Leave a Comment:
81 comments
(A)
the Issuer (Minibond Limited) has indicated to the Trustee that it is unlikely the Issuer will receive any more funds from the Swap Counterparty (Lehman Brothers Special Financing Inc) or any other entity related to the Swap Guarantor (Lehman Brothers Holdings Inc) under the Swap Agreement and accordingly, unless a new swap counterparty can be appointed, an event of default is very likely to occur as interest payments become due.
Thus the rest of the series will be defaulted progressively while the only good news we have is next week anouncement whether a new swap counterparty can be located. I too hope local institution can take over.
(B)
For Minibond 3, the other possibility of credit event is that the underlying securities default cannot exceed 10.
So even though if (A) succeeded, (B) is still a problem.
I can only say that I will pursue all the way to FIDReC for an outcome. The fact that Lehman Brother is a credit event was never mentioned throughout the sales process and only appears in the Base Prospectus which by then, we have already signed to purchased. The 3 documents i.e. factsheet, pricing statement and FA recommendation did not mention anything about Lehman Brothers is a credit event.
In addition, in 2006, according to this site, there were newspaper publication that this investment is of high risk and FI still selling it as low risk.
Regards,
Reply
I have been following your website on Minibond with great interest as I am one of those affected investors. Ironically, I learnt more about Minibonds from your website than from the FIs!
I have two questions
1. Is Minibond Series 5 & 6 now worth zero $
Sunday Times (19 oct 08) reported that the Minibond Series 5 & 6 is now worth zero $. Is this accurate?
Two weeks ago, I was told by the Branch Manager (BM) of the bank that sold the minibond that there was still some underlying value in the basket of entities in the event of forced selling of the Minibond. This would however be a low amount after taking deducting the unwinding liabililites etc
2. What happens to those who have not lodged complaint with FI? Will they still be compensated?
The BM also told me that if the FI/Banks were to undertake any compensation to the investors in Minibonds, it would be a blanket decision, i.e., all investors would be compensated porportionately. He said it was not true that only those who lodged complaints with the FI would be compensated
But MAS statement on Fri 17 Oct 2008 encouraged all affected investors to lodge their complaints
So does it mean that if you don’t lodge a complaint, you will not be offered compensation. What about those who are not literate?
Grateful if someone could shed some light on this
Reply
Lots of attention (and I hope effort too) are being focused on how Mini-bonds were sold to investors. While it is correct to seek redress on wrong doings, it is equally important, if not more, to find the the optimal course of action to maximise recovery. What is the HSBC, the Trustee, doing in carrying out its duties? What steps have they taken to find a replacement swap counterparty ? What responses have they received and how did they evaluate each offers? Who are the people evaluating these offer, any independent parties? Is it more viable to “convert” the Mini-bonds into floating rate instrument rather than insisting on finding a swap counterparty to continue this as a fixed rate instruments ? The Trustee must seek the approval of bondholders on how to move forward. This is our money and we must have the right to decide. Liquidation of the underlying securities must be the final resort. We should form a “steering” committee among Mini bond holders to discuss with the Trustee, MAS, FIDReC and other relevant parties. Proactive effort to maximise recovery must the top priority.
Reply
Do understand the following announcements in HK properly before bashing Singapore MAS:
1. HK Banks to buy-back the Mini-bonds at MARKET VALUE. What do you think the market value would be? Definitely not 100%. I think probably 10-20%.
2. DBS HK to refund investors if mis-selling can be PROVED. How to prove? You have signed documents saying that you understood the risks of the product. You may have verbal evidence, but how are you going to prove it? Unless the RM or PFC had given you a letter issued by DBS backing all the verbal committments.
Cheap talk in Hong Kong only, in my opinion.
Reply
1. I still find HK’s approach beneficial to retail investors
Yes, market value may be 10%-20%, but at least the risk of further
losses arising from deteriorating underlying securities is thereafter
passed to the distributors.
Also, if the distributors hold the notes till maturity, and if the
redemption value is say, 60%, then HK method is that the distributors
are supposed return the difference back to the investors.
2. More important of all, the distributors are in a better position to stop
the Trustees from liquidating the underlying securities just simply
because the swap counterparty (Lehman) is now bankrupt.
It is better not to replace the swap counterparty, but just let the
underlying securities run till maturities. But how to do this legally since
the original arrangements did not cater to such scenarios? Perhaps
the distributors can jointly apply to the Court for an Order to do so.
Gleaning all the info that appears to be coming out of the woodwork, the question I ask is,why should the MAS not act on behalf of the countries citizens who have suffered this deplorable state of affairs when they as regulators should have smelled a rat that these “synthetic” mini bonds are not the traditional bonds normally traded ? Why should the Government not step in like the US and UK and buy back these bonds and allow it to run its full course so that its citizens whose interest they are looking after do not suffer this terrible fate of loosing their nest egg unlike all the fat cats at the top who can afford to.
A fellow victim
ReplyWhy?
I think it is because after appointing the independent committee paid by the banks, they should not be saying anything that will influence the investigation of this committee.
Ok initially but politically it is suicidal as the Hong Kong govt handling inevitabily is making ours a laughing stock. And the heartlanders are losing their patience as we do not understand why the govt is so inactive until we have to organize a Hong Lim petition.
Mind my words, MD of MAS will be stepping down soon due to health reasons or personal reasons. The deal will sealed once a death occurred before the resolution of the lost of life saving.
Another question: Why independent committee take so long to investigate? Have the 3 independent people interviewed the victims? All the information are so well publicized and we even have the feedback from RM or FA at Mr. Tan Kian Lian’s blog.
Regards,
Reply
Hi Kenneth,
I am unsure if the independent people are really independent.
I am unsure why our govt has yet to step in, maybe stepping in is opening a can of worms.
With confirmation that we are in a recession, more people may be made bankrupt, the suicide rate may even goes up.
I am lost in this big jungle.
DBS, Hong Kong, has raise the expectation by annoucing that they will pay back in full if customer can prove that they were misled during the sales process. What is left is for DBS Sgp to confirm. If it is true, then they cannot say deal only applys in Hong Kong and not Singapore. This will make us sound like 2nd class citizen talking to a Singaporean/govt owned company.
I believed the statement made in Hong Kong must already have approval from Sgp HQ.
So, Singaporeans will demand for same treatment from DBS in Sgp. With 3 digits profit every quarterly, it is not a big dent to their profitability. But the problem is whether the rest of the FIs will follow suit. Remember, you have Maybank [Malaysia], HSBC, Citibank etc.
Mine is Phillip Securities and I don’t really know what they are thinking of while they have not contacted me since I complaint.
Regards,
Reply
Lioninvestor,
My RM recommended Minibond series 3 to me as “Investment grade bonds, Risk level 1-3” It was written in black and white.
What is Risk level 1-3?
Can I consider investment grade bonds risk level 1-3 as low risk investment?
Appreciate if you could give me some light.
Thanks
Reply
Puzzle,
Risk level 1-3 is probably some risk classification system used by the financial institutional you bought the Minibond from.
He probably meant it as a lower risk product.
Reply
Like yourself My wife and I had also indicated that our appetite for risk on a level of 1 to 10 was 1 to 3.We were told that this was a safe haven to park our savings as we were riding on the shoulders of Giants – I still have the ABN AMBRO flier that states this.
Should the institutions not recommend potential investors to seek independent advise – as advise from their sales executives would be biased as they stood to earn commissions that they even offered to share with us if we bought in !!! I think that is despicable !!
Albert Lim.
Reply
good news,
Lehman Brothers Special Financingis under chapter 11
regards
Reply
can somebody tell m why gd news at so good news abt “Lehman Brothers Special Financingis under chapter 11” ?
ReplyWith this credit event, the thrustee can proceed the early redemption of all minibonds (vs 2 minibonds currently).
Reply
Hi Evanovich
This is not really good news When they redemp the mini bonds the proceeds may be very little. Investors may get back only a fraction of what they have invested. This is what investors are fighting about
ReplyThe trustee has to defend noteholders’ rights. You (noteholders’ group or monetary autority) must inform the trustee to suspend the notification of the credit event to the issuer Minibond asap.
Reply
I read somewhere that HSBC Trustee must get at least 20% approval by noteholders before they can liquidate the assets. So, if noteholders do not sign the approval form, then nothing bad will happen.
Reply
If according to HSBC, if there is a white knight, then probably the notes will continue until maturity, but white knight will not appear in this market turmoil, best hope if the FIs who sold us these toxin, combining S’pore and HK, evan Japan take up the Lehmen’s role. Worse come to worse, we forgo the dividens to finace the admistrative cost for these FIs. Hopefully some one will push this idea through.
Reply
Did you guys read what our Finance Minister just said over the weekend?
How come he is saying Lehman Bonds was A1 bonds? I thought it is very clear that it is NOT a bond at all?
See details at the link below:
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_286471.html
ReplyMinibond!
Imagine even our Fin. Minister still call it a “bond” after so much publicity, how can an ordinary investor not be misled?
Touche ! Even I a lay man since the Lehman Fiasco hit the headlines learnt that this is not a bond in the true sense – but a”synthetic”bond and a high risk one – alas I am but a lay person who is only being the wiser after the horse has bolted!!
Reply
MAS “APPORVED” product doesn’t mean anything.
Since the regulator cannot even confirm the legality of a product it imply that anyone could find themselves buying an illegal product despite it mean registered with MAS.
As it can be seen this is both unfair to consumers and financial advisers.
Reply
The most important thing to know now is to establish
the valuation of the underlying securities. Is it also marketable ?
Is it better to keep the securities until maturity because all the underlying synthetic notes have a face value and a due date for redemptions
Second we need to know the faces behind Mini Bond Ltd.
There is no name and designation, just a signature when
I receive the notification from the company dated 15 August 08.
This notification which most of us receive in mid Sept 08, concern the migration of existing securities to new securities .Nobody at the trustee office could explain the rationale for the migration.
Third, as a group , we must negotiate with all the financial institutions and banks selling these products for some compensation. There is no use complaining to Mas to take action against the FIs. Will the fines be payable to the complainants, if there is a case of misrepresentation ? What Mas should do is to get the FIs to jointly cough out their commission and pay a nominal compensations so that the loss to individual investors is alleviated.
ReplyThings begin to look more complicated as more “independent” people and parties get involved.
I am unsure what would be the outcome. Would MAS or the relevant authority deal with each investor (ie us)?
I think unlikely for MAS to deal with us directly. They have asked us to talk to HSBC trustees, FIs and FIDReC. FIDReC ask me to talk to FIs first. if not satisfy, then complain to FIDReC to mediate. If still not happy, then go to court.
I can only see the solution is a class suit against the banks for mis-selling a high risk products as a low risk product through their FAs. The rest are just procedures, ventilating valve for us to vent our angers.
Regards,
Reply
Lehman-Issued Debts Find Some Buyers
http://www.fundsupermart.com/main/research/viewSector.tpl?articleNo=11035
ReplyReading the BT and My papers, I can only conclude by looking at the outcome of DBS High Notes 5, Lehman Minibonds [5 & 6] and Merrill Lynch Jubilee Series 3 LinkEarner Notes will give us an indication how Lehman series of Notes will end up.
It will be as straight forward as HSBC trustees and KPMG recalculate the underlying securities and close case. As HSBC trustees said, they will only take actions to revalue once 15 days grace period is over.
Can Mr Lo ask MAS whether what other options MAS is considering? Is liquidation the only solution and nothing else?
On mis-sell, how can MAS help since FAs knowingly, for whatever reasons, mismatch the customers’ risk appetite with a high risk product and sold it to them. Thus resulting in hugh losses of life saving of sgp investors.
Just my thoughts.
Reply
Is there anything that can be done? Lehman must have known for some time the problem they were in and yet continue to market new money raising products. No one will trust the banks on investments anymore. Put your money with them and lose all. Safer to put money in your house. What a convenient way for a bank to take your money. Market the products, call them safe because they are linked to rock solid institutions, then just declare a credit event. I also learnt from this that FDs are insured for 20k only and this is not advised to customers who put in more than the amount. Will MAS provide us with legal help to sue the banks for misleading their customers?
ReplyI bet they will not be there. To have the MD of MAS there will be lucky enough. But this is a great effort by the 17 people. Wish you guys all the best.
Just got a reply from my MP’s PRM [public Relation Mgr]. The answer is he redirect my email to MAS…..
Regards,
Reply
Just to update you all that 17 of us have signed a petition to Prime Minister, copied to Goh Chok Tong, Chairman MAS (see today’s ST – front page. There’s a small write-up).
Mr Lo, a retiree has managed to arrange a meeting with MAS on Mon, 6 Oct Mon @6pm at MAS Building, but he would like to have a prior discussion at 5pm. Seven can go for this meeting. If you want to go, please call Mr Lo at 68467885.
Don’t know if these measures will help but there’s no use just complaining, which is what I see most people doing. Take whatever measures necessary to make sure your complaints are heard by the highest authority.
Reply
I wonder when filing the complaints, original “documents” like risk profile sheet, risk survey sheet etc should be attached.
My opinion is that photostated copy will do..
I’m afraid that if original “documents” are sent.. It maybe “misplaced”, “lost” and are then gone.
MAS’s Opera platform showing structured products’ prospectus/pricing documents:
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/LeftFrame?OpenFrameset&LayerVal=D&Frame=RightPane&SRC=/opera/sdrprosp.nsf/vewPublicLatestDebuntures?OpenView
Note the disclaimer on the website:
The lodgment with or registration by MAS of an offer document does not imply that all relevant legal and regulatory requirements have been complied with. MAS does not take any responsibility for the contents of any offer document nor recommend or endorse any offer made therein. Prospectuses and profile statements which have been lodged with but have not been registered by MAS are only for comments by the public and should not be used for making any investment decision. Securities cannot be offered and applications for securities cannot be accepted unless the prospectus or profile statement is registered by the Authority and other requirements provided in the Securities and Futures Act 2001 have been complied with.
I think MAS only provide a platform/system for the products.
The rest is “buyer beware” and “invest at your own risk”.
I think all disclaimers are in place to cover everything for all relevant institutions.
Only case maybe whether the sales process has misrepresentation.
8. Heng Swee Keat, Managing Director, MAS, said, “We understand the high level of anxiety that investors in some structured products are feeling. Our immediate focus is on helping investors to get a quick and fair resolution of their complaints. We are committed to seeing that every case is properly looked into. Where there are breaches of regulations by the financial institutions, we will take action. While our current regulatory regime is basically sound, MAS will undertake a review of the sale of certain types of financial products. To help consumers assess their investment options, MoneySense will be stepping up its work on financial education.”
ReplyHi all,
Today Channel News Asia reported that Hong Kong Govt is meeting with banks on the mis-selling of Lehman bonds.
So impressed with the speed and dedication the Hong Kong Govt, the Democratic Party and the Consumer Council listening and supporting the grievances from the heartlanders.
regards,
Reply
The banks in Hong Kong already clarified this evening – no banks have reached any agreement with any clients. It is also not their intention to compromise with any clients on “mini-bond” issue. It is only a rumor.
ReplyGovt weighs in on mis-selling
HK side seems brighter…
http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_285044.html
I think all the financial instituitions conduct some kind of “Fact Find” or “Financial Needs Analysis” and this is documented and a copy return to investor, when you purchase financial products
I suggest the affected investors to look for it and attached it with your official complaint.
My mother-in-law is one of the minibond victims. Her version of “Fact Find” document, filled up by the agent and asigned by her, indicated her risk profile as “Conservative”. It is indicated minibonds as “Investment Grade Bonds”.
If this is not mis-selling, then what is it?
Reply
Strictly speaking minibonds are investment grade. If you look at the credit ratings (underlying and Lehman) … none of them is below ‘BB’ (the cut-off for investment grade status). That means the bankers don’t know Lehman’s true financial standing because it is rated ‘A’ by the ratings agencies. It’s either Lehman is hiding thier true financial standing, or the ratings agencies models are broken. Take note that the big banks also took a large losses from Lehman’s demise as they have transactions with them. So no one outside lehman is actually aware that Lehman is about to go bust until it was too late.
As with the selling tactics, I think more enforcement should be made so that these products are only sold to the proper individuals (or not even sold at all).
Replytrue they are investment-grade, but they are not bonds, but credit derivatives, hence the misrepresentation.
Investment-grade bond = low-risk e.g. bonds issued by General Electric
Investment-grade derivatives = high-risk
The standard in Hong Kong on Lehman Minibond update on 2 Oct 08.
Banks in `secret’ deals to avoid Lehman suits
Bonnie Chen and Alfred Liu
Thursday, October 02, 2008
Three banks are secretly negotiating with angry investors to prevent being taken to court over the distribution of Lehman Brothers minibonds, according to sources.
They are among 21 banks and financial institutions with exposure to Lehman Brothers investment products but which are said to have only a few investors and prefer a settlement rather than a court case.
According to the source, the banks involved are Dah Sing Bank, DBS Bank (Hong Kong) and Mevas Bank, which is part of the Dah Sing Banking Group (2356).
Democratic Party vice chairman Sin Chung-kai confirmed yesterday one minibond investor had asked the party to cancel his complaint as he had accepted a settlement offered by Mevas Bank.
“The man has not given us details but said the terms were acceptable,” Sin said.
But two other Mevas customers, identified as Chu and Chan, said they had not been contacted by the bank as yet.
Dah Sing Banking Group declined to comment, saying its staff were on holiday.
The Democratic Party has received 2,300 complaints on Lehman Brothers-related investment products involving more than HK$1.1 billion.
“I believe the small and medium-sized banks have fewer cases to handle so they are prepared to reach a settlement,” the party’s newly elected legislator, Kam Nai-wai, said.
Chan Kam-lam of the Democratic Alliance for the Betterment and Progress of Hong Kong, which has received 500 complaints, said he had not heard of any bank reaching a settlement with clients.
The Hong Kong Monetary Authority, which is investigating marketing practices concerning the products, said it would welcome moves initiated by the banks. “But we will continue the investigation even if the banks have reached a settlement with clients,” an HKMA spokesman said. “So far no bank has informed us about any settlement.”
The Securities and Futures Commission said it believed Lehman Brothers had arranged HK$12.7 billion worth of structured products.
The Democratic Party has said it will help investors sue the banks while the Consumer Council has promised a thorough probe and the use of its legal fund to help those found to have been misled
Regards,
ReplySome ppl felt that investors were “greedy” and went for the 5% interest-producing Minibond product. I beg to differ.
CPF-OA gives 2.5 % risk-free. CPF-SA/RA gives 4 % risk-free. For retirees, we can withdraw money from CPF annually, after setting aside the Minimum Sum.
By buying Minibond we are getting only 1% more than CPF-SA/RA, not even enough to cover inflation. Moreover our capital cannot be withdrawn for 5.75 yrs, and we are exposed to credit risks of the REs. Does this sound like a “greedy” investor?
ReplyYou have good logic… but not accurate and dangerous. Do not assume that all low rates are risk free. Because as we have learned in this fiasco, there are high risk investments with low rate of return.
The correct way of investing is to assess the risks of the investment first then look if the rate is worth it.
To fix the whole system, not only should there be more regulation, more investor eductaion is also necessary.
ReplyIt’s more like a case of a “misinformed” investor than a “greedy” investor.
Reply
I guess we need some sort of political tzunami before our Govt wakes up to our plight !!
ReplyAnother piece of news from The Standard in Hongkong. We must make our view known on 11 Oct 08 at Hong Lim. Cannot give up as HongKong is making very good progress. As of Sgp, still waiting….Hope govt will come out with a favourable statement soon.
=========================================
Watchdog to back losers in Lehman minibond chase
Tuesday, September 30, 2008
The Consumer Council may help seek litigation for investors who were allegedly duped into buying Lehman Brothers minibonds.
Civil Party lawmakers Audrey Eu Yuet-mee and Alan Leong Kah-kit, assisted more than 20 investors lodge complaints yesterday against banks and investment agents, including a demand for compensation.
The council’s chief executive, Connie Lau Yin- hing, said it was most concerned about the case. If the dispute could not be settled by mediation, she said, the council may use its Consumer Legal Action Fund to help investors.
Agents allegedly misled investors into buying minibonds from the failed investment bank, assuring them there was little or no risk at all.
A retired couple, aged 75 and 68, claimed they switched their HK$7.2 million retirement fund from fixed deposit to Lehman Brothers minibonds. They said a bank staffer told them it would be very safe.
They are now demanding the bank pay back the investment.
The council has received 868 complaints on Lehman Brothers-related investment products involving HK$617 million.
NICKKITA LAU
============================================
read this website and note the date of the article, this was back in sept 2007
http://jsb-riip.blogspot.com/2007/09/singapore-bank-has-4-billion-in-sub.html
what i dont understand is why were the banks so desperate and to still think that CDOs were investment quality when it was only one month before that that the CDO minefield blew up all over the world or was it just a commercial decision to sell what the banks have already underwritten….
ReplyIf any bank already know the CDO is toxic & going to explode, and then still package it as “safe instruments” so as to pass the risks to the retail, then it’s a big ethical issue that warrant detailed investigations !!
ReplyEasy job for MAS. Investigation by independent parties and if guilty, MAS fine the FIs. So what is going to happen to the investors who have shifted FD to this minibond bomb? Is FIDRC or CASE helping? Only 20 cases of complaints in HK, the Consumer Council started to consider action on the banks.
Maybe their 2 sundays of protest lead by Democratic party helps to push for action. Hope our 11 Oct petition helps.
Regards,
ReplyI am one of those affected. I thought Singapore banks are safe. My purpose of going to the bank was to save and not to gamble. The risks were not explained, the prospectus was not shown and only the brochure was shown highlighting the good points – a 4% pa interest for minibond series 1 taken from ABN Amro in 2006. With the low interest rate offered on fd’s I also signed for minibond series 5 with Maybank in 2007. These are my life savings and I am deeply hurt by what SM said.
I had been deceived by the relationship managers at the banks who insisted that the minibonds were safe.
I hope that MAS and the FIs would be compassionate and look into our plight and offer some compensation to offset our losses.
Hi,Peter Wee
Maybe i have a good news for you
http://realtime.zaobao.com/2008/10/081001_25.shtml
Thank You Mr Lew. There was another article but no paper has followed up:
http://finance.thestandard.com.hk/en/business_news_view.asp?aid=72231
Maybe you can copy the address to your internet explorer address
ReplyI believed MAS and the govt are tracking the situation and seems like Hong Kong is making good progress. How I wish CASE or FIDRC can be more independent and react to the current situtation in Sgp.
Let’s hope for some miracle while the Hong Kong Miracle is taking shape.
Regards,
ReplyHi Foolish investor,
At “Minibond victims turn to MAS” ENGEL wrote that he bought bulk of his bonds from GYC assume it is a FI. He went to see the GYC MD and they tai-chi to OCBC. Sorry, I don’t know what it stands for but will ask ENGEL.
See you on 11 Oct at Hong Lim between 5 to 7 pm for Mr Tan petition to govt.
I really, really hope Hong Kong does something different for their affected investors …..
Reply
Local FI must have all been benifited by selling the toxic Mini-bonds, so many series. MAS in the 1st place allowed selling of such toxic product, why only to public rather than FIs? S’pore + HK + Taiwan investors are are paying for those Wall St gold collar FIs via such pre-packaged “Low Risk” “Bond” in the end. Helpless noteholders are lost. It is the time when Gov should stand out to voice out for people rather than for FI only.
ReplyI can only think of two possibilities:
i) Govt & MAS is doing something behind the scene but not able to speak out as the solution is not in place or chances of succeeding is very low i.e. all investments are contractual and no one want to take over this bad stuff especially the financial is crashing in USA.
or ii) Really don’t know what to do so just keep quiet. Since FIs started it, let them follow law by law ie. Investors complain to your FI [wait for 14 days for reply], then if not satisfied, wait for another 14 days before complaining to FDIRC. Get a queue no. and wait for 6-8 weeks before FDIRC talk to you.
Of course you have to put up to HSBC trustees saying cannot do anything unless Minibond Pte default interest payment +15 days of grace period. Also has to put of FIs like GYC tai-chi saying they are not the correct FIs. Phillip Capital has confirmed they are consolidating all complaints. Understand they only took series 1 to 3.
Even though in my mind I have write off my investment but I cannot stop thinking about it everyday. I think it will be worst when the day it is confirm I get back nothing. I can also imagine those with >$100,000 feeling. It will be worst then mine and it is going to hit very, very hard. Especially the old folks –> huge lost, old and not working, cannot start saving all over again, guilty for not being “clever” and lost a hugh chunk of family’s saving.
Better not think so far, take it step by step. At least this site helps to cool off and sure self-destruct as mine will only trigger HSBC on 02 Dec 08.
Regards,
ReplyKenneth
(1) Just curious, what is “GYC”?
(2) Even if I cannot recover part of the losses from the FI, I earnestly
hope that something is done to enhance the supervision. I’ll never
touch structured products for the rest of my life. But I cannot bear to
see that nothing is changed and future customers keep being misled.
(3) From what I observe, such products are almost “unregulated”!
I was re-looking at the Pricing Stt of Minibond, & realized that there’s a
paragraph at cover page stating:
A copy of this pricing Statement has been lodged with and registered
by the Monetary Authority of Singapore (the “Authority”) together with
the Base Prospectus…..Registration…with the Authority does not imply
that the Securities and Futures Act, or any other legal or regulatory
requirements, have been complied with…
Maybe that’s why the doc have been intentionally worded so that most
readers cannot comprehend…
The remark by the Government from SM Goh is certainly unsensitive at a time like this, and very untypical of Government officials. Wonder if it reflects the Government’s attitude too? While investment are personal decisions, there are many aspects of life in Singapore in which the Government plays a part. So, why is it that in this case, the Government has taken such a hands-off and unhelpful attitude? Beats me.
ReplyActually, I invested these products using my so call “safty money” for my kids education or in case there is something happen to me, didn’t know that it will burn up all my hard earn money as I was not told that the risk was so high. I meaan if a product such as China milk its harmful, the authority should take it off the shelves, let alone sell it to laymen like us. We won’t be able to appreciate or assess the risk without proper advise form the experts. Hope this meesage get to the authority.
Reply
I expected someone from Government financial body to start leading a team to look into this issue earnestly. The implication is deep, escalating and hitting more new structured products.
I respect our Health minister when handling intricate issues like SAR, medical cost, organ donation etc. At least he requested for time to firm up investigation and recommendation. Affected citizens know that authority is working for solution.
But now, we don’t know what our government financial body is thinking or doing? Let us know what are the options you are considering. Many people is panicking. Especially pitiful to see solemn expression of those retiree…
Hi,
I retain a copy of the flyer (for Minibond Series 5 & 6) given by HLF’s RM. An extract of the flyer is as follows :
1. (left portion of flyer):
Credit-linked to some of the world’s largest financial institutions :
Citigroup; DBS Bank; Goldman Sachs;HSBC; Merrill Lynch; Std Chartered.
2. ( center portion ):
Invest with confidence
With our Minibond Series 5 & 6 credit-linked to six major financial institutions. you can enjoy the returns you derserve with peace of mind.
3. ( right portion )
Redemption : 100% of principle amount ( unless a Credit Event occurs to any of the Reference Entities or there is early redemption other than upon an exercise of the early redemption option by the Issuer )
Credit Events : A default or similar event happening to any of the Reference Entities, such events being “Bankcruptcy”,”Failure to Pay” or “Restructuring”(detailed definitions are set out in the Pricing Statement ).
Reference Entities : Citigroup Inc ( AA/Aa1),
DBS Bank Ltd ( AA-/Aa2) ,
The GoldmanSachs Group, Inc ( AA-/Aa3),
HSBC Bank PLC ( AA/Aa1),
Merrill Lynch & Co., Inc ( AA-/Aa3),
Standard Chartered Bank ( A+/A2 )
If I lose money due a Credit Event not mentioned by the RM and not stated explicitely in the flyer, does this constitute to misrepresentation by the FI ?
Please advise.
ReplyChee
(1) I’m sure there are some fine prints in the same brochure that asks
you to read these in entirety with the Base Prospectus and Pricing
Statement, and disclaim the liability of HLF.
In addition, under the right portion, under “Security for the Notes”,
it reads:
AA-rated US dollar denominated portfolio credit-linked securities…
Note the use of “credit-linked” everywhere…mislead readers to think
that the monies will be invested in bonds of the RE…whilst in actual
fact (only if you read the Pricing Stt carefully), then you’ll know
“credit-linked securities” = CDO
(2) Suggest you write to HFL and complain, copy to MAS so that they have
better ideas of why the brochure’s misleading…and then hope that Mr.
Tan’s efforts will convince the authorities to investigate and act.
Thanks ,
I have signed Mr. Tan’s petition (to S’pore Gov ), complained to HFL, copy to MAS ( attention chairman Mr. Goh Chok Tong ) and FIDReC.
Copy of flyer is attached to the complaint etters.
High reward high risk?
The fact is 5% pa return for 5-3/4 years is not high risk. It is only 3% above the inflation of 2% during that time. When inflation hit 6.5% recently, the return is not even worth investing!
So, it is not high return but we got con into believing low risk.
I guess SM message is to test the ground for reaction. If mute reaction, then means not serious. Thus 12 Oct 08 gathering and petition to government is important. Mr Tan was a highly regarded CEO in NTUC and i believed the labour MPs knows what is going on.
My feel is the MAS or Govt need time to understand the depth of the situation. Facts like how many Singaporeans involved, total $ amount etc are information they should already have. What is not complete is information from Lehman Brothers e.g. recalculation value. If Lehman Brothers go law by law and only work on those default recently, there is nothing MAS can do. If MAS is looking for other alternatives and has not firm up any, how to tell anyone as raising false hope will be even worst. When Govt says something, usually it will turn out thus their words is like gold. e.g. More ERP.
Again this is just my opinion. Without any concrete action for success, coming out to say something will only make it worst.
There again, there are consequences. If in the event it is confirm 0 return for Minibond % & 6, any “nothing-to-lose” action by a person who lost everything will make the govt looks very very bad especially when the HK govt can come out with a solution which is acceptable to their hurt investors.
Just my thoughts. Let’s go step by step and not get too work up. Provide each other with updated information and support any action to get govt or MAS attention.
Reply
Exactly, how is 5% even considered high risk? Seems like the whole risk-reward trade off is in haywire here. 5% return for possibly a 100% capital loss? I can’t help but to assume that CPFSA is pretty risky too.
ReplyOh and good job hosting this site lioninvestor. We must never let this issue die down or it will just be forgotten. And I highly suspect this is what the FIs and maybe even MAS want. People forget way too easily.
Replytotally agree with you.
CPFSA is consider high risk because we might not live till the age to redraw our $$$ from CPFSA and any time before reaching that age, this $$$ is untouchable even for emergency.
I agree, Kenneth. People need to turn out for the 12th Oct meeting to show the scale of the problem, and the number of people involved in this farcical handling of the situation by the FIs and MAS.
Reply
a bit like marie antoinette saying “let them eat cake”
a bit like saying that devaraj of nkf was taking peanuts
Reply
The Hong Kong Monetary Authority says it will investigate whether banks used improper tactics to market Lehman Brothers mini-bonds, as angry bond holders demand answers about their investments. That should be the way. How about our MAS…. is it going to investigate whether banks used proper tactics to market LB minibond…. don’t keep on put the blame on investor for “greedy”…. this is a matter of misrepresentation by the FI financial adviser…. now is not only involved one bank… or affected one investor…. a group of investors feel being conned in the same way… that is problem with the FIs marketing tactics on this products…
Reply
Is there no way for another party to take over Lehman Bro’s place? Is it possible to sue the creators of this “bond” in an international lawsuit?
Replymee too. very disappointed SM can make such a statement because his life savings is not affected by the entired issue….
ReplyBased on the FAQs provided by Lehman Bros. the early redemption of the securities will entail a payment to or from the swap counterparty i.e LBHI.
Could the trustee check out whether the payment is due to or forthcoming from LBHI?
As this saga is expected to last over a long period, the trustee bank will definitely pass the costs of administration , legal fees,
newspaper advertisements, etc to the noteholders.
Could the trustee bank and banks selling the structured products assist in bearing the costs of all fees, which will snowballed if resolution of this affair take a long time.
Reply
i was shock to see SM making such a statement in http://www.todayonline.com/articles/278589.asp.
ReplyApparently, in meetings MAS has held with some individual investors, they have claimed to be still unaware of the size of the problem in Singapore (i.e. how many investors and how much $ is involved). This what I think
1. How can they say they do not know abt extent of investments? They are MAS – they can compel the FIs to give them this info.
2. They can convene a forum of all investors. Entry will be provided upon prior registration e.g. show your investments docs. That way, only involved parties are invited.
Their actions so far are simply pathetic.
Reply
It has been suggested that Lehman Brothers deliberately suppressed the buy-back price to discourage redemption, hence it is possible the underlying securities are worth more than that.
(Apparently this is a standard practice for structured products.)
ReplyThat is correct. Just that we don’t know how badly the events of the past 2 weeks would have affected the underlying.
Reply