Many people have expressed their dispair or loss of hope at the way things are moving here in Singapore in resolving the Lehman Minibond issue.
Letters to financial institutions have been received with non-committal replies.
SM Goh Chok Tong, chairman of MAS, also made a statement (while he was in China) which on the surface made the situation looked even more hopeless for investors.
So, is there hope for all the Minibond investors?
First of all, we must understand that no financial institution is going to hastily accept liability or admit any wrongdoing (whether there is or not) at this point in time. Doing so will only set a precedent and might open the floodgates for them. They will stall for time and that is to be expected.
Also, time is needed for investigations to take place and everyone is probably cautious to see what further developments might unfold before committing to anything.
At this juncture, what you can do (after you have filed your complaint) is to take all their replies and document them carefully.
My personal opinion is that there has to be a clear directive or even action taken by the authorities before things will really start moving.
For that to happen, the people at the top has to be fully aware of what is happening. Judging from the comments made by SM Goh, this does not appear to be the case.
That is why the letters to him and your MP is important – to highlight to them the severity and true nature of the problem. The gathering at Hong Lim Park organised by Tan Kin Lian will ensure that this issue gets mass publicity – and then we can see what happens after that.
It is no longer a case of an individual investment decision gone wrong. More of a case of a systematic problem which needs to be corrected and rectified. The risk of the product had been wrongly defined at the initial stage with the product being sold to the wrong group of people.
Stanley Jeremiah, a lawyer who specialises in financial services and products, has spoken out strongly in favour of retail investors.
Unfortunately, this is not a simple problem with a clear solution in sight. It will take time to find a solution that is acceptable or at least partially acceptable to all parties.
Also, this is not just a problem occuring in Singapore alone.
Bloomberg has reported that Lehman Brothers were selling similar products globally even up to a month before they went bankrupt.
A French bank has stated that their decision to sell Minibond to Taiwanese investors was a mistake as the market was not really ready for it. Thus, they are willing to buy them back from investors. The Tawainese Senator/authorities have also urged their local banks to do the same.
Hong Kong’s Financial Services and the Treasury Bureau said in a statement Sunday that financial regulators would quickly investigate the allegations of misleading salesmanship. The Hong Kong Monetary Authority has also setup their own hotline to take complaints from the public.
Sources have mentioned that the losses to some of these minibonds might not be as great as first estimated. Recall that Lehman Brothers had quoted the following prices for the Minibond in the buyback market the week before they gone bust.
The other countries have acted. Let us see what happens in Singapore next.