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).
Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”
3. Ask for information in writing
The investors had approached the relationship manager who sold the notes to them. The RM was not able to give them a satisfactory answer. These investors then approached me for the answer.
I am not able to give you the answer. I do not have the answers, as there are many series and each series is different from the other series.
You should send the questions in writing (by letter or e-mail) and ask the relationship manager to give you the reply in writing. If you do not get a satisfactory reply, you should lodge a written complaint with MAS. If the RM does not know, it is the RM’s duty to get from the product issuer.
As an investor, you have the right to get relevant information on the product that you were sold. You are also entitled to be informed by the trustee or arranger, whenever they are significant changes that affect your product.
Act to safeguard your interest. Do not accept slipshod answers. Lodge your complaint.
4. Experience with FIDREC
If you have gone through FIDREC, please send the outcome to me, so that your experience can be shared with other investors.
Although you are covered under a confidentiality agreement, it should be all right to give general information – did you accept the adjudication, how many interviews did you attend, how long did it take you to present your case, how long does FIDREC take to give an answer.
This information will be helpful to other investors who are waiting for FIDREC adjudication.
I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.
So far, the replies given were discouraging. Many complaints have been lodged to FIDREC. It takes a long time to settle a case.
5. Mental health concerns during difficult times
I wish to read to you a letter sent by an investor, with the initial FO:
Dear Mr. Tan,
First of all, thank you for all the help and information that you provided in your blog and in Hong Lim Park.
With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.
Sad to say, I am also exposed to one of the products and have to go through emotional “struggle” everyday.
On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money …
I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.
> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …
It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.
BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”
This list will go on and on and on and on … …
My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.
This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.
FO
6. Class action
The various groups are still talking to several lawyers to find out about their approach towards a class action. They are still not clear about the estimated legal fees and the chance of success.
I am now talking to a few senior lawyers to see if there are any misrepresentations in the prospectus, pricing statements, sales brochures and advertisements.
If necessary, we will arrange for a Queens Council in the UK to give a written opinion. We will find out the cost and how to finance it.
7. Special meeting for next Saturday, 6 December, 5 p.m.
This will be a special day to commemorate the second anniversary of The Online Citizen. I will be speaking at this event. I shall be talking on a matter that is relevant to the investors of the credit linked notes.
If you are free, do come to this special event and give your support.
Tan Kin Lian
Speech by Tan Kin Lian
1. Investors should see their Member of Parliament
I suggest that you should see your Member of Parliament, together with other investors living in your area. If you aleady saw your MP before, you can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you. You can ask your MP to ask MAS:
1. What is the outcome of petition #1 which ask MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? Did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act?
2. How many investors had their cases resolved by the financial institutions? How many cases were rejected by the financial institutions or have made offers that were rejected by the investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?
3. How many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?
It is the duty of the MP to ask these questions on your behalf. Your MP can also raise them in Parliament.
2. Material facts should be disclosed in Prospectus
Investors have been told that they the prospectus contained a warning ‘you could lose all or a substantial part of your investment’ in bold print, on the page 1 or 2”. But what if the prospectus did not disclose material facts?
The New Paper’s Doctor Money wrote on 4 November 2008:
“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.
They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.
Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”
You can ask a lawyer whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act. This section reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).
Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”
3. Ask for information in writing
The investors had approached the relationship manager who sold the notes to them. The RM was not able to give them a satisfactory answer. These investors then approached me for the answer.
I am not able to give you the answer. I do not have the answers, as there are many series and each series is different from the other series.
You should send the questions in writing (by letter or e-mail) and ask the relationship manager to give you the reply in writing. If you do not get a satisfactory reply, you should lodge a written complaint with MAS. If the RM does not know, it is the RM’s duty to get from the product issuer.
As an investor, you have the right to get relevant information on the product that you were sold. You are also entitled to be informed by the trustee or arranger, whenever they are significant changes that affect your product.
Act to safeguard your interest. Do not accept slipshod answers. Lodge your complaint.
4. Experience with FIDREC
If you have gone through FIDREC, please send the outcome to me, so that your experience can be shared with other investors.
Although you are covered under a confidentiality agreement, it should be all right to give general information – did you accept the adjudication, how many interviews did you attend, how long did it take you to present your case, how long does FIDREC take to give an answer.
This information will be helpful to other investors who are waiting for FIDREC adjudication.
I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.
So far, the replies given were discouraging. Many complaints have been lodged to FIDREC. It takes a long time to settle a case.
5. Mental health concerns during difficult times
I wish to read to you a letter sent by an investor, with the initial FO:
Dear Mr. Tan,
First of all, thank you for all the help and information that you provided in your blog and in Hong Lim Park.
With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.
Sad to say, I am also exposed to one of the products and have to go through emotional “struggle” everyday.
On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money …
I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.
> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …
It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.
BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”
This list will go on and on and on and on … …
My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.
This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.
FO
6. Class action
The various groups are still talking to several lawyers to find out about their approach towards a class action. They are still not clear about the estimated legal fees and the chance of success.
I am now talking to a few senior lawyers to see if there are any misrepresentations in the prospectus, pricing statements, sales brochures and advertisements.
If necessary, we will arrange for a Queens Council in the UK to give a written opinion. We will find out the cost and how to finance it.
7. Special meeting for next Saturday, 6 December, 5 p.m.
This will be a special day to commemorate the second anniversary of The Online Citizen. I will be speaking at this event. I shall be talking on a matter that is relevant to the investors of the credit linked notes.
If you are free, do come to this special event and give your support.
Tan Kin Lian
Friday, November 28, 2008
Speaker's Corner 5 pm on 29 Nov - change of plan
There will be an Indian Cultural event at Hong Lim park tomorrow at the same time as my speech. The tents occupy most of the open spaces. I like to ask those who read this message to skip the meeting tomorrow. I will post my speech here.
There is space in a corner of the park for a small crowd For those who miss this announcement and turn up at Hong Lim park tomorrow, I will distribute a hard copy of my speech on the spot.
There is space in a corner of the park for a small crowd For those who miss this announcement and turn up at Hong Lim park tomorrow, I will distribute a hard copy of my speech on the spot.
The Standard : Legco first on Lehman fizzles out
Standard, The (Hong Kong) - Wednesday, November 26, 2008
Author: Diana Lee
The first open meeting of the Legislative Council subcommittee probing the Lehman minibonds saga got bogged down in party bickering yesterday and failed to reach agreement on confidentiality.
Civic Party legislator Ronny Tong Ka-wah said meetings should be transparent and documents made available unless witnesses request confidentiality. This demand must be justified with evidence submitted to subcommittee members and the legal adviser, he said.
``In principle we should not accept a general request. I would not accept, for example, a bank claiming each and every document is confidential,'' Tong said.
However Democratic Alliance for the Betterment and Progress of Hong Kong legislator Chan Kam-lam disagreed, saying mutual respect and mutual trust should exist between witnesses and subcommittee members.
``Even individual people have their privacy, so why not companies?'' Chan asked.
The Democratic Party's James To Kun-sun said mutual trust has nothing to do with the probe.
``We are here to find out the truth,'' To argued. ``What if the banks claim the staff training manual [for selling structured financial products] is classified material? ``What's the point of a public hearing if everything could be treated as classified so easily? We talk about mutual trust among legislators, not between witnesses and legislators.'' Lawmakers also failed to compromise on whether legislators should sign a confidentiality agreement.
The pan-democrats said they did not object but raised doubts about the effect such a pledge would have on lawmakers.
Philip Wong Yu-hong, subcommittee vice chairman and a commercial sector lawmaker, said ensuring lawmakers will keep the confidential submissions confidential is more important. Classifying what is confidential is another issue.
The Legco Secretariat will host a briefing on December 4 to inform lawmakers on matters they should know about the Lehman probe, including the general principles of what information should be treated as classified and confidential.
Meanwhile, Emily Lau Wai-hing of the Frontier, again failed to persuade members to support the pan-democrats' demand for a smaller subcommittee, which currently has 24 members.
Subcommittee chairman Raymond Ho Chung-tai said he hoped the discussion on the subcommittee's size is finally over and that members may unite to face the challenges ahead.
When the subcommittee meets will be decided on Friday. It is expected to host meetings every Tuesday and Friday morning starting early next year.
Author: Diana Lee
The first open meeting of the Legislative Council subcommittee probing the Lehman minibonds saga got bogged down in party bickering yesterday and failed to reach agreement on confidentiality.
Civic Party legislator Ronny Tong Ka-wah said meetings should be transparent and documents made available unless witnesses request confidentiality. This demand must be justified with evidence submitted to subcommittee members and the legal adviser, he said.
``In principle we should not accept a general request. I would not accept, for example, a bank claiming each and every document is confidential,'' Tong said.
However Democratic Alliance for the Betterment and Progress of Hong Kong legislator Chan Kam-lam disagreed, saying mutual respect and mutual trust should exist between witnesses and subcommittee members.
``Even individual people have their privacy, so why not companies?'' Chan asked.
The Democratic Party's James To Kun-sun said mutual trust has nothing to do with the probe.
``We are here to find out the truth,'' To argued. ``What if the banks claim the staff training manual [for selling structured financial products] is classified material? ``What's the point of a public hearing if everything could be treated as classified so easily? We talk about mutual trust among legislators, not between witnesses and legislators.'' Lawmakers also failed to compromise on whether legislators should sign a confidentiality agreement.
The pan-democrats said they did not object but raised doubts about the effect such a pledge would have on lawmakers.
Philip Wong Yu-hong, subcommittee vice chairman and a commercial sector lawmaker, said ensuring lawmakers will keep the confidential submissions confidential is more important. Classifying what is confidential is another issue.
The Legco Secretariat will host a briefing on December 4 to inform lawmakers on matters they should know about the Lehman probe, including the general principles of what information should be treated as classified and confidential.
Meanwhile, Emily Lau Wai-hing of the Frontier, again failed to persuade members to support the pan-democrats' demand for a smaller subcommittee, which currently has 24 members.
Subcommittee chairman Raymond Ho Chung-tai said he hoped the discussion on the subcommittee's size is finally over and that members may unite to face the challenges ahead.
When the subcommittee meets will be decided on Friday. It is expected to host meetings every Tuesday and Friday morning starting early next year.
To each his own
TO EACH HIS OWN
Author Unknown
Nov 27 2008
I cannot change the way I am,
I never really try,
God made me different and unique,
I never ask him why.
If I appear peculiar,
There's nothing I can do,
You must accept me as I am,
As I've accepted you.
God made a casting of each life,
Then threw the mold away,
Each child is different from the rest,
Unlike as night from day.
So often we will criticize,
The things that others do,
But, do you know, they do not think,
The same as me and you.
So God in all his wisdom,
Who knows us all by name,
He didn't want us to be bored,
That's why we're not the same
Author Unknown
Nov 27 2008
I cannot change the way I am,
I never really try,
God made me different and unique,
I never ask him why.
If I appear peculiar,
There's nothing I can do,
You must accept me as I am,
As I've accepted you.
God made a casting of each life,
Then threw the mold away,
Each child is different from the rest,
Unlike as night from day.
So often we will criticize,
The things that others do,
But, do you know, they do not think,
The same as me and you.
So God in all his wisdom,
Who knows us all by name,
He didn't want us to be bored,
That's why we're not the same
Thursday, November 27, 2008
The Online Citizen interview an investor
Listen to this interview of the experience of an investor in the minibonds:
http://theonlinecitizen.com/2008/11/toc-exclusive-interview-with-investor-who-lost-150000/#comments
The Online Citizen wishes to have other investors to come forward to share their experience. I hope that more can come forward. We need the authority to hear about how they have been misled into the wrong investment that cause a total loss of their savings.
If you are willing to be interviewed, send an e-mail to kinlian@gmail.com.
http://theonlinecitizen.com/2008/11/toc-exclusive-interview-with-investor-who-lost-150000/#comments
The Online Citizen wishes to have other investors to come forward to share their experience. I hope that more can come forward. We need the authority to hear about how they have been misled into the wrong investment that cause a total loss of their savings.
If you are willing to be interviewed, send an e-mail to kinlian@gmail.com.
Wednesday, November 26, 2008
Speaker's Corner 5 p.m. Sat 29 Nov
There will be a meeting of investors of the credit linked notes at Speaker's Corner at 5 p.m. on Sat 29 Nov.
Agenda
1. See your MP
2. Misrepresenation in prospectus
3. Ask for information in writing
4. Experience with FIDREC
5. Mental health concerns
6. Class action
7. Special meeting on Sat 6 Dec
Agenda
1. See your MP
2. Misrepresenation in prospectus
3. Ask for information in writing
4. Experience with FIDREC
5. Mental health concerns
6. Class action
7. Special meeting on Sat 6 Dec
Bonus is likely to remain low
I organised a collective protest against the bonus cut made by NTUC Income earlier this year. I reached a settlement as follows:
http://tankinlian.blogspot.com/search?q=collective+protest+settlement
I promised policyholders that I would monitor the situation and give an update.
Recently, I decided to surrender my Living policy, which was affected by the bonus cut. I received a surrender value that included the special bonus to compensate for the bonus cut. In this case, I was slightly better off (with the special bonus included).
During the past six months, there has been turmoil in the financial market resulting in a large markdown of asset prices. I do not know whether the "compensating" special bonus will be withdrawn or reduced in the next few years of the global financial crisis.
Earlier, I wanted to press for the bonus cuts in past years to be restored due to the good financial results up to 2007. With the large drop in asset price in 2008, it will now be difficult to press for this measure. It is also likely that future bonus will remain at a low level, until after the global economy has recovered.
On the bright side, the cash value of a life insurance policy remain largely protection (although the yield is low) during a bad period. It does not suffer the capital loss that comes from shares and other investments.
http://tankinlian.blogspot.com/search?q=collective+protest+settlement
I promised policyholders that I would monitor the situation and give an update.
Recently, I decided to surrender my Living policy, which was affected by the bonus cut. I received a surrender value that included the special bonus to compensate for the bonus cut. In this case, I was slightly better off (with the special bonus included).
During the past six months, there has been turmoil in the financial market resulting in a large markdown of asset prices. I do not know whether the "compensating" special bonus will be withdrawn or reduced in the next few years of the global financial crisis.
Earlier, I wanted to press for the bonus cuts in past years to be restored due to the good financial results up to 2007. With the large drop in asset price in 2008, it will now be difficult to press for this measure. It is also likely that future bonus will remain at a low level, until after the global economy has recovered.
On the bright side, the cash value of a life insurance policy remain largely protection (although the yield is low) during a bad period. It does not suffer the capital loss that comes from shares and other investments.
An apology to Chee Soon Juan and his sister
I refer to this posting:
http://tankinlian.blogspot.com/2008/10/protest-outside-dbs-headquarters.html
The posting in my blog was written by somebody else in CNA forum. I reproduced the mesaage in my blog but overlooked to mention the author. It gave the wrong impression that the message was written by me.
I wish to apologise to Chee Soon Juan and his sister for the damage that is caused to them by the statement, “what many stupid and selfish politicians in Singapore have done and seek self destruction.” This statement came from the original posting (by someone else).
I do not personally share this sentiment and wish to acknowledge their personal sacrifice in fighting for what they believe in.
http://tankinlian.blogspot.com/2008/10/protest-outside-dbs-headquarters.html
The posting in my blog was written by somebody else in CNA forum. I reproduced the mesaage in my blog but overlooked to mention the author. It gave the wrong impression that the message was written by me.
I wish to apologise to Chee Soon Juan and his sister for the damage that is caused to them by the statement, “what many stupid and selfish politicians in Singapore have done and seek self destruction.” This statement came from the original posting (by someone else).
I do not personally share this sentiment and wish to acknowledge their personal sacrifice in fighting for what they believe in.
A sense of responsibility: Obama
http://www.channelnewsasia.com/stories/afp_world/view/392333/1/.html
WASHINGTON: President-elect Barack Obama has chastised US auto executives for being "tone deaf" for flying on corporate jets to Washington to beg for bailout money, and said he believed bank executives should forgo their end-of-year bonuses.
In the advanced excerpt of an interview to be broadcast Wednesday and released by ABC News late Tuesday, the president elect focused on responsibility.
Bank executives forgoing bonuses is "an example of taking responsibility," Obama said.
"If you are already worth tens of millions of dollars, and you are having to lay off workers, the least you can do is say, 'I'm willing to make some sacrifice as well', because I recognize that there are people who are a lot less well off, who are going through some pretty tough times ," Obama told ABC News.
As for the incident in which the heads of Ford, Chrysler and General Motors flew their private jets to Washington last week to ask Congress for bailout money, Obama said: "I thought maybe they're a little tone deaf to what's happening in America right now."
He described it as "a chronic problem, not just for the auto industry ... (but) for the captains of industry generally.
"When people are pulling down hundred million dollar bonuses on Wall Street, and taking enormous risks with other people's money, that indicates a sense that you don't have any perspective on what's happening to ordinary Americans," Obama said.
And when the "auto makers are getting paid far more than their counterparts at Toyota, or at Honda, and yet they're losing money a lot faster than Japanese auto makers are, that tells me that they're not seeing what's going on out there."
Obama said he hoped his presidency will help "usher in ... a return to an ethic of responsibility. That if you're placed in a position of power, then you've got responsibilities to your workers. You've got a responsibility to your community. Your shareholders."
He added: "And that's true ... for members of Congress, that's true for the president, that's true for cabinet members, that's true for parents.
"I want all of us to start thinking a little bit more, not just about what's good for me, but let's start thinking about what's good for our children, what's good for our country. The more we do that, the better off we're going to be," he said.
WASHINGTON: President-elect Barack Obama has chastised US auto executives for being "tone deaf" for flying on corporate jets to Washington to beg for bailout money, and said he believed bank executives should forgo their end-of-year bonuses.
In the advanced excerpt of an interview to be broadcast Wednesday and released by ABC News late Tuesday, the president elect focused on responsibility.
Bank executives forgoing bonuses is "an example of taking responsibility," Obama said.
"If you are already worth tens of millions of dollars, and you are having to lay off workers, the least you can do is say, 'I'm willing to make some sacrifice as well', because I recognize that there are people who are a lot less well off, who are going through some pretty tough times ," Obama told ABC News.
As for the incident in which the heads of Ford, Chrysler and General Motors flew their private jets to Washington last week to ask Congress for bailout money, Obama said: "I thought maybe they're a little tone deaf to what's happening in America right now."
He described it as "a chronic problem, not just for the auto industry ... (but) for the captains of industry generally.
"When people are pulling down hundred million dollar bonuses on Wall Street, and taking enormous risks with other people's money, that indicates a sense that you don't have any perspective on what's happening to ordinary Americans," Obama said.
And when the "auto makers are getting paid far more than their counterparts at Toyota, or at Honda, and yet they're losing money a lot faster than Japanese auto makers are, that tells me that they're not seeing what's going on out there."
Obama said he hoped his presidency will help "usher in ... a return to an ethic of responsibility. That if you're placed in a position of power, then you've got responsibilities to your workers. You've got a responsibility to your community. Your shareholders."
He added: "And that's true ... for members of Congress, that's true for the president, that's true for cabinet members, that's true for parents.
"I want all of us to start thinking a little bit more, not just about what's good for me, but let's start thinking about what's good for our children, what's good for our country. The more we do that, the better off we're going to be," he said.
No reply from financial institution after four weeks
Hi Mr. Tan,
I think you should bring attention to the investers that under Step 3 outlined by MAS, the financial institution is required to give a reply within 4 weeks:
http://www.mas.gov.sg/consumer/structured_products/fidrec_3_step_process.html has
I have not received a reply after 4 weeks. Why doesn't MAS take action against the FI?
REPLY
I suggest that you should lodge a complaint directly with MAS on this matter.
I think you should bring attention to the investers that under Step 3 outlined by MAS, the financial institution is required to give a reply within 4 weeks:
http://www.mas.gov.sg/consumer/structured_products/fidrec_3_step_process.html has
I have not received a reply after 4 weeks. Why doesn't MAS take action against the FI?
REPLY
I suggest that you should lodge a complaint directly with MAS on this matter.
Tuesday, November 25, 2008
End of Free Financial Advice
The FSA of UK (equivalent to MAS) is introducing this new measure in 2012. It will have great impact on how financial products are sold. Our approach in Singapore is modelled on the UK - so I expect that similar measures will be introduced here. It will prevent the sale of financial products that are bad for customers.
From the Telegraph in UK, 25 Nov 2008
The days of consumers getting "free" financial advice look numbered under new regulatory guidelines which are aimed at improving the way financial products are sold.
The Financial Services Authority (FSA) has outlined new guidelines that effectively outlaw commission payments, which have been seen by many consumers as a way of getting "free" advice.
The FSA has made it clear that it is concerned that these payments are used to disguise the cost of financial products, and may create bias in an adviser's recommendations.
A spokesman for the FSA said it hoped its proposals would restore consumers' trust in the financial services industry at a time when many "need real help and advice with their retirement and savings planning". The changes are due to come into force in 2012.
The regulator's review contains three key proposals. Probably the biggest change is to the way advisers are remunerated.
For the first time all advisers, whether they are independent financial advisers or sales agents, will have to declare and agree with the customer in advance exactly what the advice costs. Consumers will then have the option of paying for it in advance or opting for the cost to be taken from their savings over a period of time.
A spokesman for the FSA said: "Commission as we know it will disappear for ever. We want to sever the providers' involvement with the advisers' fees." The FSA has not ruled out banning commission completely at a later date.
Another major change is that all advisers will now have to take advanced qualifications, equivalent to the first year of a degree course, if they are offering full advice to consumers. At present 80pc of advisers do not have these qualifications.
Andrew Fisher, the chief executive of Towry Law, a firm of financial advisers, said: "This is brilliant news for consumers. The smoke and mirrors, lies and obfuscation that have been used to disguise consumer fees will be stopped.
"Individuals thought that commission meant 'free' advice but it was always paid for, either by raising product charges or by reducing the value of a consumer's investment. For the first time, any commission charge will now explicitly be linked to consumers' savings and will have to be agreed upfront."
The FSA said its framework would provide a mix of services, so "less sophisticated" investors who could not afford to pay for full advice were not excluded. Many companies are expected to offer "guided sales", where consumers are given basic financial information.
If this led to a recommendation to buy a certain product, however, the sales person would still be required to have the appropriate professional qualifications and be upfront about any product charges. The FSA said: "It must always be made clear at the outset whether consumers are paying for independent advice or a sales service."
Trevor Matthews, the president of the Chartered Insurance Institute said these proposals should "kick-start" the process "of moving to higher levels of competence and and professionalism". He added: "The biggest challenge for the long term future of this industry is to restore trust in financial services, which has been dented for too long." He said today's proposals go some way to addressing this issue.
David Elms, the chief executive of IFA Promotion, said he welcomed the proposals but was awaiting details on how they would be implemented.
He added: "We want to see the same standards applied to all advisers, whether they are recommending products from across the spectrum of providers or selling just one company's products.
"This should enable consumers to understand the choices available to them."
From the Telegraph in UK, 25 Nov 2008
The days of consumers getting "free" financial advice look numbered under new regulatory guidelines which are aimed at improving the way financial products are sold.
The Financial Services Authority (FSA) has outlined new guidelines that effectively outlaw commission payments, which have been seen by many consumers as a way of getting "free" advice.
The FSA has made it clear that it is concerned that these payments are used to disguise the cost of financial products, and may create bias in an adviser's recommendations.
A spokesman for the FSA said it hoped its proposals would restore consumers' trust in the financial services industry at a time when many "need real help and advice with their retirement and savings planning". The changes are due to come into force in 2012.
The regulator's review contains three key proposals. Probably the biggest change is to the way advisers are remunerated.
For the first time all advisers, whether they are independent financial advisers or sales agents, will have to declare and agree with the customer in advance exactly what the advice costs. Consumers will then have the option of paying for it in advance or opting for the cost to be taken from their savings over a period of time.
A spokesman for the FSA said: "Commission as we know it will disappear for ever. We want to sever the providers' involvement with the advisers' fees." The FSA has not ruled out banning commission completely at a later date.
Another major change is that all advisers will now have to take advanced qualifications, equivalent to the first year of a degree course, if they are offering full advice to consumers. At present 80pc of advisers do not have these qualifications.
Andrew Fisher, the chief executive of Towry Law, a firm of financial advisers, said: "This is brilliant news for consumers. The smoke and mirrors, lies and obfuscation that have been used to disguise consumer fees will be stopped.
"Individuals thought that commission meant 'free' advice but it was always paid for, either by raising product charges or by reducing the value of a consumer's investment. For the first time, any commission charge will now explicitly be linked to consumers' savings and will have to be agreed upfront."
The FSA said its framework would provide a mix of services, so "less sophisticated" investors who could not afford to pay for full advice were not excluded. Many companies are expected to offer "guided sales", where consumers are given basic financial information.
If this led to a recommendation to buy a certain product, however, the sales person would still be required to have the appropriate professional qualifications and be upfront about any product charges. The FSA said: "It must always be made clear at the outset whether consumers are paying for independent advice or a sales service."
Trevor Matthews, the president of the Chartered Insurance Institute said these proposals should "kick-start" the process "of moving to higher levels of competence and and professionalism". He added: "The biggest challenge for the long term future of this industry is to restore trust in financial services, which has been dented for too long." He said today's proposals go some way to addressing this issue.
David Elms, the chief executive of IFA Promotion, said he welcomed the proposals but was awaiting details on how they would be implemented.
He added: "We want to see the same standards applied to all advisers, whether they are recommending products from across the spectrum of providers or selling just one company's products.
"This should enable consumers to understand the choices available to them."
Singapore Dance Theatre performs Nutcracker
Dear Friend,
Singapore Dance Theatre performs Nutcracker
I hope that, in spite of the stress from the credit linked notes, your family is still in the mood to celebrate the December holidays.
I suggest bringing your family to watch the performance of the Nutcracker by the Singapore Dance Theatre. More details (i.e. ticket price, performance dates, booking instructions) are shown in this video clip:
http://www.youtube.com/watch?v=5WSo2D-nMjY
Performing nights: Dec 12, 13, 17, 18, 19, 29.
I am the deputy chairman of the SDT. If you can support the SDT, it will be much appreciated.
Tan Kin Lian
Singapore Dance Theatre performs Nutcracker
I hope that, in spite of the stress from the credit linked notes, your family is still in the mood to celebrate the December holidays.
I suggest bringing your family to watch the performance of the Nutcracker by the Singapore Dance Theatre. More details (i.e. ticket price, performance dates, booking instructions) are shown in this video clip:
http://www.youtube.com/watch?v=5WSo2D-nMjY
Performing nights: Dec 12, 13, 17, 18, 19, 29.
I am the deputy chairman of the SDT. If you can support the SDT, it will be much appreciated.
Tan Kin Lian
Suggestion: how to approach legal action
Dear Mr. Tan
I would like to suggest the followings:
1) Use the online petition, one for each product (Minibond, High notes ....), to gather all investors who are in favor in legal action
2) Call a meeting for all interested investors to have a preliminary discussion and to select a committee to conduct a feasibility study.
3) The meeting will identify the scope for the feasibility study.
4) The feasibility study may include :
a) study the sales brochures/newspaper advertisements/prospectus to identify common grounds for the law suit (consult financial experts/lawyers if necessary)
b) cost and return analysis
c) study other similar class action cases (US, Hong Kong, Taiwan …)
d) identify the parties for the law suit (Lehman Brothers, FIs, MAS…)
e) identify where to file the law suit (local or US)
f) work out an action plan
Pang
REPLY
I agree with you. I shall organise the survey (using online petiton) to gather the investors willing to take action.
I would like to suggest the followings:
1) Use the online petition, one for each product (Minibond, High notes ....), to gather all investors who are in favor in legal action
2) Call a meeting for all interested investors to have a preliminary discussion and to select a committee to conduct a feasibility study.
3) The meeting will identify the scope for the feasibility study.
4) The feasibility study may include :
a) study the sales brochures/newspaper advertisements/prospectus to identify common grounds for the law suit (consult financial experts/lawyers if necessary)
b) cost and return analysis
c) study other similar class action cases (US, Hong Kong, Taiwan …)
d) identify the parties for the law suit (Lehman Brothers, FIs, MAS…)
e) identify where to file the law suit (local or US)
f) work out an action plan
Pang
REPLY
I agree with you. I shall organise the survey (using online petiton) to gather the investors willing to take action.
Monday, November 24, 2008
Singapore Kopitiam Forum
You can visit this forum to have discusison about your specific topic on credit linked notes or other investments.
http://forums.delphiforums.com/n/mb/list.asp?webtag=sunkopitiam&ctx=32768&cacheTag=x10-28
http://forums.delphiforums.com/n/mb/list.asp?webtag=sunkopitiam&ctx=32768&cacheTag=x10-28
Swiss petition for national referendum to end "corporate rip off"
We can learn from the Swiss.
Mr Minder has embarked on a truly Swiss course of action to prevent such excesses in the future. Using Switzerland's system of direct democracy, he has collected the required 100,000 signatures to hold a nationwide referendum to end, as he puts it, "the corporate rip off."
http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/7741561.stm
Investors should see their Member of Parliament
I sent another e-mail to the investors to see their Member of Parliament in groups. I know that some investors had already seen their MP and the MP asked them to see the MAS or the financial institution or argued that they should have "their eyes open".
You can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you: The MP should:
1. Ask MAS what is the outcome of petition #1, asking MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act? What is the outcome of the investigation?
2. Ask how many investors had their cases resolved at the first leve, i.e. the financial institutions? How many cases were rejected by the financial instituions or made offers that were not accepted by investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?
3. Ask MAS how many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?
It is the duty of your MP to ask these questions, on your behalf, to MAS or to ask them in Parliament.
You can see the MP again. This time, ask the MP to do the "right thing" as the leader that represents you: The MP should:
1. Ask MAS what is the outcome of petition #1, asking MAS to investigate if there were any wrong doings by the financial institutions that created and marketed these credit linked notes? did these financial institutions breach the Securities and Futures Act and the Financial Advisers Act? What is the outcome of the investigation?
2. Ask how many investors had their cases resolved at the first leve, i.e. the financial institutions? How many cases were rejected by the financial instituions or made offers that were not accepted by investors? How many cases are still "waiting for decision"? How long does it take for the financial institutions to make their decision?
3. Ask MAS how many complaints have been lodged with FIDREC. How many cases have been decided by FIDREC? How many are still pending? How long does it take for FIDREC to handle these complaints?
It is the duty of your MP to ask these questions, on your behalf, to MAS or to ask them in Parliament.
Why I wanted 100,000 signatures
Discussion in www.theonlinecitizen.com
http://theonlinecitizen.com/2008/11/help-get-100000-signatures-for-tan-kin-lian-to-run/
smallvoice585 on November 25th, 2008 2.31 am
Dear Tan Kin Lian,
With due respect, sir, I believe that you are not ready for politics yet. Though you have been a PAP member for 30 years, you have not been engaged in any grassroots work in the last 20 years. You also have no experience in electioneering. You do not have a dedicated or well-organised support structure around you.
People know you to be a long-time CEO of NTUC Income for 30 years; recently as an on-line protester against insurance bonus cuts; and lately, as a champion of burnt financial product investors. I’m afraid that’s not enough to gain credibility as the next big thing in alternative politics. People need to know your stand, views and ideas on a full spectrum of political issues articulated consistently over a significant period of time. They need to see proof of a wider range of leadership qualities required in political office.
Of course, please do not misconstrue that I’m trying to discourage you.
But the 100,000 signatures that this article is calling for is in my view totally irrelevant. True politicians do not ask for a show of hands before entering the fray - they offer themselves as instruments for their beliefs and willingly submit themselves to the caprice of public opinion. That is, you do not ask for support before you commit, but you should commit first and see if you’re getting any support. If you are not ready for this uncertainty, then it speaks volumes about your dedication to your political cause.
Tan Kin Lian on November 25th, 2008 5.19 am
Hi smallvoice585
You are correct. I am not “ready” for politics …. in the conventional way. There are many examples of more capable people who came into politics during the past 20 years. Most of them did not survive. Only two did, and they have a lot of difficulty in building up their base of support.
You are also correct about the lack of a political machinery. It takes more than this political machinery for an alternative party to succeed- as it has to compete with the incumbent that has more resources beyond its own political machinery..
I wanted to take a different approach - to create awareness, to educate the public. The recent event involving the 10,700 investors of the credit linked notes show how bad things can be - that the government can just ignore the call to do the right thing and enforce the law.
If more people come forward to voice their views, it may wake up the current leaders and create the change that is desriable and good for the country. An important change is to recognise that the elected leaders should represent the people, and that a free contest is for the good of the country.
Many people said that an alternative party needs more than one person. How do you expect other people to come forward? They are not willing to sacrifice their career. They will be subject to discrimination. Maybe 100,000 signatures will change their mind.
Will my approach work? Some people think so. Others are sceptical. I am willing to give it a try. If it does not, I can go back and retire.
http://theonlinecitizen.com/2008/11/help-get-100000-signatures-for-tan-kin-lian-to-run/
smallvoice585 on November 25th, 2008 2.31 am
Dear Tan Kin Lian,
With due respect, sir, I believe that you are not ready for politics yet. Though you have been a PAP member for 30 years, you have not been engaged in any grassroots work in the last 20 years. You also have no experience in electioneering. You do not have a dedicated or well-organised support structure around you.
People know you to be a long-time CEO of NTUC Income for 30 years; recently as an on-line protester against insurance bonus cuts; and lately, as a champion of burnt financial product investors. I’m afraid that’s not enough to gain credibility as the next big thing in alternative politics. People need to know your stand, views and ideas on a full spectrum of political issues articulated consistently over a significant period of time. They need to see proof of a wider range of leadership qualities required in political office.
Of course, please do not misconstrue that I’m trying to discourage you.
But the 100,000 signatures that this article is calling for is in my view totally irrelevant. True politicians do not ask for a show of hands before entering the fray - they offer themselves as instruments for their beliefs and willingly submit themselves to the caprice of public opinion. That is, you do not ask for support before you commit, but you should commit first and see if you’re getting any support. If you are not ready for this uncertainty, then it speaks volumes about your dedication to your political cause.
Tan Kin Lian on November 25th, 2008 5.19 am
Hi smallvoice585
You are correct. I am not “ready” for politics …. in the conventional way. There are many examples of more capable people who came into politics during the past 20 years. Most of them did not survive. Only two did, and they have a lot of difficulty in building up their base of support.
You are also correct about the lack of a political machinery. It takes more than this political machinery for an alternative party to succeed- as it has to compete with the incumbent that has more resources beyond its own political machinery..
I wanted to take a different approach - to create awareness, to educate the public. The recent event involving the 10,700 investors of the credit linked notes show how bad things can be - that the government can just ignore the call to do the right thing and enforce the law.
If more people come forward to voice their views, it may wake up the current leaders and create the change that is desriable and good for the country. An important change is to recognise that the elected leaders should represent the people, and that a free contest is for the good of the country.
Many people said that an alternative party needs more than one person. How do you expect other people to come forward? They are not willing to sacrifice their career. They will be subject to discrimination. Maybe 100,000 signatures will change their mind.
Will my approach work? Some people think so. Others are sceptical. I am willing to give it a try. If it does not, I can go back and retire.
Buyer beware
Letter by Adrian Tan
Much has been said and written about “Buyer beware”, investing “with their eyes open” and “I think the prospectus says ‘you could lose all or a substantial part of your investment in the Notes’ in bold print, on page 1 or 2”.
But what if the prospectus did not disclose material facts?
The New Paper’s Doctor Money ( Larry Haverkamp) wrote on 4 November 2008 that
“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.
They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.
Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”
Investors in Minibonds and HN5, Jubilee and Pinnacle Notes should be asking lawyers whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act which reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).
And if they are, what are the remedies and against whom. As Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”
Breaches of section 243(1)(a) are something MAS is surely investigating because we have been assured, MAS is looking, “thoroughly into every possible breach of regulation, poor internal regulation or sales practices. And it will take action where necessary”.
Adrian Tan
Much has been said and written about “Buyer beware”, investing “with their eyes open” and “I think the prospectus says ‘you could lose all or a substantial part of your investment in the Notes’ in bold print, on page 1 or 2”.
But what if the prospectus did not disclose material facts?
The New Paper’s Doctor Money ( Larry Haverkamp) wrote on 4 November 2008 that
“A feature common to ALL linked notes is that investors never see the charges. They include:
> costs embedded in the initial pricing;
> counter-party returns in the product’s risk/return structure;
> commissions from buying and selling the options, swaps and underlying bonds;
> market-making and surrender fees; and
> annual management fees, including trailer fees kicked back to distributors.
They are deducted directly from the yield. Investors are likely to attribute the low return to market conditions rather than unseen costs.
Most importantly, unit trusts and investment-linked products (ILPs) routinely publish their charges. Linked notes never do.”
Investors in Minibonds and HN5, Jubilee and Pinnacle Notes should be asking lawyers whether the failures to disclose the above amounts to a breach of section 243 (1)(a) of the Securities & Futures Act which reads, “A prospectus for an offer of securities shall contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters specified in subsection (3).
And if they are, what are the remedies and against whom. As Doctor Money wrote, “The question of the day is: ‘Should non-disclosure of embedded charges invalidate linked-note sales contracts and require a refund from issuers and distributors?’”
Breaches of section 243(1)(a) are something MAS is surely investigating because we have been assured, MAS is looking, “thoroughly into every possible breach of regulation, poor internal regulation or sales practices. And it will take action where necessary”.
Adrian Tan
Singapore's investments in global banks
I received a report from an analyst.
Temasek and GIC invested a total of SGD 36.7 billion in the global banks, namely Barclays, UBS, Merrill Lynch and Citigroup. The invstment in Barclays was made 18 months ago. The others was made nearly 12 months ago.
The value of these investments dropped by slightly more than 50%, or about SGD 18.5 billion. During the same period, the global stockmarket dropped by about the same extent. (Earlier, I thought that the global banks performed worse that the market, but it does not seem to be the case).
Temasek and GIC invested a total of SGD 36.7 billion in the global banks, namely Barclays, UBS, Merrill Lynch and Citigroup. The invstment in Barclays was made 18 months ago. The others was made nearly 12 months ago.
The value of these investments dropped by slightly more than 50%, or about SGD 18.5 billion. During the same period, the global stockmarket dropped by about the same extent. (Earlier, I thought that the global banks performed worse that the market, but it does not seem to be the case).
Sunday, November 23, 2008
Ask for information in writing
Dear Mr. Tan,
I hve invested into Jubilee Series 8 Notes which will mature in 2.5 yrs time in Jan 2011. A fix rate of 3.15% per year is paid. The arranger of the Notes is Merrill Lynch who has since taken over by BOA. The trustee is HSBC Institutional Trust Services (S) Ltd. Currently the value of the Notes is 84% of the purchase price.
I have asked the RM many times but he is also not sure where the money is invested in and whether the Notes will default since more and more bad news are disclosed nowadays. I asked for the prospectus from the RM and took pain to go thru' the 100 pages but just not understand at all. I has no choice but to visit one of the branch and one of the RM verbally told me that it is invested in Merrill Lynch's bond.
I hope you can assist by enlightening me the following:-
a. where the money is invested in?
b. I understand that BOA is taking over Merrill Lynch. Could BOA just take over Merrill Lynch's assets but not its liabilities? If this is possible, then I think most likely the Notes will terminate and worthless.
REPLY
I am at a lost. There are so many series and each series is different from the other series.
I suggest that you should ask the issuer (Merill Lynch) to give you the reply to your questions in writing. If they do not, you should lodge a complaint with MAS.
I hve invested into Jubilee Series 8 Notes which will mature in 2.5 yrs time in Jan 2011. A fix rate of 3.15% per year is paid. The arranger of the Notes is Merrill Lynch who has since taken over by BOA. The trustee is HSBC Institutional Trust Services (S) Ltd. Currently the value of the Notes is 84% of the purchase price.
I have asked the RM many times but he is also not sure where the money is invested in and whether the Notes will default since more and more bad news are disclosed nowadays. I asked for the prospectus from the RM and took pain to go thru' the 100 pages but just not understand at all. I has no choice but to visit one of the branch and one of the RM verbally told me that it is invested in Merrill Lynch's bond.
I hope you can assist by enlightening me the following:-
a. where the money is invested in?
b. I understand that BOA is taking over Merrill Lynch. Could BOA just take over Merrill Lynch's assets but not its liabilities? If this is possible, then I think most likely the Notes will terminate and worthless.
REPLY
I am at a lost. There are so many series and each series is different from the other series.
I suggest that you should ask the issuer (Merill Lynch) to give you the reply to your questions in writing. If they do not, you should lodge a complaint with MAS.
Pinnacle Notes Series 9 and 10
Pinnacle Notes series 9 and 10 was sold in November 2007 - just a year ago. At that time, the subprime and CDO market was already in trouble. The issuer put in 150 underlying assets and sold them to the retail investors.
The issuer did state, in the adverstisement, that the money would be invested in the CDOs. However, the are required under the Security and Futures Act to disclose all relevant information to help the investors make an informed decision. Did they meet this standard?
It is extremely difficult for the investors to ask for information to see if the Securities and Futures Act have been breached. I hope that the MAS will investigate this matter separately. Morgan Stanley is still around, and they should be able to provide the information for the investigation.
I hope that this investigation is carried out openly, so that the investors are satisfied that they have been treated fairly and have not been "cheated".
Here are some relevant information:
http://tankinlian.blogspot.com/2007/11/pinnacle-notes-series-9-10.html
http://tankinlian.blogspot.com/2008/11/credit-default-of-pinnacle-notes-series.html
I hope that some lawyers can advice if it is possible for the investors to take a mandamus case to compel the MAS to invstigate this matter?
I hope that the investors of series 9 and 10 get together (for each series) and study if there were gaps in the prospectus that failed to described the risk of this product. You can meet with an experienced lawyer to discuss this matter. The lawyer can get a written expert opinion from overseas. If there was material misrepresentation of the securities, it may be possible to get the court to declare the transaction as void and for the investors to get a full refund.
The issuer did state, in the adverstisement, that the money would be invested in the CDOs. However, the are required under the Security and Futures Act to disclose all relevant information to help the investors make an informed decision. Did they meet this standard?
It is extremely difficult for the investors to ask for information to see if the Securities and Futures Act have been breached. I hope that the MAS will investigate this matter separately. Morgan Stanley is still around, and they should be able to provide the information for the investigation.
I hope that this investigation is carried out openly, so that the investors are satisfied that they have been treated fairly and have not been "cheated".
Here are some relevant information:
http://tankinlian.blogspot.com/2007/11/pinnacle-notes-series-9-10.html
http://tankinlian.blogspot.com/2008/11/credit-default-of-pinnacle-notes-series.html
I hope that some lawyers can advice if it is possible for the investors to take a mandamus case to compel the MAS to invstigate this matter?
I hope that the investors of series 9 and 10 get together (for each series) and study if there were gaps in the prospectus that failed to described the risk of this product. You can meet with an experienced lawyer to discuss this matter. The lawyer can get a written expert opinion from overseas. If there was material misrepresentation of the securities, it may be possible to get the court to declare the transaction as void and for the investors to get a full refund.
Experience with FIDREC
I wish to ask investors, who have gone through FIDREC, to share your experience.
While you are covered under some confidentiality agreement, it should be all right to give some public information about whethere you accepted or rejected the adjuication, or the number of interviews and length of time taken to present your case.
This information will be helpful to other investors who are waiting for FIDREC adjudication.
I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.
While you are covered under some confidentiality agreement, it should be all right to give some public information about whethere you accepted or rejected the adjuication, or the number of interviews and length of time taken to present your case.
This information will be helpful to other investors who are waiting for FIDREC adjudication.
I have asked the media to find out from FIDREC and give an update of the number of cases cleared through FIDREC and the summary of the outcome. I believe that this information is necessary for the public to know.
Guide on FIDREC process
MAS has put out a good guide on the FIDREC process. Please read it:
http://www.mas.gov.sg/consumer/structured_products/fidrec_faqs.html
Key Things to Note About the FIDReC Fast-Track Dispute Resolution Processes for Disputes relating to the Lehman Minibond Programme, DBS High Notes 5, Merrill Lynch Jubilee Series 3 LinkEarner Notes and Morgan Stanley Pinnacle Series 9 and 10 Notes
http://www.mas.gov.sg/consumer/structured_products/fidrec_faqs.html
Key Things to Note About the FIDReC Fast-Track Dispute Resolution Processes for Disputes relating to the Lehman Minibond Programme, DBS High Notes 5, Merrill Lynch Jubilee Series 3 LinkEarner Notes and Morgan Stanley Pinnacle Series 9 and 10 Notes
Morgan Stanley website on Pinnacle Notes
Dear Mr. Tan,
I was trying to find out more about Pinnacle Notes by entering the Morgan Stanley website. Lo and behold, we need to sign in agreeing to all the terms before I can view any information at the FRONT PAGE.
Can you ask MAS
[1] Is this the right practice?
[2] Is this morally right practice?
[3] Is this trying to reduce information flow to investor?
[4] I thought the Pinnacle is selling to "public" through retail network, but information sudden becomes only to privy. Is this infringing the basis of sale of Pinnacle Notes?
[5] Can MAS conduct an investigation on this type of practice to restrict information to investors?
This has been the darkest moment for my wife and myself. Frankly, the hopelessness is not due to the loss of money (altough it is a lot of money) but the loss of confidence in the system.
LKH
REPLY
Please write directly to ask MAS. I will post your e-mail in my blog also.
I was trying to find out more about Pinnacle Notes by entering the Morgan Stanley website. Lo and behold, we need to sign in agreeing to all the terms before I can view any information at the FRONT PAGE.
Can you ask MAS
[1] Is this the right practice?
[2] Is this morally right practice?
[3] Is this trying to reduce information flow to investor?
[4] I thought the Pinnacle is selling to "public" through retail network, but information sudden becomes only to privy. Is this infringing the basis of sale of Pinnacle Notes?
[5] Can MAS conduct an investigation on this type of practice to restrict information to investors?
This has been the darkest moment for my wife and myself. Frankly, the hopelessness is not due to the loss of money (altough it is a lot of money) but the loss of confidence in the system.
LKH
REPLY
Please write directly to ask MAS. I will post your e-mail in my blog also.
Risk analysis form - wrong statements
You should ask the distributor to send you a copy of the risk analysis form. See here:
http://tankinlian.blogspot.com/2008/11/risk-analysis-form.html
If you find any wrong statements in the form, you should write a letter formally to the distributor to correct the statements. If possible, try to find evidence that the statements were wrong - e..g regarding your risk appetide, etc.
If the wrong statements were fraudalent, you can lodge a police report against the sales representative.
One investor found that a statement was entered into the form without his knowledge, and he is able to prove it. He has decided to lodge a police report about the fraudalent act. This will strengthen his case to ask for a full refund.
http://tankinlian.blogspot.com/2008/11/risk-analysis-form.html
If you find any wrong statements in the form, you should write a letter formally to the distributor to correct the statements. If possible, try to find evidence that the statements were wrong - e..g regarding your risk appetide, etc.
If the wrong statements were fraudalent, you can lodge a police report against the sales representative.
One investor found that a statement was entered into the form without his knowledge, and he is able to prove it. He has decided to lodge a police report about the fraudalent act. This will strengthen his case to ask for a full refund.
Gathering 100,000 signatures
Several people have written e-mails to encourage me to represent the views of the people through the political arena. I have sent these e-mails to The Online Citizen (after removing their names) for publication.
You can read them at http://www.theonlinecitizen.com/.
I will keep this blog largely focused on financial and insurance matters, especially the credit linked notes. There will be some mention about the "gathering 100,000 signatures" but it will be somewhat subdued. It will take a few months to gather the signatures, so this matter will quieten down after a few days.
Most investors have been badly affected by the credit linked notes. Your loss could have been reduced or avoided, if there were greater accountability by the authority. I suggest that you should print out the petition form and get 20 signatures or more.
You can read them at http://www.theonlinecitizen.com/.
I will keep this blog largely focused on financial and insurance matters, especially the credit linked notes. There will be some mention about the "gathering 100,000 signatures" but it will be somewhat subdued. It will take a few months to gather the signatures, so this matter will quieten down after a few days.
Most investors have been badly affected by the credit linked notes. Your loss could have been reduced or avoided, if there were greater accountability by the authority. I suggest that you should print out the petition form and get 20 signatures or more.
Strategy on credit linked notes
My next step is to help the investors to identify suitable lawyers to take up a legal case on the misrepresentation in the advertisements and prospectus on the credit linked notes.
It is possible to identify a group of investors who have been misled by these materials and to claim for a full refund, based on the misrepresentation of the product.
The investors will have to identity the grounds of misrepresentation and to discuss it with the lawyer.
I hope that this will encourage the distributor to offer a fair settlement out of court. A fair settlement in my view should be 50% of the amount lost by the investor, i.e. both parties share the loss equally.
It is possible to identify a group of investors who have been misled by these materials and to claim for a full refund, based on the misrepresentation of the product.
The investors will have to identity the grounds of misrepresentation and to discuss it with the lawyer.
I hope that this will encourage the distributor to offer a fair settlement out of court. A fair settlement in my view should be 50% of the amount lost by the investor, i.e. both parties share the loss equally.
Low compensation offered by HLF
Dear Mr Tan,
I have received some updates from HLF regarding the Minibonds.
Both of my elderly aunts (one is mid 70s, the other is 59) have both received the calls from HLF last week regarding the "compensation" regarding to their MiniBonds investment. The total sum invested was $90,000, and HLF actually proposed to return them $250 each to compensate for their losses. This is outright ridiculous! HLF had clearly taken their money thru mis-selling, and now they are offering $250 each as good-will! Both of my aunts rejected this compensation and seeks to bring this case up to FIReC.
Thank u for everything u hv done for us!
Anne
I have received some updates from HLF regarding the Minibonds.
Both of my elderly aunts (one is mid 70s, the other is 59) have both received the calls from HLF last week regarding the "compensation" regarding to their MiniBonds investment. The total sum invested was $90,000, and HLF actually proposed to return them $250 each to compensate for their losses. This is outright ridiculous! HLF had clearly taken their money thru mis-selling, and now they are offering $250 each as good-will! Both of my aunts rejected this compensation and seeks to bring this case up to FIReC.
Thank u for everything u hv done for us!
Anne
Tan Kin Lian eyes elected presidency
This is the headline of an article in the Sunday Times.
The front page has the following message: "Im game to be elected president or member of parliament if people wants me" Tan Kin Lian now opens up on his political ambition.
My "political ambition" has been summarised in this posting in my blog on 2 November 2008:
http://tankinlian.blogspot.com/2008/11/political-ambitions.html
It is also reflected in the article written by Nur Dianah Suhaimi. It reflects my views quite fairly. The headline is an exaggeration and gives a distorted angle.
My friend said that the article may backfire on me. My supporters may not be able to get 100,000 signatures. Why not ask for 50,000?
I told my friend, "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea." I am willing to leave this to the voice of the people.
The front page has the following message: "Im game to be elected president or member of parliament if people wants me" Tan Kin Lian now opens up on his political ambition.
My "political ambition" has been summarised in this posting in my blog on 2 November 2008:
http://tankinlian.blogspot.com/2008/11/political-ambitions.html
It is also reflected in the article written by Nur Dianah Suhaimi. It reflects my views quite fairly. The headline is an exaggeration and gives a distorted angle.
My friend said that the article may backfire on me. My supporters may not be able to get 100,000 signatures. Why not ask for 50,000?
I told my friend, "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea." I am willing to leave this to the voice of the people.
Issuers of toxic notes should take more of the blame
Dear Mr Tan
I have been tracking news of Minbonds, Pinnacles and Jubilee Notes (MPJ) series actively. Some points I have observed and wished to highlight
1. Distributors with advisory roles distributing the MPJ series have recieved alot of flak for their sale, esp DBS Bank. I am not sure how much revenue these distributors are paid for each $1000 invested but a educated guess would be not more than 5-10%, Its pretty amazing how so much flak is diverted on them as opposed to the issuer (manufacturer) of these products. Lehman is insolvent now, yet, Morgan Stanley (Pinnacle issuer) and Merrill Lynch (Jubilee) have offices in Singapore and they have recieved less attention as opposed to DBS bank. As issuers of the notes, margains are definitely higher than distributors like DBS, yet I see Morgan Stanley/ Merrill Lynch relatively unscathed by all these. Surely there are no protests and investor wanting justice. I am not sure if some of the investors are even aware that Merrill Lynch/ Morgan Stanley are the issuers for them and not the local banks.
2. The main issue here are the bankrupty of the underlying asserts that causes the credit events leading to the default of the notes, I have gone through the prospectus and none of the underlying assert was mentioned. In fact alot of, esp less savvy investors, believed that the funds are invested in the 6/7 major reputable and not the underlying 150 firms. Since the underlying sercurities were not in the prospectus except that at point of printing all are rated double AA rating. If the distributors are not informed of this, is it fair to blame them wholly ?Further with a margain spread of 10-15%, does investor really expect the banks to pay them 100% of their investments? Can the banks then blame MAS as these MPJ investments were approved by MAS for sale.
3. My point here is to let lay the blame on the right parties who are primarily responsible for all these. Local Banks/distributors may have some smaller responsibilities but Morgan stanley and Merril lynch should rightly be held responsible for all misleading marketing info (since all marketing brochures pertaining to the product is issued by these 2 investment banks). Charges of continous issuance of series for pinnacle series continued despite the dismal performance of series 1/2 , yet the series were allowed to launch till series 15...
I hope you can post my comments as despite all the emtions about investments, I think we should be going after the parties who are PRIMARILY responsible for all these saga then the local distributors. In some ways, they may be victims as well since I believe noen of them knows abt the details of the investments as well.
DRAW
I have been tracking news of Minbonds, Pinnacles and Jubilee Notes (MPJ) series actively. Some points I have observed and wished to highlight
1. Distributors with advisory roles distributing the MPJ series have recieved alot of flak for their sale, esp DBS Bank. I am not sure how much revenue these distributors are paid for each $1000 invested but a educated guess would be not more than 5-10%, Its pretty amazing how so much flak is diverted on them as opposed to the issuer (manufacturer) of these products. Lehman is insolvent now, yet, Morgan Stanley (Pinnacle issuer) and Merrill Lynch (Jubilee) have offices in Singapore and they have recieved less attention as opposed to DBS bank. As issuers of the notes, margains are definitely higher than distributors like DBS, yet I see Morgan Stanley/ Merrill Lynch relatively unscathed by all these. Surely there are no protests and investor wanting justice. I am not sure if some of the investors are even aware that Merrill Lynch/ Morgan Stanley are the issuers for them and not the local banks.
2. The main issue here are the bankrupty of the underlying asserts that causes the credit events leading to the default of the notes, I have gone through the prospectus and none of the underlying assert was mentioned. In fact alot of, esp less savvy investors, believed that the funds are invested in the 6/7 major reputable and not the underlying 150 firms. Since the underlying sercurities were not in the prospectus except that at point of printing all are rated double AA rating. If the distributors are not informed of this, is it fair to blame them wholly ?Further with a margain spread of 10-15%, does investor really expect the banks to pay them 100% of their investments? Can the banks then blame MAS as these MPJ investments were approved by MAS for sale.
3. My point here is to let lay the blame on the right parties who are primarily responsible for all these. Local Banks/distributors may have some smaller responsibilities but Morgan stanley and Merril lynch should rightly be held responsible for all misleading marketing info (since all marketing brochures pertaining to the product is issued by these 2 investment banks). Charges of continous issuance of series for pinnacle series continued despite the dismal performance of series 1/2 , yet the series were allowed to launch till series 15...
I hope you can post my comments as despite all the emtions about investments, I think we should be going after the parties who are PRIMARILY responsible for all these saga then the local distributors. In some ways, they may be victims as well since I believe noen of them knows abt the details of the investments as well.
DRAW
Saturday, November 22, 2008
Plea to MAS - investors of Pinnacle Notes
Managing Director,
Monetary Authority of Singapore
82 individual holders of Pinnacle Notes arranged by Morgan Stanley Asia (S) Pte Ltd have co-signed a self-explanatory Plea to MAS on their plight in their investment in the said Notes. On their behalf, I am handing over herewith the Plea together with their signature sheets and details as stated therein.
We hope that MAS will respond positively to our Plea as we are at our wit’s end as to how to protect whatever good values that remain in our investments. We have also enclosed Morgan Stanley’s latest indicative valuation of various Pinnacle Notes which one of us had obtained through his broker. As you can see, many of these have devalued down to barest values. We understand that these devaluations had occurred rapidly in recent weeks. On top of that, we are in the dark as to the timing and exact root causes of the devaluation. Morgan Stanley is also not providing such information to us even though some of us had asked for them through our brokers.
We will be most happy to take your response in any form you deem appropriate, be it directly to me on their behalf, through a press statement or any other means.
As a matter of courtesy, I wish to advise you that I will shortly be posting a copy of the Plea, in a website which the signors have agreed, to enable them to access a copy for their records as most of them did not get one for keeps at the time of the signing at Hong Lim Park due to lack of photo-copying facilities at the site.
Thank you.
signed
sb
www.tankinlian.com/forms/PleaToMAS.pdf
Monetary Authority of Singapore
82 individual holders of Pinnacle Notes arranged by Morgan Stanley Asia (S) Pte Ltd have co-signed a self-explanatory Plea to MAS on their plight in their investment in the said Notes. On their behalf, I am handing over herewith the Plea together with their signature sheets and details as stated therein.
We hope that MAS will respond positively to our Plea as we are at our wit’s end as to how to protect whatever good values that remain in our investments. We have also enclosed Morgan Stanley’s latest indicative valuation of various Pinnacle Notes which one of us had obtained through his broker. As you can see, many of these have devalued down to barest values. We understand that these devaluations had occurred rapidly in recent weeks. On top of that, we are in the dark as to the timing and exact root causes of the devaluation. Morgan Stanley is also not providing such information to us even though some of us had asked for them through our brokers.
We will be most happy to take your response in any form you deem appropriate, be it directly to me on their behalf, through a press statement or any other means.
As a matter of courtesy, I wish to advise you that I will shortly be posting a copy of the Plea, in a website which the signors have agreed, to enable them to access a copy for their records as most of them did not get one for keeps at the time of the signing at Hong Lim Park due to lack of photo-copying facilities at the site.
Thank you.
signed
sb
www.tankinlian.com/forms/PleaToMAS.pdf
Manifesto - the future of Singapore
KC asked me to write a manifesto of what I want to do, if I get into public office. My views are already reflected in several postings in my blog. They cover moral values, economic and social issues, etc.
I like to invite other readers to post your views about what you like to see regarding the future of Singapore.
I like to invite other readers to post your views about what you like to see regarding the future of Singapore.
Battle of the mind and the heart
Dear Sir,
I am writing this e-mail in response to the statement: "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea. I am willing to leave this to the voice of the people...."
Frankly, I do not agree with some of the things you have said and the way you have said them, and some of the things you did and the way you do them, but I believe what you are doing is for the sake of the Republic and her people and not for any personal gain or ambition.
From your statements, I can somehow sense that your mind is constantly asking you to opt out while your heart is begging you to take this course.
This further cement my views that you are doing this for the right reason and you strongly believe in serving the people of the Republic.
By giving you my support and my signature, I am also taking away your option (1/100,000) to opt out and to take your views and strengths to a bigger stage and platform where you have the power to do more for the people you care so much for.
I would like to further suggest that you consider writing a Manifesto to set out your strategic direction and outlines of any prospective legislation changes you would like to bring about if you are elected to public office and why you would like to change them.
Best Regards
KC
I am writing this e-mail in response to the statement: "It is not my interest or ambition to stand for election. If I do not get 100,000 signatures, I have the excuse to opt out - that this is a bad idea. I am willing to leave this to the voice of the people...."
Frankly, I do not agree with some of the things you have said and the way you have said them, and some of the things you did and the way you do them, but I believe what you are doing is for the sake of the Republic and her people and not for any personal gain or ambition.
From your statements, I can somehow sense that your mind is constantly asking you to opt out while your heart is begging you to take this course.
This further cement my views that you are doing this for the right reason and you strongly believe in serving the people of the Republic.
By giving you my support and my signature, I am also taking away your option (1/100,000) to opt out and to take your views and strengths to a bigger stage and platform where you have the power to do more for the people you care so much for.
I would like to further suggest that you consider writing a Manifesto to set out your strategic direction and outlines of any prospective legislation changes you would like to bring about if you are elected to public office and why you would like to change them.
Best Regards
KC
Reveal your identity
Somebody asked me to "be fair" and allow his critical comment to be posted. I agreed to his request.
Normally, I expect a person to use his real name, if he wish to post a comment to criticise any person or view. If you do not wish to reveal your identity, you should post your view neutrally and do not attack or pass judgement on another person.
Normally, I expect a person to use his real name, if he wish to post a comment to criticise any person or view. If you do not wish to reveal your identity, you should post your view neutrally and do not attack or pass judgement on another person.
Useful role for financial advisers
I believe that financial advisers (i.e. insurance agents and sales representatives) have the responsibility to give appropriate advice to the consumers and they should be fairly paid for their time and effort.
The commission system and sales targets are the source of the malpractice. If a distributor or adviser can earn $6,000 (3% of $200,000) to sell a credit linked note within 30 minutes, something must be wrong. Of course, the adviser will say that the product is good, safe, approved by MAS, etc.
I encourage financial advisers to give independent and good advice for a fee of $100 or $150 an hour and to keep the advice within 1 or 2 hours. A doctor is also paid for the time that is spent to treat a patient, and does not receive a commission for the medicine that is prescribed.
The commission system and sales targets are the source of the malpractice. If a distributor or adviser can earn $6,000 (3% of $200,000) to sell a credit linked note within 30 minutes, something must be wrong. Of course, the adviser will say that the product is good, safe, approved by MAS, etc.
I encourage financial advisers to give independent and good advice for a fee of $100 or $150 an hour and to keep the advice within 1 or 2 hours. A doctor is also paid for the time that is spent to treat a patient, and does not receive a commission for the medicine that is prescribed.
Moral values and ethics
I posted a blog on my moral values and ethics, as follow:
http://tankinlian.blogspot.com/2008/11/personal-values-and-characters.html
Many people agree that it is important to have good values, as they drive our conduct and relations with other people.
A retired teacher lamented to me that in recent years, our young students are taught technical and work skills, but are lacking in moral values and ethics. Nowadays, it seems to be all right to "cheat" people to increase profits. Just say, "caveat emptor".
I hope that some of the moral values will wake our government leaders to do the right thing - the values of honesty, courage, fairness, looking after the interest of others - to name just a few.
A few readers were uncomfortable about my statement of values. They felt that I should not be "preaching" these values. I think that it is the duty of all members of society to articulate the values that should guide the future of our society. I hope that more people can come forward to express their views on this matter.
http://tankinlian.blogspot.com/2008/11/personal-values-and-characters.html
Many people agree that it is important to have good values, as they drive our conduct and relations with other people.
A retired teacher lamented to me that in recent years, our young students are taught technical and work skills, but are lacking in moral values and ethics. Nowadays, it seems to be all right to "cheat" people to increase profits. Just say, "caveat emptor".
I hope that some of the moral values will wake our government leaders to do the right thing - the values of honesty, courage, fairness, looking after the interest of others - to name just a few.
A few readers were uncomfortable about my statement of values. They felt that I should not be "preaching" these values. I think that it is the duty of all members of society to articulate the values that should guide the future of our society. I hope that more people can come forward to express their views on this matter.
Investors to see your Member of Parliament
I have sent the following message to the investors to meet their Member of Parliament in a group.
Some investors said that they have met their MP earlier, and their MP have not acted. You should see the MP again, and again.
It is the duty of the MP to look after your interest. As many people are affected, you should continue to see your MP - until the MP has taken the appropriate action.
All the best!
Dear Friends,
I suggest that you should contact the other investors in your constituency and arrange to see your Member of Parliament at the Meet-the-People session. Tell your MP about how you were misled into investing in the credit linked notes. Let the MP know about this matter for the victims directly. Ask your MP to take up the matter in Parliament or with MAS.
You can get information about your MP from this website:http://www.parliament.gov.sg/
The investors in your postal sector are shown in the attached Excel spreadsheet. I hope that a few of you can take the lead to contact the other investors and organise the visit to see your MP.
Some investors said that they have met their MP earlier, and their MP have not acted. You should see the MP again, and again.
It is the duty of the MP to look after your interest. As many people are affected, you should continue to see your MP - until the MP has taken the appropriate action.
All the best!
Dear Friends,
I suggest that you should contact the other investors in your constituency and arrange to see your Member of Parliament at the Meet-the-People session. Tell your MP about how you were misled into investing in the credit linked notes. Let the MP know about this matter for the victims directly. Ask your MP to take up the matter in Parliament or with MAS.
You can get information about your MP from this website:http://www.parliament.gov.sg/
The investors in your postal sector are shown in the attached Excel spreadsheet. I hope that a few of you can take the lead to contact the other investors and organise the visit to see your MP.
Speak up for our rights
Dear Mr. Tan
It is very courageous of you to give a voice and help those Lehman and Pinnacle investors. I hope you do not get into trouble with the authority or banks.
You know I feel our senior X has tamed us Singaporean over the course of 20-30 years to just obey the authority. Whatever is implemented by the government, to just accept it!!!
We Singaporean do not dare to stand up for our rights and do not have a voice of our own unlike Hong Kongers, Thailand, Koreans who dare to street protest. But I do not think that street protest is not good for the economy.
If not for you, I do not think the Lehman/Pinnacle investors would dare to go to speakers corner or question the banks/ stock brokerage.
Mrs Y
It is very courageous of you to give a voice and help those Lehman and Pinnacle investors. I hope you do not get into trouble with the authority or banks.
You know I feel our senior X has tamed us Singaporean over the course of 20-30 years to just obey the authority. Whatever is implemented by the government, to just accept it!!!
We Singaporean do not dare to stand up for our rights and do not have a voice of our own unlike Hong Kongers, Thailand, Koreans who dare to street protest. But I do not think that street protest is not good for the economy.
If not for you, I do not think the Lehman/Pinnacle investors would dare to go to speakers corner or question the banks/ stock brokerage.
Mrs Y
Assessment of liability
Dear Mr. Tan
My car lately got involved in an accident (side collision) at no fault of mine. The driver cut into my lane, done damage to my car and twisted the whole story to say it was my fault.
I had no evidences against him(no pics, no eye witness), hence, the verdict of the liability status given by INCOME was, I am to be responsible for 50% of this accident's fault.
But I am the victim of the accident. Yet I am to be responsible for the other party's irresponsible driving.
I disputed against this 50% liability status with INCOME. But their assessment still stands. But deriving at the liability status basing merely on statement provided, has done unjustice to my case. INCOME did not carried out any professional inspection
on my car, to at least gathered some 'collision evidence', like the angle and dent on my car, how can it be possibly me swerving into the other party's lane.
I wish to know who i can turn to dispute against this unfair assessment?
Mdm Ong
REPLY
Income has to make the assessment based on the available evidence. Under this type of situation, an assessemnt of 50% liability seems to be reasonable - especially as you are not able to produce evidence that the other party swerve to hit your car.
It is possible that the other party could have made a statement that you swerve your car to hit his car. It is one person's word against another.
If you still feel aggrieved about the decision, you can lodge a complaint with FIDREC (www.fidrec.com.sg).
Dear Mr Tan
Thank you for taking your precious time to answer my question. Indeed, the other party has made the statement to say that my car swerve into his lane, which is an falseful allegation.
I had told INCOME I will raise my dispute to FiDREC and INCOME has actually asked me to go ahead with it for any mediation.
I guess for this case, I will have to let it rest and just blame it on my bad luck. I think FiDREC can't do much about it since I do not have any evidence against the other party.
Mdm Ong
My car lately got involved in an accident (side collision) at no fault of mine. The driver cut into my lane, done damage to my car and twisted the whole story to say it was my fault.
I had no evidences against him(no pics, no eye witness), hence, the verdict of the liability status given by INCOME was, I am to be responsible for 50% of this accident's fault.
But I am the victim of the accident. Yet I am to be responsible for the other party's irresponsible driving.
I disputed against this 50% liability status with INCOME. But their assessment still stands. But deriving at the liability status basing merely on statement provided, has done unjustice to my case. INCOME did not carried out any professional inspection
on my car, to at least gathered some 'collision evidence', like the angle and dent on my car, how can it be possibly me swerving into the other party's lane.
I wish to know who i can turn to dispute against this unfair assessment?
Mdm Ong
REPLY
Income has to make the assessment based on the available evidence. Under this type of situation, an assessemnt of 50% liability seems to be reasonable - especially as you are not able to produce evidence that the other party swerve to hit your car.
It is possible that the other party could have made a statement that you swerve your car to hit his car. It is one person's word against another.
If you still feel aggrieved about the decision, you can lodge a complaint with FIDREC (www.fidrec.com.sg).
Dear Mr Tan
Thank you for taking your precious time to answer my question. Indeed, the other party has made the statement to say that my car swerve into his lane, which is an falseful allegation.
I had told INCOME I will raise my dispute to FiDREC and INCOME has actually asked me to go ahead with it for any mediation.
I guess for this case, I will have to let it rest and just blame it on my bad luck. I think FiDREC can't do much about it since I do not have any evidence against the other party.
Mdm Ong
Friday, November 21, 2008
Risk analysis form
Ask for your risk analysis form from the financial institution that you bought the credit linked notes. You may need it to file your complaint:
http://tankinlian.blogspot.com/2008/11/ask-for-your-risk-analysis-form.html
http://tankinlian.blogspot.com/2008/11/ask-for-your-risk-analysis-form.html
Misrepresentation about the risk of CDOs
Dear Mr. Tan
After reading the explanations from many financial experts, I realize that the real risk for the minibond is the 150 securities CDO.
Out of the 150 securities, if 11 or more credits events then the investor will loose some of their principal. If 13 or more credit events then investors will lose all of their principal.
The risk for this condition is extremely high because this is equivalent to any 2 credit events out of 23 securities (or any 1 out of 11.5).
Since bank should be much safer than others, it is not unreasonable to assume that on average, the risk of one security is 2 times the risk of one bank Then the risk of 13 or more credit events will be about 23 times (2 x 150/13 = 23.1) the risk of credit event for one bank
Moreover, the pricing statement did not disclose the identities of the 150 securities referenced by the synthetic CDO. This makes it difficult for us to assess the risk. The sales brochures and newspaper advertisements did not even mention the 150 securities CDO.
Can we sue the Financial Institutions for the omitting of these important information in the pricing statement/sales brochures/newspaper advertisements ?
Pang
REPLY
In my view, this omission is material. The investors can sue the financial institution.
It is better for the government to act and take action to enforce the law (i.e. Securities and Futures Act) which requires the seller of securities to provide relevant, reliable and complete information about the securities being sold to the public.
After reading the explanations from many financial experts, I realize that the real risk for the minibond is the 150 securities CDO.
Out of the 150 securities, if 11 or more credits events then the investor will loose some of their principal. If 13 or more credit events then investors will lose all of their principal.
The risk for this condition is extremely high because this is equivalent to any 2 credit events out of 23 securities (or any 1 out of 11.5).
Since bank should be much safer than others, it is not unreasonable to assume that on average, the risk of one security is 2 times the risk of one bank Then the risk of 13 or more credit events will be about 23 times (2 x 150/13 = 23.1) the risk of credit event for one bank
Moreover, the pricing statement did not disclose the identities of the 150 securities referenced by the synthetic CDO. This makes it difficult for us to assess the risk. The sales brochures and newspaper advertisements did not even mention the 150 securities CDO.
Can we sue the Financial Institutions for the omitting of these important information in the pricing statement/sales brochures/newspaper advertisements ?
Pang
REPLY
In my view, this omission is material. The investors can sue the financial institution.
It is better for the government to act and take action to enforce the law (i.e. Securities and Futures Act) which requires the seller of securities to provide relevant, reliable and complete information about the securities being sold to the public.
Complaints in Hong Kong and Taiwan
Dear Mr. Tan,
I have found these links in youtube.com : MiniBond saga in Hong Kong
http://www.youtube.com/watch?v=ICtDCRVqPqI&feature=related (part 1)
http://www.youtube.com/watch?v=j9ykXyDj3zY&feature=related (part 2)
They explain in Cantonese on how difficult it is to understand the products. I think these clips will be helpful to explain some facts to the old folks, and those who still don't know what has happened to cause BIG losses to their investments.
Here is an explanation in English:
http://www.youtube.com/watch?v=iV0YiTl6ea0
After spending many days of searching on Google, Yahoo, Youtube and most importantly reading your blog, I still don't understand the operation and structure behind the product that I bought. I strongly believe that most of the RMs don't know that their products are in fact so risky and the reward is not in the fair proportion to the risk.
To be fair and kind (as all Singaporeans are), I think these RMs are also very stressful now to be involved in all this "mess".
My wife told me that in a Taiwanese news that she watched last night, mentioned that angry, distressed and fustrated investors are crowding around a bank to demand for refund. The Structed Deposits saga in just beginning in Taiwan as more and more Taiwanese investors start to realise about the real truth behind the painted truth.
I take this opportunity to thank you for posting my previous email to you in your blog (RE : Mental health concerns during difficult times). My wife and I are so touch that at least there is a place to air our sadness as it is extremely unhealthy to bottle up these negative emotions.
Of course, I agree with the replies/comments to my post that we should do it in a constructive and sensible way. Life still has to go on. And that is the main reason motivating me to write the post on mental health.
Last but not least, I hope that more people as knowledgeable, righteous and selfless like you will stand out to help the distressed ones. Wishing You Great Health, Strength and Happiness.
GOD BLESS ALL !
FO
Damage to integrity and character
Hi KL Tan,
I felt sorry for u on the outrageous remarks posted in ST by Mr Chua SY. I strongly suggest that you should sue both ST and the latter for the damage to your integrity and character as a result. Otherwise, the general public may really lead to conclude that you have other agendas in mind as what Mr Chua had written. At the very least, a public apology must be sought from them in order to put this matter to a close.
What are your thoughts ?
NSK
REPLY
Thank you. I do not wish to engage in the "suing" activity.
I felt sorry for u on the outrageous remarks posted in ST by Mr Chua SY. I strongly suggest that you should sue both ST and the latter for the damage to your integrity and character as a result. Otherwise, the general public may really lead to conclude that you have other agendas in mind as what Mr Chua had written. At the very least, a public apology must be sought from them in order to put this matter to a close.
What are your thoughts ?
NSK
REPLY
Thank you. I do not wish to engage in the "suing" activity.
Writing to a Government official
If you wish to write to a Government official, including a Minister, you can get the e-mail or telephone number from this website:
http://www.sgdi.gov.sg
For example, if you type Goh Chok Tong, you will get the following:
GOH CHOK TONG SENIOR MINISTER
DID : 62358577
Email: GOH_CHOK_TONG@PMO.GOV.SG
http://www.sgdi.gov.sg
For example, if you type Goh Chok Tong, you will get the following:
GOH CHOK TONG SENIOR MINISTER
DID : 62358577
Email: GOH_CHOK_TONG@PMO.GOV.SG
Writing to your Member of Parliament
You can find the name and contact of your Member of Parliament from this website:
http://www.parliament.gov.sg/
You can meet your MP at the weekly meet-the-people session.
Your MP came forward to be elected to work for the people, and has the duty to represent the people. If you have any problem, you can see your MP. You should expect your MP to carry out his duty in looking after your interest (provided that your interest is legitimate).
If several of your neighbours share a common problem, you should see your MP together.
http://www.parliament.gov.sg/
You can meet your MP at the weekly meet-the-people session.
Your MP came forward to be elected to work for the people, and has the duty to represent the people. If you have any problem, you can see your MP. You should expect your MP to carry out his duty in looking after your interest (provided that your interest is legitimate).
If several of your neighbours share a common problem, you should see your MP together.
Your experience with credit linked notes
Please share your experience on investing in the credit linked notes, i.e. minibond, pinnacle notes, high notes, jubilee notes. Send your article to kinlian1@gmail.com
http://tankinlian.blogspot.com/2008/11/publish-book-on-credit-linked-notes.html
http://tankinlian.blogspot.com/2008/11/publish-book-on-credit-linked-notes.html
Selling toxic CDO products
Hi Mr Tan,
I should think that the FIs cannot be forgiven for miselling the toxic CDO products. Take for instance the pinnacles notes. Various series have been launched during the past two years. Upon the launching of series 1 , the FIs should have been aware of where the money have gone into and the details of the 100 over companies where the money are invested. Is it justifable that if 8 out of the 150 companies went bust then the investor will lose all the money? Is this a high risk or a definite gone case investment? I believe the FIs know the answer.
If it is a high risks investment then it must have a high return. Is it justifable that the town councils invest into these products to get a modest 5% return? In these product the amount receive at the maturity will be equivalent to our initial investment if nothing goes wrong and thus the return is only about 25 percent. Any mature person will definitely know that it is crazy to invest in this high risk product and getting such a low return. The worst thing is that it is not liquid at all and the investor has very little or no control of his investment.
To think that so many series have been launched and sold to general public as a safe bond like investment instrument of negligible risks is really a shame to these FIs.
In recent years, whenever the RM in the bank want to sell me any product he/she will always say ever since the Asian crisis, MAS has put stricker measures on the financial products and if they mis-represent they will get into trouble.The product they sold have to be MAS APPROVED. Many people like me have been led to believe that the MAS has stepped in to protect the people and we are not suspicious of the RMs' advice.
I really hope that the FIs will admit their mistakes and make compensations to all investors . This will definitely benefit them in long run as the customers will have more faith in investing with the FIs. In order for the FIs not to lose their liquidity I suggest that the money compensated to be put back into the FDs at prevailing interest rates and allowing the investors to withdraw a certain % a year.
Jen
REPLY
I suggest that you send your views to Mr Goh Chok Tong and to MAS.
http://www.sgdi.gov.sg/
GOH CHOK TONG
SENIOR MINISTER
DID : 62358577
Email: GOH_CHOK_TONG@PMO.GOV.SG
I should think that the FIs cannot be forgiven for miselling the toxic CDO products. Take for instance the pinnacles notes. Various series have been launched during the past two years. Upon the launching of series 1 , the FIs should have been aware of where the money have gone into and the details of the 100 over companies where the money are invested. Is it justifable that if 8 out of the 150 companies went bust then the investor will lose all the money? Is this a high risk or a definite gone case investment? I believe the FIs know the answer.
If it is a high risks investment then it must have a high return. Is it justifable that the town councils invest into these products to get a modest 5% return? In these product the amount receive at the maturity will be equivalent to our initial investment if nothing goes wrong and thus the return is only about 25 percent. Any mature person will definitely know that it is crazy to invest in this high risk product and getting such a low return. The worst thing is that it is not liquid at all and the investor has very little or no control of his investment.
To think that so many series have been launched and sold to general public as a safe bond like investment instrument of negligible risks is really a shame to these FIs.
In recent years, whenever the RM in the bank want to sell me any product he/she will always say ever since the Asian crisis, MAS has put stricker measures on the financial products and if they mis-represent they will get into trouble.The product they sold have to be MAS APPROVED. Many people like me have been led to believe that the MAS has stepped in to protect the people and we are not suspicious of the RMs' advice.
I really hope that the FIs will admit their mistakes and make compensations to all investors . This will definitely benefit them in long run as the customers will have more faith in investing with the FIs. In order for the FIs not to lose their liquidity I suggest that the money compensated to be put back into the FDs at prevailing interest rates and allowing the investors to withdraw a certain % a year.
Jen
REPLY
I suggest that you send your views to Mr Goh Chok Tong and to MAS.
http://www.sgdi.gov.sg/
GOH CHOK TONG
SENIOR MINISTER
DID : 62358577
Email: GOH_CHOK_TONG@PMO.GOV.SG
Thursday, November 20, 2008
How RMs are taught to sell financial products
Dear Kin Lian,
I read you blog with interest everyday and after hearing about this fiasco with the minibonds. I am glad that I had left the banking sector many years ago. I have no interests in any of the minibonds. Things may have changed now, but I would like to relate my experience as a RM in a local bank then.
I personally feel that banks should try not to sell so many different types of financial products to the mass market.
This should be done by the broking housings as they are more equiped to do so. Anyway back to my experience.
During the haydays when units trust were just being introduced to the markets, I remember Aberdeen Global Tech Fund was trading about 1.90+ many banks were scrambling to earn commission given by the fund houses. (There was an upfront sales charge of 5%, how much given to the bank, I am not sure.) Banks were flushed with Fixed Deposits and management was very short sighted. why? Because it was a liability for the bank to hold fixed deposits.
As bank sales staff, we were like attending fund launches almost every week. The product manager would come in, talk a little about the fund and give us sales target. Also started to say what customers are suited. With sales target, what does it mean? It means you need to milk you customers. We were given customers details especially those that were going to expire and also made to stay after work to make calls to them to `recommend' them this product.
Well, as sales people, we can't argue right. We were employed to do sales. How we achieve it is not they problem, just sell and be rewarded with commissions. But at the same time, we were named Financial Planner. What about this?
I remember that there was this time that the bank was selling `capital protected' funds. Of course we knew that Capital Protected is a marketing gimmick. Your capital is protected less certain charges.
Anyway, I was in mass market sales. There was a bank staff that managed to persuade a customer to place SGD 2.5 milllion in the fund.(Guess what, the fund total size was 50 mil) Any financial planner would know that is not the way. It would be best to diversify to Cash account, Fixed Deposits, Equity funds, etc). We were like shocked when we heard this.
One more point to add, usually bank sales staff have a limited time to do sales and they are taught to close the seal in the shortest time possible. (We were actually taught to close a `long term saving plan' in 15 minutes.(which is actually an insurance plan) I am not against this, but wouldn't it be better to take some more time to explain to customer if she/he actually needs this?
Let me say again, this happened many years ago. I don't know whether is it the same. If you are saying that banks had introduced the FNA (Financial Needs Analysis) signed by the customer, let me ask you one thing, WAS IT DONE PROPERLY? Do you think the aunties and uncles who do not speak English know what this document is about? I can tell you they just sign the document based on the trust of the bank or the sales staff.
This is all I have to say. Thank god I left that industry.
LW
I read you blog with interest everyday and after hearing about this fiasco with the minibonds. I am glad that I had left the banking sector many years ago. I have no interests in any of the minibonds. Things may have changed now, but I would like to relate my experience as a RM in a local bank then.
I personally feel that banks should try not to sell so many different types of financial products to the mass market.
This should be done by the broking housings as they are more equiped to do so. Anyway back to my experience.
During the haydays when units trust were just being introduced to the markets, I remember Aberdeen Global Tech Fund was trading about 1.90+ many banks were scrambling to earn commission given by the fund houses. (There was an upfront sales charge of 5%, how much given to the bank, I am not sure.) Banks were flushed with Fixed Deposits and management was very short sighted. why? Because it was a liability for the bank to hold fixed deposits.
As bank sales staff, we were like attending fund launches almost every week. The product manager would come in, talk a little about the fund and give us sales target. Also started to say what customers are suited. With sales target, what does it mean? It means you need to milk you customers. We were given customers details especially those that were going to expire and also made to stay after work to make calls to them to `recommend' them this product.
Well, as sales people, we can't argue right. We were employed to do sales. How we achieve it is not they problem, just sell and be rewarded with commissions. But at the same time, we were named Financial Planner. What about this?
I remember that there was this time that the bank was selling `capital protected' funds. Of course we knew that Capital Protected is a marketing gimmick. Your capital is protected less certain charges.
Anyway, I was in mass market sales. There was a bank staff that managed to persuade a customer to place SGD 2.5 milllion in the fund.(Guess what, the fund total size was 50 mil) Any financial planner would know that is not the way. It would be best to diversify to Cash account, Fixed Deposits, Equity funds, etc). We were like shocked when we heard this.
One more point to add, usually bank sales staff have a limited time to do sales and they are taught to close the seal in the shortest time possible. (We were actually taught to close a `long term saving plan' in 15 minutes.(which is actually an insurance plan) I am not against this, but wouldn't it be better to take some more time to explain to customer if she/he actually needs this?
Let me say again, this happened many years ago. I don't know whether is it the same. If you are saying that banks had introduced the FNA (Financial Needs Analysis) signed by the customer, let me ask you one thing, WAS IT DONE PROPERLY? Do you think the aunties and uncles who do not speak English know what this document is about? I can tell you they just sign the document based on the trust of the bank or the sales staff.
This is all I have to say. Thank god I left that industry.
LW
Social grace in commenting in other people's blog
I wish to thank Everlearning for this comment in my blog:
Hi Mr. Tan
Coming back to this blog ..... (I was shocked) to read some unhappy comments. As a guest, I have no rights to impose my host in whatever way in his house. I suppose bloggers have to exercise some discreet and courtesy when commenting in other people's blog. This is social grace.
MY VIEWS
I have received several personal attacks and sarcastic comments by people posting anonymously or under a false name. They expect their comments to be published here in the name of "presenting the other view". I expect these people to use their real identity, if they wish their contrary views to be posted.
Hi Mr. Tan
Coming back to this blog ..... (I was shocked) to read some unhappy comments. As a guest, I have no rights to impose my host in whatever way in his house. I suppose bloggers have to exercise some discreet and courtesy when commenting in other people's blog. This is social grace.
MY VIEWS
I have received several personal attacks and sarcastic comments by people posting anonymously or under a false name. They expect their comments to be published here in the name of "presenting the other view". I expect these people to use their real identity, if they wish their contrary views to be posted.
Mental health concerns during difficult times
Dear Mr. Tan,
First of all, thank you for all the help and info you provided in your blog and in Hong Lim Park.
With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.
Sad to say that I am also exposed to one of the products and have to go through emotional “struggle” everday.
On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money … etc
I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.
> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …
It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.
BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”
This list will go on and on and on and on … …
With all said above, I would like to chip in some of my thoughts that I think it will be helpful to all the distressed ones :
Calling all volunteers from appropriate organizations, reach out to these people to help relieve their emotional stress, especially the old folks, uneducated ones and those that are all alone (either they have no friends and relatives to approach for help, or they are afraid to let them know about they involvement in the structured deposit products)
Seek medical help if you are having problem coping with the stress and having problem sleeping at night. I have done so. I have to “force” myself to sleep by taking the medication from my doctor, so that I can handle the routines in the day.
This is a list of useful phone numbers that I have found from the web :
Samaritans of Singapore (SOS. 24 hrs) 1800-221-4444
Singapore Association for Mental Health Helpline 1800-283-7019
Care Corner 800 Hotline (in Mandarin, 10am-10pm daily) 1800-353-5800
Touchline Mon-Sat (10am-10pm)(for 13 to 25 year olds) 1800-377-2252
BABES (For teenage girls facing pregnancy crisis) 1800-833-6666
Pregnancy Crisis Service Mon-Fri (9am-5pm), Sat (9am-1pm) 6339-9770
Association of Women for Action and Research Helpline (AWARE) Mon-Fri (4pm-10pm) 1800-774-5935
National Family Service Centre (FSC) Helpline 1800-2255-372
SENIORS helpline (for older persons and their care-givers) 1800-555-5555
TOUCH Caregivers Centre 1800-352-1622
SAGE helpline Mon-Fri (9am-5pm), Sat (9am-1pm) 1800-3538633
Alcoholics Anonymous 6475-0890
Eating Disorders Helpline - Tel: 6345-3435 (10:00am - 4:00pm Phone Mail Mon-Fri
Source : http://www.giftoflistening.com/resources.html
Thank you Mr. Tan for being so helpful and kind, and taking your time to read this letter.
My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.
This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.
God Bless All !
FO
First of all, thank you for all the help and info you provided in your blog and in Hong Lim Park.
With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.
Sad to say that I am also exposed to one of the products and have to go through emotional “struggle” everday.
On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money … etc
I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.
> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …
It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.
BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”
This list will go on and on and on and on … …
With all said above, I would like to chip in some of my thoughts that I think it will be helpful to all the distressed ones :
Calling all volunteers from appropriate organizations, reach out to these people to help relieve their emotional stress, especially the old folks, uneducated ones and those that are all alone (either they have no friends and relatives to approach for help, or they are afraid to let them know about they involvement in the structured deposit products)
Seek medical help if you are having problem coping with the stress and having problem sleeping at night. I have done so. I have to “force” myself to sleep by taking the medication from my doctor, so that I can handle the routines in the day.
This is a list of useful phone numbers that I have found from the web :
Samaritans of Singapore (SOS. 24 hrs) 1800-221-4444
Singapore Association for Mental Health Helpline 1800-283-7019
Care Corner 800 Hotline (in Mandarin, 10am-10pm daily) 1800-353-5800
Touchline Mon-Sat (10am-10pm)(for 13 to 25 year olds) 1800-377-2252
BABES (For teenage girls facing pregnancy crisis) 1800-833-6666
Pregnancy Crisis Service Mon-Fri (9am-5pm), Sat (9am-1pm) 6339-9770
Association of Women for Action and Research Helpline (AWARE) Mon-Fri (4pm-10pm) 1800-774-5935
National Family Service Centre (FSC) Helpline 1800-2255-372
SENIORS helpline (for older persons and their care-givers) 1800-555-5555
TOUCH Caregivers Centre 1800-352-1622
SAGE helpline Mon-Fri (9am-5pm), Sat (9am-1pm) 1800-3538633
Alcoholics Anonymous 6475-0890
Eating Disorders Helpline - Tel: 6345-3435 (10:00am - 4:00pm Phone Mail Mon-Fri
Source : http://www.giftoflistening.com/resources.html
Thank you Mr. Tan for being so helpful and kind, and taking your time to read this letter.
My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.
This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.
God Bless All !
FO
Much to learn from American politics
When John McCain lost the election, he gave a magnanimous speech conceding defeat and pledging to work with Barack Obama as "my President".
In turn, Obama acknowledged McCain's long record of dedicated public service to America. He pledged to work with McCain.
Obama met with McCain a few weeks later to discuss how they can work together to solve America's problems.
Here is a country with 60 times the population and talent pool of Singapore. They know how to work together to find the best people to solve their problems.
In Singapore, we have a limited talent pool. We need to find a way to tap the best of our limited talents. We should rely on our local talents, instead of foreignt talents who do not have a long term interest of our nation.
In turn, Obama acknowledged McCain's long record of dedicated public service to America. He pledged to work with McCain.
Obama met with McCain a few weeks later to discuss how they can work together to solve America's problems.
Here is a country with 60 times the population and talent pool of Singapore. They know how to work together to find the best people to solve their problems.
In Singapore, we have a limited talent pool. We need to find a way to tap the best of our limited talents. We should rely on our local talents, instead of foreignt talents who do not have a long term interest of our nation.
Top up on margin calls
If you borrow money and pledge shares, the bank will check the prices each day. If the values of your holdings fall below the amount borrowed less a safety margin, the bank ask you to put in additional money. If you do not, you have to sell the shares at its depressed prices. This is called "margin call".
This causes the prices to fall further. As they are no buyers, the prices can drop a lot. This triggers more margin calls.
Solution: do not invest with borrowed money. Invest with long term savings.
This causes the prices to fall further. As they are no buyers, the prices can drop a lot. This triggers more margin calls.
Solution: do not invest with borrowed money. Invest with long term savings.
Relief loans to repay credit card debts
Many people expect the next big financial crisis to be triggered by the failure of the credit card debts.
I hope that action can be taken to minimise the impact of this impending crisis. I believe that a large number of people borrowed on credit cards due to reduction or loss of their earnings. The high interest rate on the credit cards add to their burden.
I suggest that a relief loan be provided to these people who have runned up the credit card debts for this reason. This relief loan can help them to reduce their heavy debts. My proposal for this relief loan is set out below:
http://tankinlian.blogspot.com/2008/11/relief-loans-to-replace-loss-of.html
I suggest that the banks should give a discount on the repayment of the credit card debts through the relief loan. As they have earned a high rate of interest before, they should take a reduction in return for the repayment of the loan.
I also hope that a limited amount of relief loan be given to other borrowers who have incurred a credit card debt for other reasons, e.g. over-spending.
The relief loan, charged at a modest rate of interest, will give the borrower a better chance to repay the borrowings, and prevent another round of financial crisis.
This targeted approach is better than giving every person a cheque under a stimulus package (as was practiced recently in USA).
I hope that action can be taken to minimise the impact of this impending crisis. I believe that a large number of people borrowed on credit cards due to reduction or loss of their earnings. The high interest rate on the credit cards add to their burden.
I suggest that a relief loan be provided to these people who have runned up the credit card debts for this reason. This relief loan can help them to reduce their heavy debts. My proposal for this relief loan is set out below:
http://tankinlian.blogspot.com/2008/11/relief-loans-to-replace-loss-of.html
I suggest that the banks should give a discount on the repayment of the credit card debts through the relief loan. As they have earned a high rate of interest before, they should take a reduction in return for the repayment of the loan.
I also hope that a limited amount of relief loan be given to other borrowers who have incurred a credit card debt for other reasons, e.g. over-spending.
The relief loan, charged at a modest rate of interest, will give the borrower a better chance to repay the borrowings, and prevent another round of financial crisis.
This targeted approach is better than giving every person a cheque under a stimulus package (as was practiced recently in USA).
Poor return from Living policy
Dear Mr. Tan,
I bought a Living policy with NTUC when you were CEO. Lately, I read that you recommended against the Living policy. Can you clarify?
REPLY
I have just surrendered my Living policy. After paying premium for 12 years, my cash value is still below the total premiums paid.
In the earlier years, the bonus was quite attractive. Later, the bonus was cut due to the economic downturn in 2003.
There was a chance to restore the bonus earlier this year, before the financial crisis, but the management refused to do so. I have decided to terminate the policy as it is likely to provide a poor return over the next few years.
This poor return applies to most life insurance policies issued in recent years. It is better for the consumer to buy term insurance and invest the savings in a low cost investment fund. With the drop in investment values, there is potential for a good return over the next 10 to 20 years.
http://www.tankinlian.com/faq/savings.html
I bought a Living policy with NTUC when you were CEO. Lately, I read that you recommended against the Living policy. Can you clarify?
REPLY
I have just surrendered my Living policy. After paying premium for 12 years, my cash value is still below the total premiums paid.
In the earlier years, the bonus was quite attractive. Later, the bonus was cut due to the economic downturn in 2003.
There was a chance to restore the bonus earlier this year, before the financial crisis, but the management refused to do so. I have decided to terminate the policy as it is likely to provide a poor return over the next few years.
This poor return applies to most life insurance policies issued in recent years. It is better for the consumer to buy term insurance and invest the savings in a low cost investment fund. With the drop in investment values, there is potential for a good return over the next 10 to 20 years.
http://www.tankinlian.com/faq/savings.html
Lodge your complaint now, before the fund collapsed
Dear Mr. Tan,
I have just visited to H. I think you may want to highlight the following:
1. PS6 is not worth 1.7% of original value
2. PS6 now has a high chance of worthless, but no letter was sent. However, the letter dated 10 Nov 2008 from H only said credit event has occurred. It is up to you to research. Thanks to your website, which is very informative.
3. I try to see my wife’s RM and I can sense that they are systematically preventing her from meeting us. They arranged until we insisted, or otherwise they give us a written letter whey we could not see our RM. I thieir strategy is that once you lodge the complaint, the RM dropped out. At it becomes words against words, in cold environment. RM become shun from lying infront of the client.
4. I went to the branch and they originally sent a very junior RM who is only prepared to take complaint and not explaining the product.
5. My RM was on MC although I had scheduled and confirmed meeting with her. Even the branch manager did not even know she is on MC. She said she only started relieving as Br Mgr the day before.
[I had 3 different stories. The counter staff said RM was having outside appointment and will contact her. The relieve RM said she was very sick, but did not know we spoke to our RM the day before. The more senior RM said my RM has stomach flu. The branch manager did not know my RM was on MC until I told her what they told me.]
6. The RM whom met us even dare to say, even if the prospectus is given after sale, as long it is given on the same day, it is considered given BEFORE sale. It shows how green those people they use to speak to us.
IMPORTANT
I think you may want to advise others their complaint for mis-selling, if any, even before the fund collapsed.
As for my case. I am clear it was mis-selling, because the RM today said differently about the product compared to the RM at point of sale. I think it is very likely that the current RM and original RM may not understood the product.
I think we will do a SD and file it, and let nature takes its course, bec it is already a dead horse unless the Authority really takes action.
I really feel painful for those who may not know how to take care of themselves. I am saddened not because of the loss of my $50,000, but how institutions take advantage of ordinary main-street workers’ hard earn saving. This is SOFT TALK for our HARD CASH.
We are grateful that you stood for ordinary men and women, and yet being criticized by the Chua Chap [don’t even bother to remember his name].
LKH
I have just visited to H. I think you may want to highlight the following:
1. PS6 is not worth 1.7% of original value
2. PS6 now has a high chance of worthless, but no letter was sent. However, the letter dated 10 Nov 2008 from H only said credit event has occurred. It is up to you to research. Thanks to your website, which is very informative.
3. I try to see my wife’s RM and I can sense that they are systematically preventing her from meeting us. They arranged until we insisted, or otherwise they give us a written letter whey we could not see our RM. I thieir strategy is that once you lodge the complaint, the RM dropped out. At it becomes words against words, in cold environment. RM become shun from lying infront of the client.
4. I went to the branch and they originally sent a very junior RM who is only prepared to take complaint and not explaining the product.
5. My RM was on MC although I had scheduled and confirmed meeting with her. Even the branch manager did not even know she is on MC. She said she only started relieving as Br Mgr the day before.
[I had 3 different stories. The counter staff said RM was having outside appointment and will contact her. The relieve RM said she was very sick, but did not know we spoke to our RM the day before. The more senior RM said my RM has stomach flu. The branch manager did not know my RM was on MC until I told her what they told me.]
6. The RM whom met us even dare to say, even if the prospectus is given after sale, as long it is given on the same day, it is considered given BEFORE sale. It shows how green those people they use to speak to us.
IMPORTANT
I think you may want to advise others their complaint for mis-selling, if any, even before the fund collapsed.
As for my case. I am clear it was mis-selling, because the RM today said differently about the product compared to the RM at point of sale. I think it is very likely that the current RM and original RM may not understood the product.
I think we will do a SD and file it, and let nature takes its course, bec it is already a dead horse unless the Authority really takes action.
I really feel painful for those who may not know how to take care of themselves. I am saddened not because of the loss of my $50,000, but how institutions take advantage of ordinary main-street workers’ hard earn saving. This is SOFT TALK for our HARD CASH.
We are grateful that you stood for ordinary men and women, and yet being criticized by the Chua Chap [don’t even bother to remember his name].
LKH
Straits Times deleted these sentences
The Straits Times Forum editor published my reply to Chua Sheng Yang but deleted the following sentences:
I can only recall the saying, “None are so blind as those who will not see the truth”.
Mr. Chua made a personal attack on my character in the last three paragraphs of his letter. I am surprised that your newspaper found it fit to print these unsubstantiated remarks, as they are not relevant to the main issue. I shall not respond to them.
I can only recall the saying, “None are so blind as those who will not see the truth”.
Mr. Chua made a personal attack on my character in the last three paragraphs of his letter. I am surprised that your newspaper found it fit to print these unsubstantiated remarks, as they are not relevant to the main issue. I shall not respond to them.
Wednesday, November 19, 2008
Sieze the opportunity
Some people said that I "siezed the opportunity" to represent the misled investors. This statement has a negative connotation. It does not fairly reflect my intent.
I hope that the Government can help to find a fair collective solution for all investors who have been misled into these investments, regardless of their age or education level (provided that the independent investigation shows that they were misled).
I do not enjoy being the target of personal attacks and cynicism, and to take the burden of attending to so many aggrieved persons asking for assistance. I wish to have a more tranquil life.
I hope that the Government can help to find a fair collective solution for all investors who have been misled into these investments, regardless of their age or education level (provided that the independent investigation shows that they were misled).
I do not enjoy being the target of personal attacks and cynicism, and to take the burden of attending to so many aggrieved persons asking for assistance. I wish to have a more tranquil life.
Explanation on CDS - Vanguard's Bogle
http://www.iddmagazine.com/issues/2008_44/187499-1.html?partner=dealbook&page=1
Suppose you have a house and you insure it against fire for $200,000. Now, suppose that you have 130 neighbors, 65 of whom are betting that it will burn down and 65 of whom are betting that it won't. And, that's approximately the ratio we have got here.
It's supposed to be about $2 trillion debt instruments covered by CDS and $62 [trillion] or $65 trillion of credit default swaps. Half of them are in one side and half of them are in the other. So, you could say "well what's the matter with having your neighbors insuring or betting your house will burn down or betting it won't burn down?"
What's the matter is you have to keep a close eye out for arsonists. So, we have arsonists out there playing the CDS market, to sink your firm, make money for themselves and their hedge funds. They want those premiums to go way up and playing games like that
Suppose you have a house and you insure it against fire for $200,000. Now, suppose that you have 130 neighbors, 65 of whom are betting that it will burn down and 65 of whom are betting that it won't. And, that's approximately the ratio we have got here.
It's supposed to be about $2 trillion debt instruments covered by CDS and $62 [trillion] or $65 trillion of credit default swaps. Half of them are in one side and half of them are in the other. So, you could say "well what's the matter with having your neighbors insuring or betting your house will burn down or betting it won't burn down?"
What's the matter is you have to keep a close eye out for arsonists. So, we have arsonists out there playing the CDS market, to sink your firm, make money for themselves and their hedge funds. They want those premiums to go way up and playing games like that
Personal values and characters
I wish to share some of my personal values that define my character:
> work for the benefit of all, and not for self-interest
> respect other people, including the poor and weak
> be fair
> be honest
> be courageous
I hope that more Singaporeans can share these values, for the good of the people of Singapore.
AFTERNOTE:
I wish to thank Everlearning for the following additional values (which I agree with):
> be humble
> be kind-hearted (or thoughtful or considerate)
> work for the benefit of all, and not for self-interest
> respect other people, including the poor and weak
> be fair
> be honest
> be courageous
I hope that more Singaporeans can share these values, for the good of the people of Singapore.
AFTERNOTE:
I wish to thank Everlearning for the following additional values (which I agree with):
> be humble
> be kind-hearted (or thoughtful or considerate)
Our Continued Fascination with wall street bankers leading to our Downfall ?
Contributed by LA
1) Die die must have wall street bankers here ( somehow, more wall street bankers here = top financial hub )
2) Die die must have wall street bankers advise us.
3) Die die must have wall street bankers to better run our own banks here.
4) Die die must have wall street bankers to better run our sovereign funds. http://asiasentinel.com/index.php?option=com_content&task=view&id=1549&Itemid=233
5) Die die must have wall street bankers sell us ( Town Councils included ) poisonous "investment" products.
Afterwards, ….. we all die ?
P.S. maybe we are all fascinated by their obscene buddy-buddy compensation – how would you like to receive US$25 Million for being a Merrill Lynch banker for just 4 months ?
http://www.fool.com/investing/dividends-income/2008/10/22/another-insane-wall-street-pay-story.aspx
how would you like to crash big name banks and still receive tens of millions dollars - no prior experience required ?
http://whatilearnd.com/post/52449126/golden-parachutes
And we are told off we are greedy for 5% return, and deserve our pain and suffering !
LA
1) Die die must have wall street bankers here ( somehow, more wall street bankers here = top financial hub )
2) Die die must have wall street bankers advise us.
3) Die die must have wall street bankers to better run our own banks here.
4) Die die must have wall street bankers to better run our sovereign funds. http://asiasentinel.com/index.php?option=com_content&task=view&id=1549&Itemid=233
5) Die die must have wall street bankers sell us ( Town Councils included ) poisonous "investment" products.
Afterwards, ….. we all die ?
P.S. maybe we are all fascinated by their obscene buddy-buddy compensation – how would you like to receive US$25 Million for being a Merrill Lynch banker for just 4 months ?
http://www.fool.com/investing/dividends-income/2008/10/22/another-insane-wall-street-pay-story.aspx
how would you like to crash big name banks and still receive tens of millions dollars - no prior experience required ?
http://whatilearnd.com/post/52449126/golden-parachutes
And we are told off we are greedy for 5% return, and deserve our pain and suffering !
LA
A tsunami of hope or terror
http://www.businessspectator.com.au/bs.nsf/Article/A-tsunami-of-hope-or-terror-LHRJP?OpenDocument&src=spb
Here's how it works: a bank will set up a shelf company in Cayman Islands or somewhere with $2 of capital and shareholders other than the bank itself. They are usually charities that could use a little cash, and when some nice banker in a suit shows up and offers them money to sign some documents, they do.
That allows the so-called special purpose vehicle (SPV) to have "deniability", as in "it's nothing to do with us" – an idea the banks would have picked up from the Godfather movies.
The bank then creates a CDS between itself and the SPV. Usually credit default swaps reference a single third party, but for the purpose of the synthetic CDOs, they reference at least 100 companies.
The CDS contracts between the SPV can be $US500 million to $US1 billion, or sometimes more. They have a variety of twists and turns, but it usually goes something like this: if seven of the 100 reference entities default, the SPV has to pay the bank a third of the money; if eight default, it's two-thirds; and if nine default, the whole amount is repayable.
For this, the bank agrees to pay the SPV 1 or 2 per cent per annum of the contracted sum.
Finally the SPV is taken along to Moody's, Standard and Poor's and Fitch's and the ratings agencies sprinkle AAA magic dust upon it, and transform it from a pumpkin into a splendid coach.
The bank's sales people then hit the road to sell this SPV to investors. It's presented as the bank's product, and the sales staff pretend that the bank is fully behind it, but of course it's actually a $2 Cayman Islands company with one or two unknowing charities as shareholders.
It offers a highly-rated, investment-grade, fixed-interest product paying a 1 or 2 per cent premium. Those investors who bother to read the fine print will see that they will lose some or all of their money if seven, eight or nine of a long list of apparently strong global corporations go broke. In 2004-2006 it seemed money for jam. The companies listed would never go broke – it was unthinkable.
Here are some of the companies that are on all of the synthetic CDO reference lists: the three Icelandic banks, Lehman Brothers, Bear Stearns, Freddie Mac, Fannie Mae, American Insurance Group, Ambac, MBIA, Countrywide Financial, Countrywide Home Loans, PMI, General Motors, Ford and a pretty full retinue of US home builders.
In other words, the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees – although they were that too.
They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.
As one part of the bank was furiously selling loans to these companies, another part was furiously selling insurance contracts against them defaulting, to unsuspecting investors who were actually a bit like "Lloyds Names" – the 1500 or so individuals who back the London reinsurance giant.
Except in this case very few of the "names" knew what they were buying. And nobody has any idea how many were sold, or with what total face value.
It is known that some $2 billion was sold to charities and municipal councils in Australia, but that is just the tip of the iceberg in this country. And Australia, of course, is the tiniest tip of the global iceberg of synthetic CDOs. The total undoubtedly runs into trillions of dollars.
All the banks did it, not just Lehman Brothers which had the largest market share, and many of them seem to have invested in the things as well (a bit like a dog eating its own vomit).
Here's how it works: a bank will set up a shelf company in Cayman Islands or somewhere with $2 of capital and shareholders other than the bank itself. They are usually charities that could use a little cash, and when some nice banker in a suit shows up and offers them money to sign some documents, they do.
That allows the so-called special purpose vehicle (SPV) to have "deniability", as in "it's nothing to do with us" – an idea the banks would have picked up from the Godfather movies.
The bank then creates a CDS between itself and the SPV. Usually credit default swaps reference a single third party, but for the purpose of the synthetic CDOs, they reference at least 100 companies.
The CDS contracts between the SPV can be $US500 million to $US1 billion, or sometimes more. They have a variety of twists and turns, but it usually goes something like this: if seven of the 100 reference entities default, the SPV has to pay the bank a third of the money; if eight default, it's two-thirds; and if nine default, the whole amount is repayable.
For this, the bank agrees to pay the SPV 1 or 2 per cent per annum of the contracted sum.
Finally the SPV is taken along to Moody's, Standard and Poor's and Fitch's and the ratings agencies sprinkle AAA magic dust upon it, and transform it from a pumpkin into a splendid coach.
The bank's sales people then hit the road to sell this SPV to investors. It's presented as the bank's product, and the sales staff pretend that the bank is fully behind it, but of course it's actually a $2 Cayman Islands company with one or two unknowing charities as shareholders.
It offers a highly-rated, investment-grade, fixed-interest product paying a 1 or 2 per cent premium. Those investors who bother to read the fine print will see that they will lose some or all of their money if seven, eight or nine of a long list of apparently strong global corporations go broke. In 2004-2006 it seemed money for jam. The companies listed would never go broke – it was unthinkable.
Here are some of the companies that are on all of the synthetic CDO reference lists: the three Icelandic banks, Lehman Brothers, Bear Stearns, Freddie Mac, Fannie Mae, American Insurance Group, Ambac, MBIA, Countrywide Financial, Countrywide Home Loans, PMI, General Motors, Ford and a pretty full retinue of US home builders.
In other words, the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees – although they were that too.
They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.
As one part of the bank was furiously selling loans to these companies, another part was furiously selling insurance contracts against them defaulting, to unsuspecting investors who were actually a bit like "Lloyds Names" – the 1500 or so individuals who back the London reinsurance giant.
Except in this case very few of the "names" knew what they were buying. And nobody has any idea how many were sold, or with what total face value.
It is known that some $2 billion was sold to charities and municipal councils in Australia, but that is just the tip of the iceberg in this country. And Australia, of course, is the tiniest tip of the global iceberg of synthetic CDOs. The total undoubtedly runs into trillions of dollars.
All the banks did it, not just Lehman Brothers which had the largest market share, and many of them seem to have invested in the things as well (a bit like a dog eating its own vomit).
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