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No mood
try to make a claim of misrepresentation with distributor, if that does not work try to file claim with FIDREC.
if not join the Pinnacle action group to sue morgan stanley
I bought Pinnacle 3 through a friend whom is one of OCBC securities distributor, my friend claim that he is also victim as he also invested in it. What should i do ? He say he is also victim, means I can’t get back at him ? He is the one recomended me to buy, any suggestion ?
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Anyone here know which Series are affected by CIT and will go bust soon ?
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What about series 6 and 7? Full impact of CIT bankruptcy will happen later as now is still early to judge.
Now it’s even worst, we have Dubai World running out of cash.
Does anyone know if we are affected?
Dubai world will not have any impact on series 6. Series 6 will not go bust yet even with CIT’s bankruptcy. However there are 2 more companies that are in danger of default, Ambac corporation and Aiful of japan. if these 2 companies create a credit event, then series 6 will go bust.
ReplyHas anyone received interest for series 2? I have not received mine yet. Is it already gone bust?
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wow.. i am sure most if not all structured notes with basket of underlyings will have CIT inside..
it’s one of the larger US banks.
ReplyCIT has finally gone bust …. anyone know which Series of Pinnacle being affected ?
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Pinnacle notes briefing for class action suit.
http://www.martinlee.sg/proposed-pinnacle-class-action/
ReplyCIT corporation might declare bankrupt. It is one of the underlying assets in some of the series. If it does declare bankrupt then some of the series will go burst, we have to be prepared for this.
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I hv also rcvd a cheque issued by CDP, ordered by Morgan Stanley for early redemption payout. The amt is only around 0.5% of the actual principle amt.
I hv not cashed in the cheque yet as I was wondering if this would mean “I accept the redemption/offer??” I have filed my case with FIDREC. Will someone pls advise me what shall I do?
Thank-you.
Fan
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Hi Pinnacle Action Group,
It has been announced today that a group of 165 investors has initiated law suit against Lehman Brothers & RBS. So how is the class action progressing against the Pinnacle Notes so far?
ReplyIt seems that holders of series 1 will get back $45.91 per note as said by morgan stanley, so what does that mean, I am curious I don’t hold series 1 notes . Suppose my original investment was $5000 how much will i be getting back
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You mean USD31.50 per note. For my series 1, works out to 0.63% of investment. Peanuts.
ReplyHi Sureesh,
The $45.91 is per $8k invested, which is the minimum.
If someone invested $10k, he will get back $57.39.
ReplyYou are right. CIT corp had nearly gone bankrupt and it is one of the underlying securities in some of the series.
It is still in trouble and might go bankrupt any way. If that happends many of the series will go bust.
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I am also a victim of minibond and pinnacle. I think the values of many of the Pinnacle series have fallen a lot recently because this company called CIT in US is in trouble and apparently it is one of the “underlying securities” in many of the series.
ReplyIt takes X number of defaults in the underlying entities before the notes go bust. CIT is just one of them.
Unfortunately, besides CIT, there have been a number of others.
ReplyHi Pinnacle Action Group,
I am quite a big victim of Pinnacle series 7! I did not know that this site exists till today and it is most comfort to know that there is such an Action Group ready to act for justice. I definitely want to join the lawsuit.
Is it ready to proceed with the lawsuit as series 2,3,5,6, & 7 are now having 0.01% – 0.33% residue value as at 28 Aug 2009? i think they will go bust sooner than later!
As with most of the rest, I have written to the FI end of last year. Then after several reminders, it took them more than three months to give me a one-statement reply which says NO compensation!!! Subsequent queries to the FI fell on deaf ears!!! We need JUSTICE in Singapore!
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Hi ENG,
Thanks for your reply. I agree with you, they are considered daylight robbers to me, no matter what.
My parents are so old already, they still sell such high risk products & the worst thing is they themselves dun even know much abt such complicated investments. All they know is to sell sell & sell & meet their KPIs & get their big fat commission & bonus~!
Dig proof? These FIs documents have disclaimer & their documents are drafted by lawyers.
We will be writing in to Fidrec. Have to try ALL means to get back some money at least.
Heard abt the Hong Lim Park petition, hope they can at least give us a reply but doubt they will do much.
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Has anybody tried appealing (at FI) again after receiving a rejection letter from the FI?
It may work.
Eng… i understand your anguish, but it’s still not fair for you to say FI “are already confirmed as robber!”
Even if mis-selling is proven, at most you can call the banks crooked merchants, but robber would be very inappropriate.
banks didn’t point a gun or knife at you forcing you to invest.
ReplyHi Lim,
U may just go ahead to lodge with Fidrec on behalf of your parents 1st, as the queue has been very long lately, and wait for an officer to contact them.
As far as Minibomb is concerned, we are already very pissed off by MAS bo-chap attitude. Heard Fidrec award is higher after the MAS report. But again, we have to dig proof to fight against these FIs, who are already confirmed as robbers! So far the award I heard was between 20%-50% ….. what best can we do ? Before the report, some cases even awarded “ZERO”.
Go for tomorrow gathering at Hong Lim Park and also sign the petition to our PM. Though we do not expect a positive outcome, at least something is done to show our frustrations.
ReplyHi Pinnacle Action Group,
How is the status of things? Hope the Class action comes true.
Can we have an update? My parents are really worried.
——
Has anyone complained to Fidrec & got any compensation? Whether big or small. The bank has rejected my parents. Really juz push us to Fidrec. Wonder if Fidrec really can help.
ReplyHelp! Has anyone complained to Fidrec & got any compensation? Whether big or small.
My parents are very worried about this, wonder if Fidrec is really able to help. They have a limit of $50K per product.
Series 1 Mandatory Redemption Event has occured. My parents got a letter from them. Anyone received this letter? Have no idea what they are talking about, but seems like they will pay out the liquidation proceeds to investors.
It says “An amount equal to USDxxxx will be will payable to the holders of the Tranche A Notes on a pro rata basis.
An amount equal to USDxx,xxx will be converted into SGD at the exchange rate prevailing on or about the Early Redemption Date (as determined by the Determination Agent) will be payable to the holders of the Tranche B notes on a pro rata basis. ”
Help, anyone can help explain what this means? Would they really pay out whatever proceeds that left? *clueless.
But there are so many investors, this amount divide by no. of investors then is very little also. 🙁
Come on, MAS has to be responsible, they are the ones that allowed such toxic products to be sold here. but of cos they are not willing to spend the $ or effort to do something that can really help us get back our $.
ReplyHi Lim,
The size of Tranche B is S$13,464,000 while that of Tranche A is US$880,000.
If you invested in the S$ version, that will be Tranche B.
Divide the amount xx,xxx by 13,464,000 to get the percentage of original amount you will get back.
Based on the numbers, it ranges from 0.07% to 0.7%.
ie. For every 100k invested, you get back between $70 to $700.
ReplyI still don’t see any notice about the fate of series 3 notes on morgan stanley’s web site. Has any got any news from their FI about this.
ReplyMAS has already washed their hands off after releasing the investigation reports and ban the FIs from selling these toxic products. I guess they will not interfere anymore and leave us to die on natural death !
ReplyMAS won’t inform consumers when a note has died.
it’s up to the calculation agent to inform the custodian agent who will then inform the client.
Replysorry I meant to say if indeed series 3 has gone burst then surely there must be notification to this effect from either MS or MAS
Replyif indeed series 1 has gone burst then MS should announce it, but so far there is none.
ReplyThink Both Pinnacle S1 & 3 have already gone bust, as there’s no pricing recently ………. it’s so mean for MAS to simply push us to Fidrec and fight for ourselves when confirmed there is a mis-selling. It’s a very stressful & painful process to go against the giants.
ReplyHello,
Has anyone bought their Notes from PHILLIPS? How was their response?
Thanks.
ReplyI notice series 3 has no price quoted by morgan stanley. has it done bust too like series 1
ReplyI’m a victim of Pinnacle Series 1. I was recommended to buy this minibond product from my insurance agent in 2006. *Dave – similar to your situation, the agent told me it’s a minibond guaranteed by Huge State/National companies, I was not aware of any underlying smaller companies.
Btw, I am a very new investor. I only knew about the default recently. Pls advise if a committee has been formed for a Group Action. Thanks.
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Hi Fan,
I had a series of correspondences with the distributor bank over the last 1/2 yr. They took 4 mths to get back to me to reject my appeal and pushed me to FIDRec. I guess in your case, u cld do the same to try to first establish a correspondence chain with the distributor bank which shld push u to FIDRec.
FIDRec will then advise u to lodge a complaint with them stating all the facts, correspondences etc. According to them, if the distribution bank still reject their appeal on ur behalf, the final recourse is to pay $50 for court arbitration.
ReplyTks Dave for your advice. I have not written to PHILLIPS yet.
*Anybody – any tips on how this compliant letter should look like, any item to avoid?
Have a happy Sunday 🙂
Tks,
Fan
Hi Fan,
Just state the truth from ur point of view. I m sure there will be many out there with similar experiences.
The fact that MAS suspended the banks from selling such products for 6 mths is testimony of the wrong-doings done to investors.
The next step is for the pple in-charged to come clean with their conscience and do the right thing by compensating the affected.
The problem with the sellers is that they are unwilling to put themselves in our shoes, because if they know that if they do put themselves in our shoes, they will no doubt need to make good the wrongs done to us because of guilt.
Just my 2 cts worth.
ReplyHi Fan,
This was written some time ago (some of the things might be outdated) but you might want to refer to it:
http://www.martinlee.sg/how-to-file-a-dispute-for-structured-product-victims/
ReplyHi All
Maybank has informed me officially that they will NOT compensate my parents investment in Pinnacle Notes Series 1 after reviewing our case.
Anyone filed to Fidrec before? What is the chances? But FIDReC’s jurisdiction is up to S$50,000 per product. which means they only compensate $50K the most if is successful. THats not even half the amount of my parents investment.
Dunno what to do now, my parents thinking of appealing to Maybank which i think wld be useless.
Hi Pinnacle Action Group,
how is the status of things? Hope the Class action comes true.
Morgan stanley has just confirmed that series 1 is dead, a manditory redemption event as they call it. Series 2 and 3 are just one more default away from going bust. I suppose it is only a matter of time. I hope the class action suite comes through
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To: All Pinnacle Investors
We would like to have a Series 7 investor in the working c’tee because we do not have one yet. All the other Series have an investor who has come forward to work on this proposed class action. It is not because Series 7 has gone to zero – we anticipate that when/if it does , it is a Series that is represented. Of couse, we can wait for that to happen before the Rep for Series 7 comes forward and it is therefore not critical to have him/her in the c’tee yet.
However, the representative must be a keen person with the fighting spirit to want to seek justice and compensation. The law is clear. We only need to come together and bring the matter to Court – expensive as it may be given the high legal costs that lawyers charge. Alas, we do not have a “no win, no fee” systme in S’pore – or else this matter will be a walk in the park – because thousnads of investors have been HURT – like you have.
Hope all this is clear.
ReplyTo:
All Pinnacle Investors
The signing up for the proposed class action has yet to start because we have not firmed up the fee structure with a law firm. The major law firm that we are still negotiating with will need some time to agree to our propsoed terms.
If your Series has not gone ‘bust’ – wait for it to be zero. Then, file the complaint to FI or fidrec if you want to. Then, if no result, wait for the propsoed class action to be formally launched and sign up from then on.
We cannot be sure at this stage that we can get the major law firm to agree to our terms – the merits of the case notwithstanding. Basically we need a fee structure that caps each investor’s payment to a max of no more than $2k , subject to 2000 signing up – i.e. a budget of $4 mln to get the best high calibre team. Win , we get 50% refund – lose that is the max.
Please wait for the formal announcement.
We have approached almost the major firms in S’pore to do it at our proposed terms. So far, it has been tough to get an agreement – but the Action Group c’tee members will try and try till we exhaust all avenues.
Hope the above is clear. If not, please email us with specific questions.
ReplyHi PAG,
When is the announcement going to happen? Its been nearly 3 months.
ReplyHow many have already signed up. How many to go before 2000 target is hit.
I hold series 6, but it has not defaulted yet. Should I wait until default before I take action or what.
To: Mr/Ms SHK
We like your fighting spirit. We have a strong case – if we can get 2000 or so investors to sign up. Pls. contact us with your email address and we would like you to be part of the committee,especially if you are Series 7.
Tks.
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If any class action on this case, I AM IN!!
To fight my investment back with another 2k by ratio is worth the effort.
Intheknow, your comments are constructive..
ReplyThanks
There are so many defaults going on. I thought with the US government buying Toxic assets there should be less defaults. I am very pessimistic. But I wonder why MS have not declared redemption on series 1 yet.
ReplyHi Sureesh,
GM does not seem to appear in the list; but recently there’s another default in the underlying securities in Series 3 – Chemtura Corporation.
ReplyA lawsuit has two sides – we know our case and on a balance of probability legal opinion is that we have a good case. Hence, we are actively going to try and get this case to court. Only question is the legal fees which we are still negotiating.
Investors only have to ask themselves whether they want to give it a chance of getting compensation from the Court – or are they going to simply let the matter go.
This is not a frivolous case- it is about $100 mln in losses that all have suffered. Let it go ? Or fight it out ?
Replyit was disclosed in the prospectus that the monies received would be used to purchase a basket of securities that have not yet been decided upon but will have a certain minimum AVERAGE rating.
i am pretty sure i read this somewhere in the prospectus.
it would not be improper for this practice since the issuer doesn’t have the funds to buy the basket yet, so how can they disclose what the basket it? IMO, as long as the issuer bought securities that adhered to the minimum AVERAGE rating promise, that’s fine.
this practice is very common for vehicles like mutual funds where they have a mandate dictating what the fund can buy, but they can’t tell you i am buying 100 Intel, 100 Microsoft during fund launch since they have not bought it yet.
Replyi think the biggest problem is all the documents that you have signed (e.g. risk disclosure and account opening stuff) more than adequately covers the bank.
the documents usually have a clause to say that the hard copy clauses supersede any verbal agreement/advice given by your RM.
for me, i am very careful when signing all such documents and would add in handwritten comments beside my signature for all verbal promises made by RM and insist my RM countersign against my comments.
although it can be said that it’s not fair for the consumer to fully understand the product, there is usually yet another clause in the documents you signed declaring that you have seeked the necessary legal/financial advice and that you fully understand the risks of the product.
all in all, consumer should not have signed the documents if he/she didn’t understand the contents.
i only have sympathy for the group of people who genuinely have no way of understanding (e.g. the gauge of Primary education used by most FIs). the rest of the people with formal education have no right to complain, IMO.
product goes ok, no one complains.
product goes sour, consumer complains mis-representation.
a tat unfair if i may say so.
can the uncles/aunties who bought Genting on Tuesday at 85 cents cry foul when the price dropped to 70 cents the next day due to an off-market transaction at 72 cents? they had no way of knowing as well.
ReplyI think if they are suing the creator of the product, then it would be a different playing field altogether.
Then it would be whether there is sufficient disclosure in the prospectus.
Is it proper to sell a product where the actual CDS entities of the underlying securities are not even known at the point of purchase?
This will be debatable with no precedent.
ReplySureesh,
Refund refers to refund of legal fee of $2000/- paid if we win.
ReplyDear Surresh,
(a)” Refund” refers to the legal fee of $2000/= paid , if we win. The refund will be about 50% – because we do not have to pay the cost of the party we sue and we get them to also pay part of our costs as awarded by the court.
(b) We will claim for full compensation of each investor’s investment – for those who join in the proposed class action only. We want to involve and give a chance to all Pinnacle investors to join in the legal action and we can wait a little longer to launch.
(c) Also, we are close to but have not finalised negotiations with the law firm. Until we decide on whihc of the 2 firms we want to work for us, we cannot give a defnite proposal with regards to the legal fee payable per investor/per series. A London QC is also being identified and will be involved to give support – if not too expensive.
(d) We aim to have a high caliber team to fight this case and will not settle for half measures. We aim to win. Hence it is taking a little longer to get it properly organised.
Hope the above is clear. Please leave your contact tel. no if you would like to chat about the matter.
ReplyYou say if win get 50% refund .Refund of what, the $2,000.00 we paid or the 50% of the amount we invested in the notes. Do we wait for the series we bought to go bust or wait join and pay up now.
ReplyNotice to All Pinnacle Noteholders
As more and more Series become ‘worthless’ – we will be nearer to the proposed class action. Fee structure now being negotiated with 2 top law firms and experts have been identified to help fight the case against only one party.
The fee structure will be such that each will only have to pay up to max. $2000/-, win or lose. If win, there will be about 50% refund; if lose thats the max. We have yet to be able to get this strucfture agreed with the law firms.
Also, we need 2000 investors to join in to build the legal fund. Expert opinion received so far has been positive that we have a strong case.
Please register your email with us to be kept informed when we are able to officially launch the proposed class action.
ReplyBut if value is near zero how long can all the series survive, the us economy is still losing jobs and with lost jobs more credit card defaults.
series 1 and 10 have gone bust, the front and tail end of the series. After that series 2, 3, 5,6,7 will go bust too wonder if we csn join the pinnacle action group afetr that
Can anyone confirm whether Pinnacle S 2, 3 & 5 still surviving or gone bust already ?
ReplyHi Minibomb,
I have just received the interest for S 2 yesterday, so confirm S 2 is still surviving, though the value is near zero.
I was advised by maybank RM to write in letter ask for compensation for Pinnacle series 1. Write letter & submit to the FI that sold the product. RM has informed that series 1 become 0 cents~!!!
What a painful lessons and these RMs, wonder if they have any conscience at all.
Useful websites: http://tankinlian.blogspot.com/2009/01/statutory-declaration-mis-selling-of.html
http://www.mas.gov.sg/consumer/structured_products/fidrec_faqs.html
ReplyIf there’s conscience, these trash wouldn’t be sold in first place. All profits proceeding from selling these pinnacle trash must be returned to us. Isn’t it true that the FI’s have reported good first quarterly results? At the expense of us – stupid normal singaporean who lost our life-saving.
Shouldn’t it be pay-back time as well for our FI? They certainly have outperformed even the American banks!
What about pinnacle series 6 any problem with this, why no big announcement that series 1 has gone bust.
ReplyJust received a letter from Hong Leong that another bank has closed, Capitxxxxx???
Have you also seen it?
Hi DL,
All the letters can be found on Morgan Stanley Pinnacle website.
Here’s the latest indicative prices:
http://www.martinlee.sg/pinnacle-notes-price-quotes-and-updates/
ReplyHI all,
juz spoken to the maybank branch manageress at JE today, confirmed that Pinnacle notes series 1 have gone bust last Friday.
Any chance to recover thro’ legal means.. please help.
Helpless victim
ReplyDear Jane,
Pls register your email and tel no details with [email protected]
We are working on the proposed class action and it will take time to evolve. Register with us so that we can update you from time to time.
tks
Reply
Hong Leong Finance spore has not resolved my pinnacle note series 2 issue after i interviewed with their internal review community.
Thinking of approaching Fidrec. can anyone advise whether there is any case resolved by them or they jus throwing the ball around and feel that we walk in with our eyes open.
can someone pls advise whether the pinnacle action gp is also for Singaporeans? I got send my email to them but i m no gd at computer and dn know weather they have any msg 4 me so far.
At what stage are we now? Can anyone in pinnacles action gp pls advise?
A VERY UPSET AND DISSAPOINTED CITIZEN
Jane Lau
ReplySureesh
I noticed there was no price for the pinancle notes on Feb 27, has something happend
Reply
A class action for all Pinnacle Investors of Sereies 1,2,3,5,6,7,, 9 & 10 is now in the final stages of planning. Atop law firm and a Snr Counsel will be engaged. It be the only viable class action lawsuit as it will name the arrnager of the Notes, Morgan Stanley as the defendant. Complaining to FIs and DIDRec as most will now will not be effective. the rpoposed class action will be affordable and opinion received is ther is a solid case. Please register your email address with [email protected]
We will update you withthe progress of this class action effort.
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Hi, does anyone has anyupdate on the progress of Series 9,10 status. Had waited for 3 mth plus..still no reply from HL. MAS had just appointed an independent advisor to manage this issue right?
ReplyTo ALL Pinnacle Investors
Please register your email adress with [email protected]
A class action is being planned. We will update you withyour email address registered with the Action Group.
Sure, all the series are in danger of collapse – but rather than
worrying about it – plan ahead on what to do about it.
but how long will the notes be alive.
what are the chances of a default
Pinnacle 6 investors,
You should have received the dividend by now. That means the notes are still alive.
But as our friends fom the Lehmann Brothers minibonds, DBS High Notes, are winning their battle, we pinnacle notes investors would soon be left alone to fight for ourselves.
Just worry., any concern let’s discuss
DL
ReplyHi All,
Latest buyback price for Pinnacle 15/16 is about 75%.
If you are a worried investor and want to get out of Pinnacle 15/16, please email:
and we can discuss further.
I AM ONLY INTERESTED IN SERIES 15/16.
Thanks,
Intheknow
I hold Pinnacle series 6, MS is supposed to pay interest today but I checked my CDP account today, so far no payment. Has anything happen
ReplyHi
Does anybody know if there are any more defaults in the basket of CDOs of
Pinnacle notes 6.
Now that the 3 auto companies will be going bankrupt will this effect PN 6 in any way.
Everytime I hear some company going bankrupt I worry if PN 6 has it in their basket.
Reply
Sureesh,
I shared the same worry and concern. Can MS make more transparency on the status of this series? A little silverlining is that I was told the January due coupon has been credited.
Li
Redemption Bids Prices for Pinnacle Notes as of 28 Nov 08 can be found in:
http://portal.iocbc.com/PDF/BidPinnacle.pdf
Notes 6 (SGD) is 3.49% and Notes 7 (SGD) 3.71%
Pinnacle Notes 6 & 7:
AP is 4.60% and an 1.99% away to a credit event. I called MS Infolines this morning and was told that 3 more defaults to the REs of Synthetic CDOs portfolio would trigger a credit event. They have already contemplated a zero recovery for any default to take place in the current market situation. Upon liquidation, the mark-to-market value will ne very low and may not even enough to cover the unwinding cost. MS’s staff said that MS may have to call to pay the balance in Pinnacle Notes 9 & 10.
I found out the redemption price of Pinnacle notes 6 has gone up.
Last week it was 0.77%. This week it has gone up to 3%. Is this a good sign, Does this mean that the chance of default is lower.
Expertise view 1 in:
http://ftalphaville.ft.com/blog/2008/11/17/18324/from-pinnacle-to-nadir
“….The bottom line though, is that this kind of product should never have been made available to retail investors, and no sane regulatory authority would have allowed it to have been.
So please MAS, you try explaining synthetic collateralised debt obligations to the average investor, because the below, frankly, does not cut it……”
Expertise view 2 in:
http://josh.sg/2008/11/a_pig_in_a_poke.html
“….And now the MAS (the banking regulator in Singapore) has washed its hands of the Pinnacle Notes affair, telling customers to talk directly to their banks if they claim they’ve been misled and want compensation……”
This is what I mean – “…In short, the CDS which is largely unregulated shouldn’t have got past the regulator MAS and ordinary people are really not up to the grade to take up this CDS or rather the local market is just not ready for the play of CDS…”
The unregulated structured product CLN was then floated to the market and found the ordinary people/average investors (most of them are not even qualified as average investors and they are actually retirees putting money in FD and/or saving acc) via the FIs.
Refer to “….It is a ‘Credit-linked Notes’ (Pg ii). It is printed on the brochure “Pinnacle Notes Series 2: Secured Credit-linked Notes”. We do not seem to have the ground to challenge them on the name. In LB Minibond all series, they are printed as ‘Minibond’….” They are ‘Credit-linked Notes’ not named ‘Minibond’ and IMO and understandably the minibond holders even have a gound to seek for redress on the name let alone other superior grounds.
Having heard and read so much about CLN and it is reasonable for one to think that it is a complex structured product requires the investors to fully understand the risk by studying the Base Prospetus, Pricing statement together with the marketing materials (Advertisment and Sales Brochure) before they actually act on it. The Sales Brochure clearly states them as important information.
Now that the Base Prospetus and the Pricing Statement were known only given after the close of sale (ie, the investors bought with ‘Informed decision’). How did the investors arrive their ‘informed decision’ when they were deprived of the right to read and understand the full risk of the product without the Based Prospetus and Pricing Statement given to them before the sale was closed? Should I venture say that the FIs and RMs as governed by the F & F A and FAA are fully responsible for the disclosure of all material information to the investors for them to make ‘Informed decision’ when the FIs & RMs have failed to provide them with the Base Prospetus and Pricing Statement to seek for valuable financial advice?
One more area to note is in the Fact Find/ RM recomendation. it is a poorly structured form provides no relavance to the Sturctured product such as CLN (as agreed by DBS wealth managment that the risk level is 8 to 9 in a risk mesurement of 1 to 10). It merely ask U if U have experience in Unit Trust and liken UT to CLN. It deprives U the right of 7-day cool-off unilaterlly. It postulates that U (an average investor) do not need financial advice buying a complex CLN.
Lastly the close of sale in 10 to 20 minutes for an average investor/man in the street in a highly risky CLN deal shall be an area for consideration for taking up a suit.
ReplyHi C S,
We may want to challenge the FI on the ground that the Pricing Statement & the Base Prospetus were only given to us after the sale is closed.
The brochure pg ii & iii provide for investors to obtain Base Prospectus and Pricing statement from the FI and read together with the brochure to understand the risk of the product before deciding to act on it.
http://www.morganstanley.com/pinnaclenotes/pdf/series2/Pinnacle_Series2_Pricing_Statement.pdf
It is a ‘Credit-linked Notes’ (Pg ii). It is printed on the brochure “Pinnacle Notes Series 2: Secured Credit-linked Notes”. We do not seem to have the ground to challenge them on the name. In LB Minibond all series, they are printed as ‘Minibond’.
Pg 7 & 8 definte the Underlying Assets and Credit Event.
Pg 13 & 14 Provide the information about the underlying assets.
The PPMS came after the issuer and the determination agent (might be the tustee HSBC) jointly decided on the CDS Synthetic CDO reference portfolio and seems that the money is landed somewhere in credit card securitisation. MS said that the PPMSs were available for inspection and now they even them put up on the website.
It is a very difficult case. In short, the CDS which is largely unregulated shouldn’t have got past the regulator MAS and ordinary people like us are really not up the the grade to take up this CDS or rather the local market is just not ready for the play of CDS.
Wish that lioninvestor and Intheknow can provide their expert advice in what U desire and I am just as lost.
ReplyHi Kevin,
I’m no lawyer and this being a new case makes it all the more harder to gauge.
Mr Tan Kin Lian consulted some lawyers and posted their remarks here:
http://tankinlian.blogspot.com/2008/12/legal-action-against-issuers-and.html
However, as we know, anything can happen in a lawsuit. There are no guarantees.
ReplyDear Kevin
Can u pls. explain the relevance of the PPMS document to the investor ? When we bought the notes it was based on the Prospectus/Pricing Statement – and nothing was said about the “credit default’ amount that we are exposed to ; nothing was said about attachment point/detachment point (whatever that means); nothing was said about the no. of defaults before everything goes bust; nothing was said about the 100 names that we are exposed to. All we were told was the named ‘reference entities’ for each sereis (the 6 or 7 “top” names ).
And then now, Morgaon comes up with a website that provides the PPMS for each series – as if it is part of the Prospectus/Pricing Statemment. I do not understand what this massive document is – and if it is now introduced for us to read when the Notes are all close to default- surely this document cannot be part of the “contract” between investor and Morgan isn’t it?
If you can provide your expert advice it will help tremendously not for the academic interst – but for a possble legal action if there is enough support from investors who want their money back.
Can I perhaps speak with you – kindly call me at 98927273 or 64697496.
Many thanks
Tks
Reply“…Credit linked to these Reference Entities:
Australia • Hong Kong • Singapore • Singtel • Temasek….”
The credit risk which is of paramount importance was not explained and instead the ‘retail investor”s attention was divirted to the equity coupon in away to mislead the ‘retail investors’ to believe that they actually invest in these 5 entities.
“Each Series of Notes will be secured by, amongst other assets, US Dollar denominated Synthetic CDO Securities that are rated at least AA on the date of investment therein” which is another major area of risk that was never explained.
The propspetus and pricing statement were only given after the sale was closed despite the marketing material state clearly that they had to be given to the ‘retail investor’ to understand fully the risk including a neccessary financial advice to be sought. The 7-day cool-off is also not given to the investor by unilaterally cancel it out in the RM Recommedation form.
Can We don’t accord blame entirely to the sales staff?
ReplyHi Dave,
You cannot accord the blame entirely to the sales staff.
No one forced you to sign the document on the spot. You had every right to take the prospectus home and read for a week before coming back to sign the document.
For such structured products, usually the offering period is 2 weeks.
(I am not sales staff btw).
Cheers,
Intheknow
Ai yo yo… This reminds me of the paramid selling scandals tt happened some time ago… We cannot blame the con-artists but ourselves bcos we shld be very clear abt what we are getting into… Unfortunately, this scam is worst than the paramid selling schemes…
Firstly, these schemes are sold by reputable institutions
Secondly, the so-called reputable institutions chose to hide the facts about the products from the buyers
Alas, as trusting buyers, we shld just be resigned to having trusted the wrong pple ? No way!!!
I won’t be as mad if this was a paramid selling scheme gone wrong…
Blame the sales staff ??! Who is blaming the sales staff… It’s the entire institution that is to be blamed and held accountable !!!!
Reply
An excellent writeout by Mr Josh on how Pinnacle CLN 9 & 10 fail in http://josh.sg/2008/11/a_pig_in_a_poke.html
Reply… and they expect us to understand over 30mins sales talk ?!?
Mis-selling is very lenient to them oredi!!
Enuff of the banter… One quick way to get back at the banks here is to organise a day where all of us in 1 united pple withdraw all our monies from a bank… Let’s see wat happens..
ReplyI heard of unity, it’s time to go seriously into some form of collective action against FI. We are getting tired after such long struggle but scattered. Unless someone could help to organize a group discussion, otherwise we the pinnacle note investors are doomed very soon.
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It’s not just the bonus or commission. I was told by an ex-colleague who joined UXX that they have to meet target on a periodic basis, otherwise they will be repirmanded and put on watch list for 3 mths. They will be closely monitor by their managers and shame. If they still don’t meet target for the next 3 mths, they will be ask to leave. That’s why those FA are under constant pressure to sell sel sell, using whatever means, or their job is at stake. Subsequently this person left after about 6 months because he cannot betray his conscious to sell products that are toxic and unsafe. He does not want to risk his reputation also in a small country like S’pore. So u see what’s wrong with the system and who’s the mastermind?
ReplyDear Kevin
I am intrigued with the detail maths. you gave on 16 Nov 2008. When I called the hotline and asked the girl to gie me the link to a written explanation on the technicalies of it all- she sid its not available.
May I know whether the technical detail you gave- like subordination level, attachment point, detachment point, recovery rate etc etc – are they information given by Morgan Stanley inthe Prciing Startement and /or Base Prospectus ?
I went thru both documents many amany times – and found nothing said on any of those terms in the definitions page or anywhere else.
tks
ReplyHi C S
Morgan Stanley Pricing Startement and Base Prospectus do not cover all the material information, there are more to read, please go to http://www.morganstanley.com/pinnaclenotes/notes.html to read ACES 2006-32-PPMS under the Underlying Asset sub-heading of PS 2. Look for the list of CDOs and the attachment point & detachment points.
Go to http://en.wikipedia.org/wiki/credit_default_swap under the sub-heading of Auction to find the final price of the failed reference entities.
Read http://www.math.ust.hk/~maykwok/courses/MAFS521_07/CDO_squared_S&P.pdf pg 2 to have a brief idea of how the CDO sq transaction work for a CDO tranche.
The buffer left to reaching the AP of various series was given to me by MS.
I was only given the Pricing statement & Base Prospectus after the contract closed. But these two documents alone are not enough for us to know the ‘structured product’ we bought.
RM could not provide advice on the underlying assets at the time of launch & accumulation phase. If I am not wrong, I read about the trustee will determine the corporate names to be referenced in the CDO tranche and the ACES 2006-32-PPMS came afterwhich but we were not provided with all these material information until lately (Btw. MS posted the ACES for all the PS series in trouble on the web after PS 9 & 10 failed).
Rgds!
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i totally agree!!… and worse still the bankers in singapore work with incentive around to sell and sell…so they sold the items without highlighting the risk..bcos the risk for them not selling is “higher” to their daily commission…
these whole episode shows how wicked financial sectors and bankers are…and they always fall back to same old words when you ask them about advice whether to hold on to the investment “it’s depend on your risk profile, if you can take higher risks you can hold on to your pinnacles”…
i have no offence to bankers around since i have frends too working in banking sectors, but i think greeds have overtaken their humanity and integrity as a whole…
i spoke to one of bankers about their bad reputation and she just keeps mum about it while she’s wearing 1 carat diamond ring with gucci bag and designer clothing… well i will take me years or never at all to trust name like citibank ever again.
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I really hope MAS come out with some guidelines on mis-selling. For examples MAS can say the following situations are high likelihood of mis-selling.
1. Sold product the buyer not originally wanted
2. Concluded sale (such a complicated product) within 30 mins
3. Sold without going through line by line of the marketing brochure
4. Sold without giving propectus
5. Prospectus was given after sale concluded
6. Sold on repetition of the Reference Entities but did not mention RISK of other link products (just mentioning link is not enough)
7. RM did not read prospectus before selling to the clients (I think you expect your doctor to read the details of the drugs before prescribing it to you or children?)
I just think that it is not right to sell by mis-representation, but eliminate their responsibility by thick documentation.
From “VERY SIONG”
ReplyI have been reading the past few post. One of the point which really annoyed me is. “You dont belong to the vulnerable group as you are educated group and less than 62 years old.. So there is no mis selling since you dont belong to this group.” Thinking out loud….
Let me give you a situation,
Say Im a engineer who work as a car salesman, and you are a customer who work in a bank and knows nothing about engineering specs.
So it goes like this. I have sold a car to you. During point of sales, you told me you wanted to buy a car for your family usage and safety (low risk product) is important. I told you the car im recommending is very safe and it had cleared safety standard with rating “A” by reputable safety board, to that I show you the pamphlet and reassured you that the car im selling is very safe. Subsequently, a few months down the road and you are involved in a car accident. One of your passenger suffered serious injuries in a side impact collision. You came back to me (car salesman) to question the safety of the car which I sold to you.
My reply to was, “The car i sold you is safe (as stated in my sales pamplet) but it is for frontal collision I didn’t say side collision got a safety grade of “A”. And didn’t you read the technical spec of the car? Oh! it wasn’t provided to you (even if I provide to you, you wont be able to understand as it is all engineering specifications) But still you didn’t ask for it in the first place so I didn’t give it to you and I also didn’t tell you. Because you never ask me about side collision safety rating. You are angry and you threaten to sue me for mis-selling and misinterpretation.
But before you proceed I said. “Wait! Let me check. Are you educated? Are you over 62 years old?” Ah, you don’t belong to this group of vulnerable category so you bought the car with your eyes wide open. So how can you put the blame on me?
Is my argument justifiable? I myself is a victim of this episode. So when i read these remarks. It really make my blood boil. Im an engineer, how do you expect me to understand the investment terms which even professor from University got problem comprehening the product. Much less for someone without banking background?
ReplyComplaint to the million dollar ministers lah. Forward them your car salesman analogy. But I suspect they also don’t understand all these structure products despite being the top brains in this country, otherwise how can 2 town council lost $12M. Worst, is Tanjong Pagar and Marine Parade GRC also kanna conned. I’m also engineer but I’m totally shocked when I know the truth – 10,000 miles apart from what I understand when I buy those bombs. It’s a fraud but what to do, our government just cannot bring themselves to pursue with thos angmo investment banks, just like US governent. Because cannot offend them lah. Then we the citizens of S’pore pledged ourselves as one “united” people just have to kanna bullied.
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Ridiculous… its mis-leading… they told me there is only 6x companies involve to default my pinnacle notes 7…
now HLF said that its ard 120 companies involved to default…wtf man…
its really dam* frustrating to hear that n waiting for their st*pid call to file up my complaints…
they beta do something….
ReplyFinancial needs analysis or risk analysis forms? These are actually put in place to make sure that the bankers have proof that they have not mis-sold any products to the investors.
A full needs analysis requires longer time to complete so bankers usually will ask only the necessary questions, state the reason why investors want to invest their hard earned money in the products and get them to sign on the dot. A box will also be checked to say that the bankers are only providing the information and investors make the decisions on their own.
ReplyThe financial needs analysis will also be effective only as long as what has been sold is consistent with what is actually bought… For example, based on what has been sold in Pinnacle Notes 1, 7 Asian bonds but what has not been told is behind 7 Asian bonds we have 100 CDOs!!! So how will the needs analysis reconcile the “hidden” products ?
Lots of conspiracy theories out there, most notable is this one… For some years before these products are marketing in Spore, fund managers already know CDOs in trouble, yet since they are still allowed to syphon money out of Spore, they collaborate with banks to paint a nice sales story to attract pple en masses. After 1-2 yrs of returning a small portion of the promised returns, they let the investments die natural deaths so that the lion’s share will be theirs while the small investors suffer “legitimate” losses!
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Well I think all this Minibond , Pinnacle Note and etc will in the end all will be worthless , we have all be cheated and there is no justice in this world.
Reply… Actually, the sh*t is rolling up the hill if u ask me… Who in the first place allowed banks to be so daring as to lie, cheat and deceive ?
Reply
With the recent saga over the few structured products and mini-bonds, we would assumed that the banks’ role will be focusing on providing assurance to their existing customers and customer retention.
Yesterday, I received a call from a personal banker from one of the local banks. He was telling me about a fixed deposit promotion and that I should meet him at the branch as the promotion will be ending soon. Fair enough, I went down to check it out but to my surprise, the banker starts to sell me their insurance plans!
Upon further subtle probing, I realised that the banks are still pressuring their staff to sell and to maintain certain target or they may be the next to go. Is this what the local banks should focus on at this point of time? Is it just another convenient excuse to axe their staff? Or is it trying to compete with rival banks for business?
I read in a recent article that most foreign banks have channelled their sales force to focus entirely on customer service and handling all the related enquries. I believed that this is the correct approach and the least that the banks can do now for their customers.
I cannot even imagine that there are still banks imposing targets on their staffs at this time. Are they encouraging them to mis-sell or misrepresent their products to secure their jobs? Does it matter to them what product they are selling to the customers or if the product is suitable? Will history repeats itself all over again when the customers complained about the products they buy at this time?
As more products are being affected, I believed that the whole episode is here to stay. I hope that the local banks will know their priority, have more compassion and adopt the correct approach. It would definitely be better if the MAS can intervene and developed a policy to control the industry.
Mr Seow
ReplyHi Kevin,
do u know how many more default it will take for Series 5 to go burst?
i have been following the price for series 5. it puzzled me that the bid can go up and down. Example week1 15%, week2 20%, week3 16%, week4 8%. Do u know why?
hope u can advise.
ReplyHi Henry,
If what MS told me is correct Series 5 still have a buffer of 2.86%.
100/125 = 0.8 ie. each RE carries a weight of 0.8%
Allow for total default of each RE if more to fail (ie, recovery rate is zero)
2.86% / 0.8% = 3.575
ie, 3 more REs are allowed to fail completely.
How many more default it will take for Series 5 to go burst depends largely on the recovery rate of the failed RE.
It somewhat reflects why Series 3 & 5 have much higher value than Series 1, 6 & 7.
Rgds!
ReplyHi Kevin,
Thanks for sharing your knowledge. I’m not financial savvy and is very blur and all these stuff. Sometimes, the more I read, the more confused I got.
I don’t understand what is recovery rate? What does it depends on? How does it works?
The other thing is the price fluctuations. According to FI, the stock market sentiment seems to be a factor whether MS wants to buy back at a certain price. Is this true?
Hi Henry,
About recovery rate-
Following an aution, Kaupting banki’s final price expressed as a percentage of par is 6.625%. ie, only 6.625% of the capital value. it is also ie. Recovery rate is 6.625%.
Read this: http://en.wikipedia.org/wiki/credit_default_swap
AS for the fluctuation of the price, it is the ask & bid mechanism and the notes are not traded in joint-stocks market. Weekly bidding price will be known every friday of the week. U can call FIs.
ReplyHi CH,
Please read:
http://en.wikipedia.org/wiki/credit_default_swap
We didn’t buy sa safe bond, we are actually trapped in ‘Credit default swap’.
PS notes are used for betting:
*Primary Protection FTD basket – 5 to 8 REs
*Secondary Protection CDO basket – 100 to 150 REs
Money is placed another place in another entity and seems to involve another CDS. PS 7, I was told placed in J P Morgan credit card bills.
U dig more U become more burr, I’d continue to find out more about how the mechanism work.
It is not for us. It is solely for sophisticated players such as hedge fund.
Our TCs with the professional fund managers fell into the mind field too.
Btw, SM asked the regulator & FIs to do the RIGHT thing. MM could only say eyes open is not enough and should read the small blue print which is vital. Though the remarks are unpleasant but GOOD LESSONS to learn.
The only setback is that MM didn’t utter a word on “Misrepresentation”. It is right that “Case is Closed” with a valid contract. But IF THE CONTRACT IS CLOSED ON MISREPRESENTATION, then it is not RIGHT to close the case by saying it is closed by the LAW. The LAW is founded by the FACT.
I am a victim too, in PS 7. I was in a full trust of FI and I didn’t indeed OPEN my eyes to read the material information or rather I didn’t even challenge the RM for all the material information to disclose to me. A PAINFUL LESSON!
ReplyDear Kevin,
Thank you for the patience and sharing with us your expertise. I am wondering if any legal approach has been sought to challenge the issuing party, ie MS and the FI distributors. Clearly to common street investors, it is is a case of packaged misrepresentation reflecting in the sales approach and the complexities of the pricing agreement for mass marketing. By any reasonable standard of social sense and expectation, investor “customers” walking to the bank were unable to fully comprehend the product and the machnics with which the product will work. I ask again, what is the material relevance or connection between the invested portfolio – swap – whatever it is, and the six big name, well -convincing credit reference entities ( used to let=believe ) ?
The FI distributors , by right should have been the most prudent and disciplined industry serving Singapore ( especially as as Singapore is aspiring to be one of the most important financial centre in the world ) should be the frontline party to learn the lesson and share the responsibilities on the consequences. The victims should learn this painful lesson too, yes, and be part of the damage – but, not the sole party in the chain under the above analysis.
Beyond the fine prints, hundreds of pages of contractual documents worked out carefully by those brilliant lawyers, there are social responsibilities, people considerations and straight forward civil judgement of rights and wrongs.
When we go to the pharmacy to buy medicine, who would understand the biochemistry and the molecule structure of the drugs? We rely on regulatory bodis to do the professional part of examining the risk and recommend its usages. . Now the world is misled to all these financial poisoned pills … apparently the regulatory authorities and “drug stores” ,”parmacists” are letting the victims to suffer their own course of fate. Absolutely no fairness if this is the eventuality!
CH
Li
ReplyDear Kevin
I appreciated your elaboration on the technicality of the financial aspect of the notes and indeed admired your knowledge and expertise. For ” main street ” investors, like me , it certainly sounded pretty exotic. Unfortunately, MS has not come out sufficiently to organize a dialog forum to face the sick or anxious investors who put so much faith on their past track record and the now tarnished “golden name”.
Most investors, like me, were attracted by the promotional material showing the lovely girl holding the baby bear , the six reference entities that local people can relate to and trust and the bolded word “secured”. It certainly was a mis-representation. Firstly, I wonder if there is any relevance or material connection between the six credit reference entities and the “underlying assets” invested which caused innocent people to be wiped out of their life-time savings. Remember – all the investors share the basic drive for a conservative, risk- averted , safe investment with modest stream of income. The hidden motif of these poisoned derivatives were so well covered by the beautifully designed and flowerily words while the real risk on ” underlying assets” etc were in such fine prints and highly technical terms ( in over 100 pages of documents ), letting alone “foreign” words such CDOs, trenches, detachment points, etc.
Financial institutions selling these products are sharing its part of responsibilities in being negligent in explaining, highlighting the underlying risk. Most bank relationship managers simply do not even have the adequate expertise on how such complicated leveraging products are going to work.
Most authorities such like the HK MAS, Stock Exchange authorities , etc are waking up to the fact that regulatory control were too loose and need to be tighten but it is already too late.
China was bad enough in exporting contaminated milk products. World authorities were quick in responding to the problem with immediate corrective actions and compensation. On the other hand, Wall St exports all these “poisoned financial derivative products” and is bankrupting the entire global financial system. The world is suffering – who is to blame? who will be responsible?
CH
Hi,
Anybody have any update on Series 10? Went to Hong Leong yesterday to find out more. But nothing much came out of it (as expected) they act as if nothing happen. and my Financial advisor dont even pick up my call. im now damn worried. dont know how to break the news to my mum. It is her hard earn saving. Thought that it was a safe investment.
I have gone thru the MAS site. Can anyone advise me on what to do? lodge a formal complaint to my FI?
Saw on the earlier comment that there will be a talk at Hong Lim Park. Can anyone shared the info? (as im need to take care of my kids)
ReplyHi KH,
unfortunately, investors of Pinnacle notes 10 will not be getting back a cent.
If your mum feels she was mislead into buying this product, she should proceed to file her dispute.
I will be posting up videos of the talk shortly. Do a search for “hong lim” on my site and you can also find videos of the previous few talks.
Reply
I am holding series 6. I feel that I was robbed under the bright sun. according to the letter I received, credit event has happened to 6 reference entities within its 135(about) underlying reference entities.
A few more is good enough to trigger the wipping out of all of our invested money. It seems our fate is doomed. And they keep all those dirty things from anybody knowing it.
Those FI carefully set the trap, and con our money in. They set all the rules which is to their advantages only and hide all information behind. Anything happens, it is our investor’s responsibility. It is intentional cheating and crime! Who on earth brought in such poisonous product to sell to our singaporean? Let’s get united and do something to bring some justice to this place!!
ReplyAngry CH,
Another series 6 victim here. Be fast or be forgotten!
I’m ready for some recovery action on collective basis as per your suggestion.
Those FIs are delaying with our complain, as I have waited more than a week.
Drop me e-mail ([email protected]) on your contact.
DL
Reply
If you want to find out more, visit Tan Kin Lian blog. Also, go to Hong Lim Park once every two Saturday, 5 – 7 p.m. The next gathering will be on 28 th Nov 2008.
Reply
U should lodge an official complaint with the FI that u got the product from. It is important to clearly let the FI know exactly what was told to u or ur mother at the point of purchase, so that they can judge if any mis-selling or mis-representation is involved.
ReplyHi LionInvestor,
Do you know what is happening to Series 5? I’m worried after reading all the comments. Plse give me advise.
ReplyHenry,
5 has been downgraded from AA to B. It can probably take a couple more credit events. I do not know the exact number.
ReplyDear “in the know” :
On p.11 of the Base Prospectus for Pinnacle which you pointed me to, there is the crucial word “threshold” – taken to mean when that “threshold” is reached with just 5 or 6 defaults, the whole basket of underlying assets will be sold and, if market condition are bad they will be zero.
Now, what the threshold is – was not disclosed in Base Prosp. or Pricing Statement. How can the threshold be so low -5 defaults in the case of Serie 9 and 10 and the whole thing is “kaput” . It looks like its left to them and they can say its zero or whatever. If it is zero why cant Noteholders have the remaining 95 assets? (assuming they are assets and not something else that our monies went into.) Without audited accounts we will never know – and what we have are words like “threshold”, “underlyiing assets” and “reference entities”, “credit event” etc etc.
In the end I wonder if we will ever understand what hit us and how an investment arranged by a top name investment bank like Morgan can turn to dust. Even an old computer or scrap car can be sold for something.
ReplyThis is an analogy.
You have $1000.
You sell 100 4-D tickets for $1 each, promising a prize money of $100 if the number is correct.
Unfortunately, 10 of them get the number correct, and the $1000 has to be used to pay the prize money. Some money will be used to buy back the rest of the tickets.
Getting the number correct in the case of the Pinnacle refers to the default.
ReplyDear Lioninvestor,
If I sound ‘stupid’, it is probably because I really do not understand it. But be that as it may, I wld like to thank you for assisting. Pls bear with me as I ask more questions.
Whats more important is this and perhaps you can help me out again. The keyword is “threshold” and as can be read from the official noticfication for S9 and S.10 – the 5 credit events exceeded the “threshold”.
Is there anywhere in the Base Posp. and or Pricing Statment – whihc gave this “magic number” called threshold ? Again I have gone thru both Base and Pricing S’ment many times – still cannot find any indication as to what this “threshold” no. was supposed to be for S. 9 or S 10 or any other Series.
Reply
Lion investor sent me a copy of the notice. I must said I didn’t quiet understand why they said a mandatory redemption event is “likely”. But they are certainly sounding defensive – “made clear, always been available” (read : did you not see the terms properly when you bought the products ?), “no obligations” (reads : I’m doing you a favour here). Please note that this communication is actually from Morgan Stanley. Pinnacle has no employee per se.
Please do not waste time reading the pricing statement, prospectus etc. What you have are related to the Notes that you bought, not related to the underlying securities. The underlying securities (the 2007 – 14 FRN due 2013 issued by ACES ?) have an entire different set of documents altogether.
For Minibonds, the Notes trustee is HSBC. The Trustee of the Pinnacle Notes should have all the details of the underlying securities. From the notice, the underlying securities can be synthetic CDOs, synthetic CDO squared, commodity derivatives (don’t know why they put the word “credit” in front), ABS. All sounding very exotic indeed!
If it is a “normal” AA rated synthetics CDO, 5-6 credit events sounds about right. It all depends on how aggressive MS priced the structure at the time. Somebody here said the AA rated Great Eastern’s structure done by Goldman is able to withstand 9-10 credit events. I find that hard to believe, but it is still possible.
I’ll be pleased to explain further you are inclined.
ReplyHi CS Lim,
those are not stupid questions. Some of these structured products are very complicated; I have to read through the document many times to try to understand them, and even then I probably cover just the tip of the ice-berg.
The prospectus for the underlying securities can be found here:
http://www.morganstanley.com/pinnaclenotes/pdf/series9-10/ACES_2007_41_PPMS.pdf
Del Boy, sorry for the confusion. The notice I sent you was an earlier one dated 3 Nov. Mandatory redemption has indeed taken place.
ReplyI try to work further into the PS 9 & 10 debacle and if I am not wrong, the brief below may help to explain the occurence of the Credit Event.
PS 9 & 10 – CDO basket 100 names.
The threshold – Subordinate level assigned by rating agent is 2.60%. Attachment point is 2.60% and Detachment point is 3.67%.
Feddie(Senior) 1% x 0.06 = 0.06%
Fannie(Senior) 1% x 0.0849 = 0.0849%
LB 1% x 0.91375 = 0.91375%
Landsbanki 1% x 0.9875 = 0.9875%
Kaupthing 1% x 0.93375 = 0.93375
Total loss is 2.9799%
MS said in the FAQ dtd 14 Nov 08,
“Given the curent market values of the underlying assets and the credit default swap transation, we anticipate that the investors will lose all of their original pricipal investment.”
Market value I heard is about 5% of the capital and may not even be enough to pay for the unwinding cost.
WHAT a CHEAT of these Pinnacle Credit-linked Notes and WHY the honest and obedient Singaporeans are so punished by the GREEDY angmoh and the unregulated finacial system for those virtue they so possess!
Why are the honest and obedient Singaporean so UNFAIRLY treated?
ReplyThe concern is now the buffer various series still hold to the specified thresold amount in respect of the Underlying Assets. Mandatory redemption event will take place if the aggregate loss calculation arising from the credit events of the reference entities in the reference portfolio of the Underlying Assets exceeds the specified threshold amount.
U are again urged to tel 68345010/11/12 morgan stanley enquiry to find out more. The buffer of the various series (if I didn’t listen wrongly) provided by MS enquiry line:
PS 1 – 0.79%
PS 2 – 1.91%
PS 3 – 3.42%
PS 5 – 2.86%
PS 6 & 7 – 1.99%
CDO list:
PS 1 – 100 REs (Downgraded to ‘B-‘)
PS 2 – 100 REs (AA rated withdrawn)
PS 3 – 121 REs (Downgraded to ‘B-‘)
PS 5 – 125 REs (Downgraded to ‘B’)
PS 6 & 7 – 125 REs (Downgraded to ‘B’)
How many REs are allowed to fail to invoke a mandatory redemption event:
Eg. PS 7
Buffer left 1.99%
weightage of each RE = 100/125 = 0.8%
Assume recovery rate of 40% for a failed RE, the loss = 0.8% x 0.6 = 0.48%
If 4 more REs failed but able to recover 40% of the value, the further aggregate loss = 0.48% x 4 = 1.96%
The 5th RE fails then CALL it a day!
Please take note that:
Washington Mutual’s recovery rate is 57%, BUT
the three Islandic banks had very very low recovery rate in
Glitnir – 3%
Kaupting – 6.625%
Landsbanki – 1.25%
PS 7 should prepare for the worst that the most two more REs can afford to fail (without recovery or very low recovery rate as in the 3 Islandic banks).
Other series, please work it out for yourselves based on the PS 7 example.
ReplyHi Kevin,
Thanks for your updates and education. It is useful that Morgan Stanley provided us with the numbers.
From the looks of it, series 1 is the most vulnerable. 1 more default and they could have a mandatory redemption.
By the way, what’s the difference between attachment point and detachment point?
ReplyLioninvestor,
Sorry, I don’t undestand too.
According to an Anmoh of MS I managed to ask via 68345011, he told me that the attachment point is where the credit event kick-off and detachement point is where the value will come to ZERO. I was not able to digest at that moment and didn’t know what to ask further.
I could not reach him later. Nevertheless, I called my RM hoping that she could help me. I suppose she is not sure too.
Btw, she told me that for PS7, once it hit 5.35% the detachment point the unwinding is without doubt. She told me that the prevailing market valuation of the underlying assets will kick in upon the mandatory redemption.
I called MS equiry line today hoping I could be elaborated on the the difference between attachment point and detachment point. The respondent could not answer me but instead she promised to ask her collegue to call me back. The MS equiry line stopped at noon and no one call me yet.
Will feed back if I have the answer.
Rgds!
Dear Kevin,
its remarkable , is’t it. All this information in high finance terms – buffer/ attahment point detachment point etc…..alas……”Yours not to reason why, but to do and die….forward the 600″ (or in this case 6000 !) – The Charge of the Light Brigade
ReplyHi Kevin,
attachment and detachment explained.
http://www.math.ust.hk/~maykwok/courses/MAFS521_07/CDO_squared_S&P.pdf
ReplyTks Lioninvestor,
will try to digest.
already lodged complaint to HLF.
Tks again!
hi.
I bought pinnacle series 8 in 2007.
Will it be affected?
If its affected, will it affect my principle amount?
what is credit default event?
Please advise me as i do not know such details. It was recommended by my finance manager from the bank.
ReplyMAS has provided some advice to investors who would like to file a complaint:
http://www.mas.gov.sg/consumer/other_structured_products/index.html
ReplyThanks, Lioninvestor
I am a miserable retiree rather heavy on Pinnacle series 6. Investment driver was constant stream of income, low to “no risk” as told by my bank relationship manager ( since linked to big corporate names as credit reference ) with little education on “credit event” , “underlying securities, “CDS” etc. Like most investors, those were the days prior to this financial crisis, we relied on the financial expertise of banking officers ( Relationship Managers ) to assist making these kind of investment decisions and the charm of the name like Morgan Stanley. Huge mistake!
Can you kindly shed some light on status of series 6 as one comment says it is in danger and very perssimistic on its eventuality
ReplyCH,
The notice on 6:
http://www.morganstanley.com/pinnaclenotes/pdf/series6-7/Pinnacle6_Notice_to_Distributors_031108.pdf
It’s not written how many more defaults will trigger a mandatory redemption event but they did mention that the rating of the underlying has been downgraded from AA to B.
As a comparison, series 9 and 10 were downgraded to CCC- before they triggered a mandatory redemption event.
ReplyCalling out to all Pinnacle Note series 6 investors,
If you feel that you were misled by FI during the sales of note, I propose a collective legal approach to ask for full refund or some compensation.
e-mail: [email protected]
DL
ReplyMore information at the Morgan Stanley website:
http://www.morganstanley.com/pinnaclenotes/index.html
ReplyPls contact me by email directly to [email protected].
Pls help too to reach out to the 850 Sereis 2 investors – need only a couple of willing guys to get a pro-tem committee going – for a Class Action.
tks
i sold my pinacle serial 15 when manager told me the indicating price is 84.75 in Standard Chartered.
I signed the form, and now they told me it are sold as 76.76 in the
evening.
What is this?Beware of wolf ? Everyones
Replyhi. did they give any explaination for the discrepancy? bcos the redemption should follow the indicative pricing and the commision should mark “NIL”. please let us know how it went. thanks
ReplyTO ALL PINNACLE SERIES 2 Investors
Pls. contact me by email to [email protected]
I have a plan to start a Class-Action and have consulted senior lawyers / Senior Counsel. I want a pro tem committee -and then we take it from there. Preferably, because I am unable to speak much Mandarin – lets start with a group of “educated” in English investors – so that we can stay focussed on the issues instead of alleging mis-selling etc.
As I am only familiar with Series 2 (which I own -) my plan is applicable only to Series 2 – altho other Series investors can start their own group and follow. Each Class-Action has to be clearly identified – so we need to have it clearly segregated by Series .
Upon receipt of your contact no. and email I will arrange a Meeting. Series 2 is not under yet- so we can plan for it now.
Tks/ – lets stay and fight this together.
Reply
I just find it so frustrated and helpless, waiting for the series to blow 1 by 1 and can’t do anything about it. This is no investment, this is poision w/o antidote, waiting for the effect to set in and kill you. Which ever banks that sold these to us will have their retribution coming like LMB.
ReplyYou may wish to write to MAS ([email protected]) and FIDRec ([email protected]) for a written reply and some form of moral support.
Reply
I felt that the bank staff play a big role in this. 3 months ago, I brought a cheque to a bank and told the receptionist I wanted to place it in FD. Instead she referred me to a “wealth manager” and told me he can do it for me. I was puzzled and asked her again, she reassured me. the “wealth manager” instead of placing it in the FD for me, asked me to place it in something similar to FD, except it is for two years instead instead of one and with fixed interest of 3% and assured me that my capital is 100% protected by the “bank” and there is no risk at all ( at that time, i assumed that it the bank that i went to will protect my capital, he never mentioned that it is a bank in another country). At that time, I was not even aware that my money was being place in some kind of investment with another institution as i had never put my money in this kind of investment before and had never wanted to. When I realised it is some kind of a investment linked to a US banks a month ago, I chose to give up and lost about 20% of my principal. I feel that the bank staff who sold this had the intention of misleading the customer. There is no integrity on the part of the staff who are selling this, all they wanted is to hit target and earn commission. They choose to tell you the good side but not the bad side of it. Until now, i still do not understand how all these so call “investment” work.
ReplyDo you still trust our bank staff here, in particular the counter staff and the relationship managers? Yes, all they want is sales, and commissions and all those staff like helping you to earn higher interest, etc are all bull shit, lies and nonsense. What they care are only for themselves, to meet their quotas and more commissions without regard to the fact that they are hurting others in the process.
ReplyHi C S Lim,
I also bought series 2, this morning called MS, so far 4 out of 102 CDS already default, just need about 2 more will be dead, it just matter of time.
Hi CS Lim,
I have not been successful in sending an email to the email address stated in your message.
ReplyHi CH,
I also would like arrange a collective legal case against the FI for misled during sales, for my case series 6.
Maybe you could give me advice.
Let’s keep fighting.
DL
ReplyI m very very shocked !! I am from Singapore.
I bought into Pinnacle Notes Series 1 in 2006 through a local distributor bank after seeing its ADs, brochures and also through advise from the bank staff… They told me that Pinnacle Notes Series 1 was linked to the performance of 7 major Asian bonds but never told me about it being linked to CDOs… 2 days’ ago, they forward a “self-explanatory” letter from Pinnacle Performance Ltd to me although the contents of the letter was totally “greek” to me!!!
Only through my phone contact with the branch manager that I came to know that the product is linked to the CDOs and 5 “credit events” (what that meant?!) had taken place. Also, the “value” of my investment has dropped to 2% !!! Over the last 2 years, I was never once given information on the status of my investment with Pinnacle Notes…
My questions now :
1. Is this how foreign banks are allowed to “re-package” their products with fantasy offerings and make false claims to entice their customers to buy into the false claims ??!?
2. Isn’t this criminal ?
3. Can anybody comment on my recourse ?
ReplyHi Dave,
Your recourse would be similar to what the minibond and high notes investors are doing:
http://www.martinlee.sg/how-to-file-a-dispute-for-structured-product-victims/
ReplyHello Dave,
My insurance agent told me the same. He sold to me a a minibond and told me they are gtd by the National State companies.
I only learn about the default last week. Pls advise me what I should now/first? Do I write my appeal to the institution I bought the notes from? What is the next step.
Thanks, Fan
CB,
the default is confirmed. For more details, watch out for the MAS release later tonight.
ReplyMorgan Stanley is holding on to the news. Let’s wait for confirmation and updates tomorrow.
Reply