Martin Lee @ Sg
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MAS Sets Out Resolution Process and Timeline for Investors of Structured Products

MAS just released a statement providing the numbers of people affected by Lehman Minibonds, Jubilee Series 3 and DBS High Notes 5. The investment amount of each product was also given.

More importantly, it gave out specific timelines to financial institutions who have received complaints.

For holders of Minibond series 5 and 6, you might also want to note that HSBC Trust does not anticipate commencing the sale of the underlying securities within the next two weeks. While no one has approached them on taking over the swap counterparty role yet, a few financial institutions (FIs) are assessing the commercial viability of taking on this.

The entire press release can be read below:

MAS sets out resolution process and timeline

On another note, David Gerald, head of the Securities Investors Association of Singapore (SIAS), has mentioned that complex investments are not suitable for retirees. His statement can be found in this article in the Business Times (accessible only after 6 pm).

There was also an article on the liquidation of the Jubilee Series 3 LinkEarner Notes inside the same issue of the Business Times.

Separately in Taiwan, the government and two private agencies have started accepting registration from Lehman Minibond victims seeking to recover their capital.

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27 comments
5D says 10 years ago

In case any wonder why MiniBond is sold big time in HK, Singapore and Taiwan but not US/UK:

http://hk.ibtimes.com/articles/20081013/lehman-mini-bonds.htm

The interesting question is: what about Japan/Korea?

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ryan says 10 years ago

Hi,

Ppl pls dun lose faith. The only way forward is to fight for our right. The intention of MAS and FIs could be to drag this matter and eventually sweep it under the carpet. We should never let them do that. Collective action is needed, do what we can to save ourself.

Ryan

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    Lulu says 10 years ago

    How to fight? FIs are giants and they cannot fail so they have to have the necessary backing. Though there is a process, all know it to be a futile process that does not address the root cause. Rather, we see the wall that disclaims liability inconsistent with the template reply of taking responsibility.

    Thus the fate seems terminal. As many have received, it can be expected that the one-pg letter will be issued to pronounce the judgement on each complainant “after due process”. A lot of noise has been made but the giants remain strong giants.

    They say you cam go to Fidrac and then to the courts. Why put the victims to more trouble (and money)? The FIs caused the problem so they should solve it themselves and not pass on to others at more cost and expense on victims.

    Lulu

    Reply
madman says 10 years ago

I had lost close to a million on minibonds. My entire savings of 35 years totally wiped out. I am 59 this year. I don’t have another 35 years. How do i survive?

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    lioninvestor says 10 years ago

    Hi madman,

    have you filed your complaint yet?

    Reply
Lily says 10 years ago

i was told to read this scale of L. Bros commitment Globally.
Scary ler.
http://malaysiafinance.blogspot.com/2008/10/possibly-my-most-important-posting.html

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Lily says 10 years ago

The end of my job. cash rich investors will and never trust any trusts and strutured products from any financial institutions for the next 20 years.
The entire system is breaking down and blogs had make record, comments and pass on to their next generation…
I am sure bankers, especially the creative one back by regulators and all the promises by branded banks are not wash down with faith and trusts.
My investors all avoiding me.
What Jobs should I do now?

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    Desperate says 10 years ago

    I am an investor who is burnt by the minibond. However I do agreed with your concern. Nobody is going to touch any structured products at least for this generation, and will review the prospectus with magnifying glass for a statement that say “will lost all of your investment”. I suggest you get your colleagues to put up a petition to urge MAS to revamp the whole system to ban those products which may result in lost of all the investment.

    Reply
Desperate says 10 years ago

Looks Like MAS is putting the pressure on FI now. Latest MAS statement.

http://www.businesstimes.com.sg/mnt/html/pdf/MAS_Oct17.pdf

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sianz says 10 years ago

hk banks to refund mini bonds investors

Click here for story

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rx says 10 years ago

Hi all,

Look at this news.

http://www.channelnewsasia.com/stories/singaporelocalnews/view/383331/1/.html

Does it mean minibonds are included?

Regards,
RX

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    lioninvestor says 10 years ago

    Of course not. These cover normal deposits only

    Reply
VSL says 10 years ago

NChong,

HSBC did not mention anything about the chances of securing a counterparty. All she said was that some parties are looking thru the documents before making a decision. She did not hint whether the party is local or foreign.

She mentioned that eventhough Minibond 5/6 were confirmed defaulted about a week ago (after their grace period was up), no action has been taken to liquidate the assets. So, HSBC is trying to NOT liquidate the assets. Perhaps she is just trying to allay my fears.

She also mentioned that HSBC can only hold on to the assets for a certain period of time, beyond which HSBC would have to let go of them. She did not mention her max holding period.

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Frustrated says 10 years ago

The complaint handling process is a joke. Especially if you bought your Minibomb from securities firm/brokerage and not from a bank.

Yesterday, when we met up with the “O” securities firm [brokerage], the head of compliant told us that its firm is only a “ORDER EXECUTOR” and there is no need to advise on the suitability of the products to its customer. It will take order even if the application and cheque are received through post. It execute order just like when you place an order to buy and to sell a share in the SGX.

She said the firm is only one of the distributors for Minibond and its company policies forbid its staff [remisers/customer service officer] to give advice to its customers. The handling process is to ascertain if any of its staff has breach the company policies by advising its customers during the complaint handling interview.

She said as a brokerage house, it does not give advice to its customers. For Minibond and other alternative investment products, the firm sales channels include organize seminars for its customer and invites product providers to explain their products and answer its customer questions. As distributor, It provides brochures, prospectus and application form at these seminars and at the sales counter. If the customer want to buy minibond, its customer service personnel is there to help client to fill up the application correctly and “execute” the trade.

If customer comes to the firm to subscribe for Minibond when referred by Financial Advisers, the latter are acting in its capacity as “Introducer” and not as the customers’
‘ “financial advisers”. As such these FAs do not need to fill up “know your client” questionaire to determine the suitability of the products to the customers.

In another words, neither the brokerage nor the Financial Advisory firms, has the duties to advise its customers on these financial instruments. Meaning there can never by any MiS-Selling in these process. The customers are their own Financial Advisers by reading the brochure, prospectus, pricing document etc. The responsibilties lies with the customers. Mis-selling can only take place if you can show prove that its CS advise you on the product.

The impression given is that the Customer Handling Process is just an exercise to satisfy MAS directive to set up a customer complaint process and allows the appointed independent party to certified that the firm has a good process in handling complaints. It ultimate stance is that it does not owned any responsibility to its customers because they just help customers to execute their order.

When a hypothetical question is asked “would you sell Minibond to a 80 year old lady, speak only dialect, this minibond?” The answer is “Yes” we are legally allow to do so.

It would seems that these FIs are extremely CREATIVE in finding loopholes in circumventing the Financial Adviser Acts. The purpose of the acts is to protect the consumers against fraudulent selling of financial instruments and in this case “O” brokerage has indeed found the answer. Noboby is responsible for advising the customers. One party is an “Order Executor” the other partner is “Introducer” and not in the capacity as Financial Adviser. I am not saying there is conspiracy to defraud the public, but certainly a loophole is found is this is legally allow!

The terms of reference of the Independent party is to assess the adequacy of the Complaint Handling process of the firm. I am sure the process will score with “flying colors”! What so difficult in creating an adminstrative process for review just for show?

As long as the loopholes exist to circumvent the FAA, the whole exercise of customer complaint at this FIs is a joke. Just a public relation exercise for these FIs and their partners while its customers loses all their retirement funds and coffin money.

A really sad affair!

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    Roger says 10 years ago

    Then the point of contest would be on the “First-to-approach” basis, meaning are you approached and introduced to the products by them or did you ask for the product yourself?

    If you were approached then i don think their reasoning would stand, as they should have make known to you if their not acting in their capacity of a FA.

    Have you signed any disclaimer from them on that understanding?

    Did you signed the Need Assessment form and do up a risk profile analysis before the purchase?

    Reply
    richard says 10 years ago

    Hi Frustrated,

    I don’t think you should get bog down by the explanation of your FIs. Their comments are unimportant and are meant to deter and frustrate your effort to pursue the case further.

    Ultimately, when you go proceed to next stage of mediation at FIDREC, it is the panel of judge who would adjudicate whether they are right to offer you the product in the manner you described.

    I understand that for every case pursued we have to pay $50 and the financial institution has to pay $500.

    Our main objective must be to focus on amicable and fair resolution of individual case by arbitration or group case by a class action suit , pending the replacement of the swap counterparty, which would then render the whole issue redundant.

    Reply
sian says 10 years ago

Hi,

Any one from minibond series 5,6,7 & * , wana keep in touch so that we can explore the possibility of seeking class action….

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    #Jason58 says 10 years ago

    # sian

    Ok with me, but how to keep in touch with eack other?
    Have u sign up the TKL’s new petitions on ‘Investigate the sales Training’ ?.

    Reply
    Eric Ong says 10 years ago

    hi sian
    i got series 5 and 6, bought it from phillips securities thru’ my broker

    thanks
    ericong
    94870368

    Reply
richard says 10 years ago

Does the trustee need to convene a meeting for noteholders of series 5 and 6 before enforcing the sale of the underlying assets under the ‘bo bian’ Act?

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    VSL says 10 years ago

    I spoke with HSBC on this today. Para 7 of the FAQ section on their website says HSBC must get noteholders permission before enforcement action can take place. However the staff at HSBC cannot cofirm this. She says HSBC MAY liquidate without consulting noteholders. She is supposed to get back to me on this.

    Reply
Jackie says 10 years ago

Hi,

It is probably better not to time the market but hold these underlying securities (CDO) to maturity. Doing so existing retail investors can continue to receive some coupon payment from these assets. If they were to liquidate the minibonds now in this difficult market condition, they are unlikely to get back much of their principal.

If there is to be a high possibility of default from these CDOs, then the same would probably speak for other existing series of DBS High Notes as well. The risk of default of these higher grade CDOs has been normally low. Unfortunately the last couple of weeks of large financial institution and bank failures taught us that even well-known institutions can default. Something that we may not have seen before in our lifetime.

Minibond is a complex derivative tied to an accumulation of debts, credit risk. As these debts reach their maturity dates, then the principal is redeemed at Par value.

The best thing is not to have invested in minibond at all, but one cannot turn back the clock. Investors can only find way to maximise what they can take back. Liquidation at this time would probably mean investors could not get back much of their money after substracting the unwinding cost.

DBS asset management and Lion Global Investors have structured similar CDO products before and should be able to provide more professional advice. And I would not be expecting local banks like DBS and OCBC to default.

Btw one can find the indicative values of DBS High Notes on this link below

http://www.dbs.com.sg/ratesonline/structuredinvestments/

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Roger says 10 years ago

Agreed Jackie, but can we really time the market?

There is still high possibility of a default fro the CDOs and although more remotely, a credit event from the REs later. There is no assurance that we can ride through safely to maturity .

Even if we are able to get a new swap counterparty and guarantor, the rules of the game do not change.

We need to explore and weigh the risks of all available options and elect one that offers the greatest value preservation to the minibond holders.

Of course, the appeal for redress and fair compensation is a separate matter altogether unless the authority is willing to make a collective consideration on the issue.

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Jackie says 10 years ago

Despite Lehman Swap counterparty and Minibond Ltd ceasing to exist, HSBC as a trustee would be able to seize the Underlying Securities (CDO) and demand all the coupon and redemption amount directly upon a Default by Lehman. Lehman would had been taking a cut from this before bankruptcy in the arranger role.

This crisis provides an opportunity for an another finanical institution to replace the middleman role for Minibond and takes a cut. The Underlying Securities are still good but early termination would result in significant losses to investors as they are likely to be grossly undervalued in this difficult market condition. So it makes sense to continue receive coupon and hold until these CDO reaches maturity or defaults to retain most of the value.

MAS & HSBC should seek other creditable banks and financial institutions to see how they could restructure these ‘Minibonds’ to give back most of their value to retail investors.

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Fury says 10 years ago

How could MAS still approve to sell Minibonds series 9 &10 when Lehman was at the brim of bankruptcy?

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    oldman says 10 years ago

    1. yes. I think MAS shoule be responsible for such case.
    How can such products can be sold here?
    And It is sold to retail investor in ASIA only. It is not allowed to sold retail investor in US.

    2. Is LB has any asset in Singapore? Government should freeze those asset and sell it to pay the victims.

    Reply
Son_of_A_Victim says 10 years ago

The bank complaints handling process is a joke. It is an effort by bank staff to frustrate customers it is their own fault for taking risks that resulted in a loss and not the bank’s fault. The tone is condescending and rub “salt to wounds”. It is a one sided thing to deny responsibility by the bank. I suggest investors don’t waste their time and go either to MPs or the Police. I wonder why MAS asked investors to go to the banks with their complaints and for the banks to investigate themselves. How is any misselling offense going to be discovered through this process when bank are simply interested in denying responsibility. My mom is 68 yrs old and she was sold High Notes 5, if she fall sick and needed the money it would have to be redeemed at a fraction of the principal because it is suppose to be held to maturity. Also, my mom is not well educated and does not understand English well how could she have understood the product which is a complex derivative. The bank insistence that “she should have known the risk” when we complained is simply ridiculous. The banks are only interested in denying responsibility. To ask the banks to investigate themselves and then compile the report to MAS is ludicrous. MAS is not doing its job. It did not do its job in the first place to screen these products and to screen the selling process of the banks. It did not do its job in the beginning and it is not doing its job at the end.

Minister Tharman is in charge of MAS. He should resign. MAS is not doing its job.

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