In a joint statement issued by the Securities Association of Singapore (SAS) yesterday, the six brokers namely, CIMB-GK Securities, DMG and Partners, Kim Eng, OCBC Securities, Phillip Securities and UOB Kay Hian, said that they were prepared to buy over the Lehman-linked investments at cost from vulnerable investors.
CIMB-GK has gone one step further and said they will buy back Lehman Minibond Series 3, 5 and 6 and Merrill Lynch Jubilee Series 3 LinkEarner Notes at the original investment amount, irrespective of interest earned. The scheme will first apply to vulnerable investors.
The coordinated timing of the announcement meant that the decision was something that was brokered behind the scenes. It’s a complete turnaround based on initial feedback given by some of the investors who have gone to meet their securities firm. Some of them were earlier told that the firms only provided a transactional service (like buying/selling shares) and did not provide any financial advice.
This move to make compensation has somehow become necessary with increasing pressure from the public. The gathering at Hong Lim Park, parallel events unfolding in Hong Kong and subsequent press coverage must have played a role in influencing the government to apply “pressure” on the financial institutions to “do the right thing”.
Surely, this is a much better arrangement than asking every investor to lodge their individual complaints with the financial institutions? The original insistence by MAS that “they cannot ask financial institutions to make compensation” now seems like a thing in the past.
Non-vulnerable investors continue to await their ‘fate’.