Tan Kin Lian / Columnist
Lehman Brothers filed for bankruptcy on 15 September 2008. Together with the problems faced by Merill Lynch and AIG, this event caused a sharp drop and turmoil in the global stock markets.
Many conservative investors in Singapore thought that this was a problem only for equity investors. They were in for a bigger shock.
Credit linked securities
These investors had been convinced by their bank relationship managers to invest their hard earned savings in credit-linked securities, such as the well advertised Mini-bonds, Pinnacle notes and High Notes. These securities offered a higher rate of return, compared to the 1% interest on fixed deposit.
The relationship managers told the investors that these securities have relatively low risk, as they are linked to several strong financial institutions.
The relationship managers did not explain the working of the credit linked securities. They probably did not understand anyway. These structured products were so complex to be incomprehensible, even to the experts.
The structure was described in unclear terms in a prospectus and supporting documents, comprising of more than 100 pages. Many of the key explanations were presented in small print.
Several hundreds of millions of dollars were invested by these conservative investors in the credit linked securities.
Unwinding the structure
When Lehman Brothers went bankrupt, the credit linked securities managed by them had to be unwound, according to the terms of the structure.
The investors were told that several of the credit linked securities had no value. The investors had lost nearly all of the capital that they had invested.
Investors in credit linked securities managed by other investment banks wanted to get out now, before they face the same fate as the Mini-bonds.
They were not that lucky. The Pinnacle Notes managed by Morgan Stanley now have a market value of only 35%. 65% of the principal has disappeared.
Bewildering
Many of the investors were dumbfounded and bewildered. They thought that they had invested in safe securities. They were assured by the relationship managers that these securities were very safe.
What happened? Even the risky stock market fell by only 40% during the past year. Why should these safe investments lose all of their capital? Where did their money disappear to?
If their losses exceeded those of the underlying assets, who profited from their misery? Are there any winners in this episode – people who made gains on the losses of the hard earned savings?
Protecting the small investor
Two months ago, the New York State Attorney took action against several financial institutions for marketing the “auction rate securities” to retail investors on the representation that they are liquid investments and can be redeemed at any time.
During the liquidity crisis, these securities could not be redeemed. The financial institutions had to buy back these securities at no loss to the investors.
I hope that the Monetary Authority of Singapore or the Attorney General can take similar action on behalf of retail investors in Singapore, who had been misled into investing in the Mini-Bonds and similar structured products. These investors were clearly misled by the relationship managers into investing in these products on the advice that these investments were safe.
It is time to hold the financial institutions accountable for their mis-selling activities and for our regulators to be pro-active.
Views of the Public
I posted my call to MAS in my blog www.tankinlian.blogspot.com. I received many views from my readers. Here are some of these views.
David said…
I bet MAS won’t do that. Singapore laws are and will be pro-business, pro-rich, pro-foreign talent and not pro-ordinary local folks. That’s why “talent”, capital and investment flows readily here and with high economic growth and as a financial hub. Never mind the wide income gap or even suffering for ordinary folks.
Melvin said…
I am not a risk taker. Recently I was convinced by fund manager to put my money in mini bond series 9.
I invested $150,000 and I do not know how Lehman Brothers involved in this series 9. I was told by her it only based on 6 baskets which I found to be okay. Will I be getting some money back or nothing?
ym said…
These Mini-bonds are effectively hidden credit-default-swaps – the instrument that brought AIG to their knees. Even AIG, as a sophisticated insurer misjudged the risk. How about the general public?
Ordinary citizens were sold on the premise it was a safe bond, but its not. Effectively, the investor has become an insurer of the credit of the reference companies in return for 2% more interest. The public should never sell these products because they cannot evaluate the risks, and they evidently cannot rely on the marketing banks or credit-rating agencies to do it for them.
mx said… I feel that consumers have too an onus to find out for themselves what products they are getting instead of placing total blame on the financial institutions who sold them the product.
I am very sure that the prospectus or factsheet would have mentioned that there is a chance that the instrument may have risk of becoming worthless. It is $10,000 or $100,000 that they are investing here.
Won’t be it very silly to listen to some relationship manager about where to put their money without reading or finding out the risks themselves? You are responsible for your own money, and should not go about blaming others when you lost the money.
Conclusion
Over the past year, I have posted many warnings in my blog about the risks of these credit linked securities. In my view, the return on the product does not commensurate with the risk. I feel that consumers are given a raw deal.
I am surprised that MAS allowed these products to be marketed to the retail public. I hope that MAS will now take pro-active action to help these retail investors minimize their losses.
Tan Kin Lian also blogs here.
Picture from Reuters.
Related posts:
- Hong Kong investors protest DBS
- Protecting consumers
- WP concerned about “class action suit” by investors
- Investors petition Mrs Lim Hwee Hua
- Angry investors turn up at Hong Lim Park to seek redress
I disagree that MAS is aware of the activities of the financial institutions.MAS just leave them a set of guidelines for them to guide themselves and pay them a visit,
on notice, once a while, probably just to mark attendance. Sufficient notice is given to FIs to ‘make sure the place is squeaky clean’ before the visit.
Everybody is warned to behave on that day , from senior management to counter and frontline staff.
As far as MAS there is nothing amiss with FIs.
Any complaint see the FIs first, then FIDREC, CASE, to your MP for debate in Parlaiment, to court,, if you win then MAS will consider whether there is a prima casie for further investigation and in this order.
MAS is the ‘court’ of last resort.
zhummmeng (#53):
There are so many barriers (FIs, FIDReC, CASE and MP) between the retail investors and MAS. Although I reckon to directly take FIs to court. Whether the FI win or loose the case in case, they still stand to loose in terms of reputation. Fight the FIs in an open court with public hearing. Although FIDReC exists for investment dispute resolution, its limitations favour the financial institutions (FI):
1. payout is limited to S$50,000.
2. investors must approach FIDReC on an individual basis.
3, Collective action is prohibited by FIDReC.
4. Lack of Openness
These limitations ultimately favour FIs.
Mr.. Tan Kin Lian – I hope you do not get upset by inspir3d (#43)’s rude comment, afterall inspir3d is the ultimate specimen of what we call the Ugly Singaporean, & like what our Prime Minister says, it would takes years to improve their social grace.
Keep up your good work, Mr. Tan !
I am glad that Lorna Tan the finance journalist is beginning to see light in the light of the current debacle that the way to approaching personal financial and investing needs is a need based appraoch and not product pushing and peddling which has been the cuase of the current problems.
Product selling and pushing should be banned for insurance and investment products. Therefore “product advice’ option in the ‘know your client” fact finding form should be removed and banned. The options should be multiple specific needs analysis or single specific need analysis, ie. options 1 & 2. only.
Removing the product advice option would reduce if not eliminate what is currently happening. Mis-selling or mis-leading advice or misrepresentation would be mitigated.
I urge MAS that if it is serious about overhauling the system this is the sore thumb and trouble maker. Cut it off IMMEDIATELY and not slowly or gradually and most of the problems will be reduced.
The second issue is the products.. Distinguish the products for different market segments based on demographics, gender and age.It must be specific and clear and flouting of this rule by adviser , both adviser and the company CEO or senior management must be held accountable and dealt with punitively.
Thirdly products must be checked for its financial usefulness, efficacy, riskiness and classified before approved for sale to the market.
I believe if these three areas are addressed , mis-selling ,misrepresentation, mis-leading and unethical practice can be reduced enormously.
of course lastly these rules must be enforced proactively and not for show to decorate MAS website and lying in the financial institutions store room.
MAS must assume direct regulation and not relegate it to the FIs entirely. It mustn’t trust the FIs to enforce it. They wont’ shoot their own foot.
All that is happening won’t happen if the FIs have been diligent and truthful in the implementation and enforcement of the MAS guidelines. The fact they didn’t.
Nip these problems in the bud and maybe Singapore can move up and replace
New York or London as the top financial centre in the world
It is time MAS enforces section 27 of the Financial Advisory Act(FAA) proactively instead of paying lip service.. All the mis-selling and misrepresentation and conflcit of interest wouldn’t have happened if advisers,consultants and insurance agents have complied with this requirement. Unfortunately, they are all product pushers and they push indiscriminately resulting in old folks being victims.
It is puzzling that product selling or pushing or product advice is still allowed. Don’t you agree that there is a conflict. How would you expect the advisers to use need based approach when product advice option is still available and encouraged. It is still an option in the KYC form . Is it meant as escape route for the incompetent insurance and bank salesmen .Is Caveat Emptor meant for the banks and insurance companies to absolve and protect themselves of liabilities?
What is the matter with MAS? Is it serious about practicing what it preaches? Is it MAS’s interest to protect the investor interest? These are the questions that many are asking now in the wake of the structured product debacle. I hope that MAS will be forthcoming with a sincere answer.
zhummmeng ,
try to say something more sensible. Always scolding financial institutions and sales people. It’s like they owe you …
And… please dont say CEO and snr mgmt to take responsibilities.. You think this is China or Japan or Taiwan where they will quit over any fiasco.
Nowadays, I believe only our part of the world does that kind of thing.. Even US nowadays, the CEOs are paid compensation to leave the bank even though they left the banks in a mess.
isa,
don’t you think the fiasco is due to the irresponsible salesmen or consultant for unethical selling, for mis-selling, for misrepresentation; the company CEO and senior management for for thinking of making money only and forget about the safety of the consumers?
I don’t know whether you have bought a financial product . How did the salesman approach your needs? Did she or he even ask about your needs, I wonder? I am sure these people didn’t comply with Section 27 of the FAA.If they had then we might not have this fiasco.
The CEO and his kakis ought to be given a kick in the butt for being greedy, bottomline conscious that they don’t care what their salesmen do.
Let me share with you this. if MAS is serious and walk the talk and not NATO this won’t happen again. The next change in the ground rules will cover the salesmen, the CEOs and their henchmen and everybody in the company for whatever happens to their consumers. No more blame game, taichi , finger pointing, or ‘I don’t know, I didn’t see’ stuff by CEOs
I always scold these 2, because these 2 are the pain in the neck. If you are following the present saga, have you heard anyhting from them? They are hiding
The whole world is demonstrating and there is no word of assurance from them .
If you are a victim or your parents lost their life saving you would not be saying waht you are saying.
I recommend that you read SECTION 27 of the Financial Advisory Act (FAA) before sleeping. It will either bore you to coma or you have insomnia.
`The market does not exist to serve the interests of financial intermediaries. It exists to serve the public.” – Joseph Yam, CEO HKMA
.
“You need regulators to take a view. You need a health warning.” – Joseph Yam
No one can deny that the financial market is to serve the consumers and not to make the intermediaries rich.
This has to apply too, to the insurance and the banking industry.
The insurance companies and the banks must not design products with the aim of profiting from the losses of the consumers or without considering the interest of the consumers.
The products of insurance companies are not designed to help the insurance agents achieve MDRT, COT or TOT at the expense of the policyholders .
The structured products are not designed to create employment for RMs, personal bankers and to provide profit for the banks by making the consumers bear the risk and loss and to let the banks earn the distribution fees.
MAS should emulate their counterpart in HK and see its roles in its perspective.
Capitalism is about balacing greed and fear.
Banks have evolved to becoming casinos, except they seem incompetent at pricing risk but very good at paying management and directors.
\Who is to blame – you and I:-
1. for electing wrong people to become regulators
2. believing the lie that value can be manufacturered by debt based ‘instruments”created by “smart” financial wiz kids and sold by slick salesman thru sexy RMs to idiots like us.
3. believing your banker is honest and concerned about your retirement.
4. if a great business has a hard time returning 10% on capital pa, how can a bank return 8% without risk???
5. being lazy and not seeking the truth for oneself and looking after your own investment.
A talk show host recemtly summed the current situation best – a failed presdient presiding over a failed legistature regulating a failed financial system – c’est la vive
If you think this is the EOW, try the CDS(credit default swaps) and credit cards next……..
a 15 trillion economy supporting a 50trillion CDS on a sustained basis? Dream on……the nightmare is becoming reality.
we live in interesting times………nobody will be spared, everybody will loose something. question is what do you value.
i think all the advisers should go through every page of the investment contract word by word with the consumers. if the government has done their part by enforcing this rules strictly, let say by 70% will do, then a lot of consumers will not invest and they will surely invest in cpf only rather than those high 5 bonds. then the quote will be singaporean should learn to take more risk rather than always rely on government. so the chinese character for an offical, guan, has two mouth they can say anything.
the thing is if any government has not done their duty well to protect the citizen then next election we should surely not vote for them. but the thing is now it still not very close to election, i wonder if suitation will be different if it is near election with so many angry investors who are misled. but i still guess if it is the election time i might still do not have a chance to vote again, or will i ever have a chance to vote in my life time even if i live till 80 years old with all the GRCs. i think the MP which i vote for if i really have a chance, (currently i really feel i have little chance to vote in an election at my place bukit batok now or future), will speak out against those bad advisers or banks or insurances companies. MP in parliment please say something, do not keep so quiet when your voters needs you.
i read on newspapers that an old lawyer is going to fight a case to let bukit batok to have an re-election. he is so old and he never give up to help people. so many MPs are so young and rich yet they cannot stand up for their voters this is very very sad. in the end i can say lucky and unlucky. unlucky because i never get to vote for my bukit batok MP so i cannot say anthing. those citizen who has vote should voice out loud and clear. lucky is i learn that i must force all my advisers to go through all the contracts word by word with me and lucky i do not have an MP who i have ever voted into the parliment. if you have one and the MP never help you sad for you.
there is one thing i am very curious about mr tan kin lian. you are the ceo of insurance company for many years and yet now you warn people about bad insurance. it really something special or different. will those people in insurance hate you very much. because it is something like last time you are on same boat with them now you are against them. something like betrayal.
i guess usually no one who work before for example, big organisation or civil service, will tell all the dirty linen. And are you afraid of revenge by people who might hate you? but i hope that you are safe because i personally think you are doing good deeds. but what your motive or ideal or goal?
i am just curious and if i have mentioned anything not right please correct me and i am sorry. thank you.
Hi question (#65)
There are good insurance products and bad insurance products.
A good insurance product offers protection at a fair premium. There is a fair margin to pay the sales person and to cover the expenses of the insurance company and give a fair profit margin.
There are bad insurance products that over-charge the customer and pay exessive commisison to the sales person and make excessive profit for the insurance company.
I want to encourage insurance companies to sell good products that are fair to customers.
I also want to encourage the banks to sell good financial products. The structured products are bad products because they give poor value to the customers in relation to the risk. The product creators and sales people take away too much in charges, and leave the investors to take big risks (like the minibonds, high notes, etc). These products are like high cost insurance policies, but many times worse.
I hope that more people will come forward and speak about business ethics. Do not go out and cheat customers. Give fair value to customers.
More people should also tell the regulator and the Government – look after the interest of ordinary people, the retirees, uncles and aunties and also the young people. Do not allow these ordinary people to be cheated out of their hard earned savings.
the old lawyer has pass away, he fight till his last days. he is a hero equal or if not very close to lee kuan yew in terms of ability. i wonder will another lawyer will continue his foot step to go to court with regards to re-election at my place bukit batok. rest in peace hero hope you will bless singaporean in heaven.
When there are crooks, cheats, mobsters and other undesirables, these people deserve to be blamed for misbehaviours. But, if there are widespread nonsense around, it can be said that enforcement and enforcer are negligent and it is fair to say so.
patriot
“More people should also tell the regulator and the Government – look after the interest of ordinary people, the retirees, uncles and aunties and also the young people. Do not allow these ordinary people to be cheated out of their hard earned savings.’
It is a dream that these animals called RMs, financial consultants, insurance agents will ever have the interest of the ordinary people at heart. At the heart of these animals is only commission. These animals cannot distinguish the old from the young , the male from the females , the rich from the poor. They only see commission and money. They only see MDRT, COT or TOT. They only see their own retirement.
At the funeral wakes these animals shed crocodile tears because these buayas
only have a chegue with amount enough to settle the funeral expenses.When they see the deceased’s widow and children they are happy because they see more whole life insurance polices to sell. The cheque is only enough to settle the funeral bill. What a noble profession with a noble cheque enough to help the widow settle the last expense which otherwise would have to come from widow’s life saving. What noble gesture these animals have shown at the funeral wake. The widow is so touched that she need not think of the funeral expenses because her late husband bought a Whole life policy of of $25k costing $150. What a leverage WL insurance is. It is just a piece of paper and ink and yet so much powderful. Phew!!! It is one load off her mind.
We need animal tamers and trainers and not regulators
at least the US Senate knows the decency of looking after small investors/retirees by protecting their savings at the banks. what is mas going to do ? increase the protection from $20k to $21 per account. or better, don’t do anything ?
Hi Dodo,
Sorry to disappoint you about decency………
Alot of Congress members and Senators have to face their “bosses” (public) for their jobs in 40days time – it is called an election and they understand who and what their bosses need – these are the working guys in main street far away from Wall St.
Nothing to do with decency but everything to do with contigency of being re-elected!
Just a thought :
If drugs-pusher who sell drugs get death sentence because it ruin someone else life, should not the junk-security-seller also deserve some sort of punishment for ruining someone else’s life ?
Well, if we follow the principle of “Caveat emptor”, then there isn’t a need to enforce this law. Everyone knows the danger of illegal drugs, but without the law who is there to protect those who can’t resist from the “temptation” of those pusher who has no qualms in selling to anyone as long as they get $$.
The financial consultants from the banks and insurance companies have no qualms at all so long they get their commissions. Die is their the consumers’ problem. At the banks the RMs fleece the old folks and the frail. At the roadshows the insurance agents prey on the weak , the aunties and uncles, the illilterate and the gullible bullshitting them about revosave can be used as annuity and revosave to pay for vivolife for free.This is clear misrepresentaion and unethical . MAS is not bothered. They should send mystery shoppers to nap them in the act.
Before another debacle happens these people and the companies and the banks
should be stopped and prosecuted for breaches of the FAA
SUppose I am a dairy-product manufacturer (from China of course)
Suppose the dairy-product called CDS (CanDoSuperly) contain certain amount of MELAMIN-X
Suppose in the label of the CDS it contained these statement in small print “MELAMIN-X is protein that enhances your mojo, but may constitute health risk if consumed in excess quantity.”
SUppose a salesman in the store approaches you and recommendeded you to buy this product, claiming that the risk of developing health risk is 1 in a billion.
Suppose you being a financial wizard (who sold similar CDS security product) thought that MELAMIN-X is a kind of supplement and trusted the store to sell only safe product, made some mental calculation (base on statistic) on the benefit versus risk and believed that the benefit outweight the risk; and with the persuasiveness of the salesman (equal your own) you decided to buy a carton of the product.
SUppose after consuming for a few months, news broke out that MELAMIN-X will cause Kidney stones and that being careful went for a checkup. Lo and behold, indeed your kidney is full of stones!
Suppose you wanted to undergo immediate operation to remove the stones, but doctor tells you that it is too late (you need a KDS – Kidney DEFECT SWAP). You complain to the health insurance company to get compensation for the operation, but the insurance company said too bad, it’s your own fault! You did not read the small print!
Questions :
1. DOes putting a warning in small print reduce the liability of the manufacturer and make it more acceptable to be sold ?
2. Is it morally right for the me to sell you the product knowing that it contain health risk – however small it is ?
3. You being a layman (even though a financial wizard no less) knows nuts about these health-related jargon but trust the store and salesman to know enough to warn you about the risks, should you take the blame alone ?
4. What recourses do you have ? Is the authority suppose to protect me from these fraud ?
The unfortunate outcome of this story is :
Manufacturer – Closed down, owner bankrupted, but plan to start over again, with CDS version two
The store and salesman – Get to keep their commissions and sales revenue, got a minor slap from the authority
The AUthority – Sit tight and wait for the whole saga to blow over.
You – Getting a KDS (Kidney Defect Swap) because you had too much CDS. If lucky enough maybe discharged from the hospital in a month’s time – with your pocket lighter but at least you get to keep your life.
(Hey, you are a financial wizard, you already know how this works)
Someone else may not have the luxury as you do.
Alll financial products should be marketed like drugs and medicine with details of of the components, the side effects, the indication and contras and warnings, dosages for chilldren and adults and so forth. In the first place they must undergo clinical test before putting out for sale in the markets.
If financial products have such stringent requirement, approval from FDA, then the products will be safe. Next is the seller ,the pushers, and if we can have some rules how these product are to be dispensed and recommended. The ‘doctors or pharmacist’ (RMs and the insurance agents) must bear some responsiblity and have reasonable basis to recommend the products or solutions to the patients.
The watch dog must show its teeth and have a presence to deter malpractices.
The consumers are no wizard.. The advisers , the RMs, the insurance agents are the wizards.
Poster Zhummmeng has been tirelessly reminding the readers here of the dangers, both hiddened(some intended) and latent risks of financial products and what regulators ought to have been awared of, in their duties in policing the financial industries. Remember I wrote that MAS is fully qualified and awared of its’ duty?
It is very unfortunate that much of todays’ commerce are in the hands of less scrupulous businessmen who employ crafty, unethical, underhanded tactics and sophisticated complex techniques to make their money.
If I may used the behaviours of cat and dog to relate to businessman and the regulator, some might find it farfetch. But, if one is familiar with them, one will find that, yes man(kind) does behave same same.
Dog, when well fed, tends to be clumsy and lazy, as for cat, when fed well, not only becomes fat and lazy, it becomes friendly with mice and rats. Oh, not exactly friendly but can live with them peacefully. They can gather together, look at each other at close distance, even side by side. This phenomenon is quite common at most rat infected HDB Estates. Tell me if it happens at your places.
Unethical businesses malpractices have been endemic in commerce and it had overflowed into governing and enforcement authorities since time immemorial.
People, by and large, want propriety, love and happiness, but the need for regulators and enforcers show that ideals are more farfetched and evasive than a sinful man struck down by lightning.
Nevertheless Zhummmeng; You deserves my highest respect for the ideals You promulgate.
Yours respectfully: patriot
Just like to share this piece of news hot from the stove (HK). With the help of HKMA mediating, those who had invested in the Lehman affected mini-bonds, there is a possibility that they might be able to get back 60~70% of their investment. Hope they do though as there are over 12 billion HKDs invested from the small investors. Here is the link (albeit in Mandarin) http://hk.news.yahoo.com/article/081006/3/8kyt.html
Wonder if that would shed a light for MAS or the Singapore Authority to follow suit.
Every other financial regulator in the world has banned short-selling, with exception to MAS of course. This makes you wonder if MAS is in cahoots with financial institutions.
Big Fish wallop small fishes. Big Fish’s mouth is Bigger. Once the mouth of Big Fish opens, all small fishes swim into the stomach by suction force and semua mati!!! This was what actually happened.
The watch out word is “greed”. The Big Fish is also greedy. An instrument called “Structural Deposit”, “Notes”.”Mini Bonds” was planned to lure small fishes into the mouth. Provided the mouth is open all the time, the small fishes can excercise “freedom of choice” swimming in and out happily. Once the mouth close, what happens?
Oscar (#78):
You completely missed the point here. I am only want MAS to investigate. MAS says they will investigate if there is evidence of mis-representation and mis-selling. However, MAS should be suing the banks if there is evidence of mis-representation and mis-selling instead. This is only fair because personal bankers have privelleged access to information with regards to valuation and risk of these structured products while retail investors have neither the sophisitication nor background. Go look up Section 27 of the Financial Advisor Act in your free time.
“78) Oscar Choy on October 7th, 2008 6.24 pm
An instrument called “Structural Deposit”, “Notes”.”Mini Bonds” was planned to lure small fishes into the mouth.”
Hey, your said the word ‘lure’ yourself. So any culpability on those people who may be exercising the act of luring, if any. Probably not for you. Because “small fishes can excercise “freedom of choice” swimming in and out happily”.
What happened if the small fishes are decent aunties & uncles and the people doing the ‘luring’ have this picture of an angel (trusted institutional name) pasted on their foreheads.
80) To lim on October 7th, 2008 6.35 pm
Should be to Oscar Choy
“77) Donaldson Tan on October 7th, 2008 5.21 pm Every other financial regulator in the world has banned short-selling, with exception to MAS of course. This makes you wonder if MAS is in cahoots with financial institutions.”
My friend, Donaldson. Singapore is unique lah. The is what you will get if you are not politically and financially aware from the lack of openess / discussion on the “dirty & messy but important stuff” due to a very controlled msm. At least, you are trained to size up on all these matters.
And here, we still have some other people trying to perpetuate the very kind of approach that should not be there in the first place. Who are they trying to protect.
Donaldson Tan,
applying section 27 of the FAA will be considered ‘over regulation’. This section is meant for FIs to hang it in their pantry or to decorate the customers service area.
Miss-selling and misrepresentation is between the consumers and the FIs to sort it out..We don’t want to ‘chap’ otherwise we will be seen as busybody and over regulating…’”we can’t force the banks to compensate the consumers. This is father and son affair.”
zhummmeng (#84):
So the ¨father and son¨ are in cahoots.
We must keep up the pressure on MAS to enforce section 27 of the FAA so that consumers can get responsible and competent advice from the real advisers.
Salesmen can’t. The problem is the consumers are bewildered by the many titles these salesmen used to disguise themselves .
Dunno which one is the right one. Every salesman claims he or she is an adviser.
Maybe we should ask, Excuse me, can the real adviser stand up. i bet every one of them will stand up…..susah lah
zhummmeng (#85):
The personal bankers, relationship manager, etc at our local retail banks are financial advisors. They fall under the category of the Exempt Financial Advisor as they derived their license by being a representative of the bank they work for. Hence, these sales people still falls under the jurisdiction of the Financial Advisor Act and are liable for their recommendations, as described by Section 27 in the same act.
How the markets really work (from 2007)
How did these comedians see it coming
when financial reporters did not?
http://www.brasschecktv.com/page/187.html
Why $700 billion bailout of banks is far short of the amount needed and why many banks will fail anyway.
(Whatever you call it, $700B Bail out, Buy in or Rescue Package, it’s the same thing.)
http://www.moneyandmarkets.com/files/documents/Final-Bailout-White-Paper.pdf
Look at this article…
http://biz.yahoo.com/ap/081008/bank_of_america_settlement.html?.v=11
WASHINGTON (AP) — Bank of America Corp. has agreed to buy back up to $4.7 billion in auction-rate securities to settle charges it misled thousands of customers about the risky investments, federal and state regulators said Wednesday.
Full detail…
Finally, SEC in US in doing something right. The regulator in US did not say CAVEAT EMPTOR, BUYER BEWARE. They responded and there is compensation action by the accused bank. I hope it will be the same for Singapore. If a wrong is not corrected / punished, then our social moral has taken a big step back.
Let look at this from another point of view. If big institutions can misled you and they have CAVEAT EMPTOR as the ultimate weapon, then the society has failed.
It is as good as saying:
1. I can misled you. If you do not believe, then I have done nothing wrong since you have not taken the bait.
2. I can misled you. If you believe, then I have done nothing wrong since you accept my misleading by signing.
Can we accept this kind of misleading?
Caveat Emtpor cannot be applied to financial products just as it cannot be be applied to medicine or drugs especially prescribed medicine.
Financial products must be prescribed too and by a financial doctor and NOT by a salesman.
The financial doctor or adviser is responsible for any out come of the prescriptions or recommendations and if it is found that the dispensing or prescription breaches Section 27 of the FAA and the prescription is NOT ON REASONABLE BASIS the adviser is liable for professional misconduct and should be punished. The aggrieved consumers shall be entitled to full compensation plus any loss of opportunities by the adviser or the adviser’s employer or both.
Whatever you call it, $700B Bail out, Buy in or Rescue Package, it’s the same thing. – Mozi (#88)
What about progress package? it is pork barrel too.
Ultimately, it is the banks’ responsibility to ensure that the products they sell to their customers are explained throughly and the risks involved are made known.
But how many of these Realtionship Managers actually know what thet are selling? Those who encounter these people at DBS may know.
RM is just another name for a salesman. What they are concerned about is not the customer’s welfare but meeting their sales target. As long as they do, anything that happens after you sign on that dotted line is not their problem.
How can an everyday person be expected to know the risks when the ones pushing them don’t?
What are the qualifications required to be a RM? Looking at the job site of DBS, not much.
These people should also be held responsible for misrepresentation.
The RMs, the financial consultants, the insurance agents go through the same exams. The exams are so low that they make a mockery of the word finance. If you let the monkeys take these tikam tikam exams I am not surprised they too can pass and can be licensed as financial consultants or RMs or personal bankers.
Yes they are all salesmen. To decieve the public they now have fanciful names like RMs, personal bankers in the banks and in the insurance companies they have names like senior financial consultants or exeecutive financial consultants .. In my opinion they are at best a direct snake oil salesmen and at worst consalesmen or financial exeecuthieves.
Their roadshows are like the waterloo pasar malam street stalls selling koyok.
I agree. All these Financial Advisors like to showcase this cert or that diploma in insurance but what do they know? These people are only savvy at making themselves ’sound credible’ or sound ‘honest’.
Anyway, a lot of these 20 something, 30 something salesmen just talk shop. At the end of the day, no matter how honest they make themselves to be, they are just people who are after your money. Come on lar, you think they really have your interest at heart? I spoke to one who used all the nice words, “I understand your situation”, “I also go through it myself”, “Unlike the rest, I sell only the cheap policies to you cos I have your welfare at heart”, “I also have all these policies”, etc, etc… I’m sure many of you out there have heard of such things before and been conned.
So, please, really take care of your hard earned money. Don’t think that financial advisors are always on your side even if they claim to be. A lot of them will be getting you to invest and buy policies from them now, they’ll tell you that it’s a good time, think through very carefully, dun fall into traps or else, you’ll be like poor Mrs Lim on the news. Lose all your hard earn money.
What about investors of Pinnacle notes, what is the status now, all this talk about mini bonds and DBS high notes only.
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