Yesterday, a group of Minibond investors turned up at the National Library at 7pm to talk about their “Minibond woes” and discuss further action.
As the meeting was arranged at a short notice, I had expected only a small group of investors to be at the meeting. Instead, I saw a big group of 100+ investors gathered when I went there to have a look. Many of them heard about the meeting from Mr Tan Kin Lian’s blog and from newspapers.
Channelnewsasia: Online petition for investors who bought Lehman-linked structured products
Minibond on the radio
There were even a handful of jounalists there to gather feedback from the investors. They duly reported the event in the media. I would like to thank the press for highlighting and increasing the public awareness of the current situation.
Straits Times: Investors Turn to MAS
Today:
Mini-bonds, Major Headaches
Business Times: MAS Cracks Whip to Get Fair Deal for Investors (Accessible only after 6pm)
A decision was made by minibond holders not to waste time and to submit the Minibond Petition to MAS immediately. Among other things, the petition urges MAS to:
- look into the possible mispresentation by financial institutions selling the product to risk adverse investors.
- explore negotiations with all parties so that Minibond will have a chance to run until maturity.
- lobby for Nomura Holdings to take over the liabilities Minibonds as a precondition for operating in Singapore.
- instruct HSBC Trust not to force liquidate any series without first consulting note holders.
- take a more active role to help investors like what the Hong Kong MAS is doing.
Mr Tan Kin Lian will be helping to organise another proper meeting for structured product victims. If you like to be kept informed, please sign his online petition to provide him with your details if you haven’t already done so.
At the same time while the Minibond meeting was taking place, MAS was having an emergency meeting to discuss how to handle the situation. Late last night, MAS issued a statement on this:
MAS Press Statement on Structured Products
Essentially, they have told financial institutions to appoint third parties to oversee their complaints handling processes and investigations into any mis-selling of these structured products.
Earlier on in the same evening, I also had the opportunity, together with a small group of Minibond holders, to meet up with the CEO of HSBC Institutional Trust last evening to seek greater clarity on the current situation.
Other than clarifying their role as a trustee and their limitations, I couldn’t really obtain much information from them beyond the FAQ they have already published on the Minibond. These are some of the points from the meeting:
- As a trustee, they have nothing to do with the design, marketing and integrity of the product.
- The underlying securities are held with HSBC Hong Kong as the custodian.
- Their role is more passive rather than active. Until an event has occured that gives them the right to act, they are bound by the terms specified in the trustee agreement.
- They are able to explore options if a third party approaches them. However, they are unable to actively seek out third parties.
- They are unable to comment how long it will take to determine the market value of the underlying securities, nor are they able to give a fair estimate of the value at this point in time.
- They are unable to comment on the actual entities in the notes that back up the underlying securites.
- With regards to the substitution of underlying securities that took place for series 1, 2 and 3, the letter dated 15 August was not sent out by them but by the issuer. They are unable to comment on why the substitution was made, nor are they aware of any changes to the entities.
- Technically, all the Minibond series are still in play until there is an event that triggers some kind of default. In the case of series 5 and 6, noteholders have already been informed of the coupon payment default and the 15 days grace period. When asked what they would do after the 15 days is over, they said it was premature to comment as there are many things that could happen between now and the end of 15 days.
Separately, someone has emailed me a FAQ issued by Lehman Brothers Singapore dated 22nd September 2008. This was addressed to all distributors and holders of bonds issued by Minibond Limited but interestingly, this is the first time I have come across this document.