Don’t touch it because you are going to take 1 year to read and to overcome a lot of roadblocks like the technical jargons, both legal and financial, you may still not understand. But once in your hand you are ASSUMED to have understood and have become a financial expert to be able to make the INFORMED DECISION. It is Caveat Emptor..The FIs and advisers responsibilities end here. You die your problem.

84 pages???? I didn’t even bother to read everything in the newspaper.

honestly speaking i will not read these things. i will just follow the professional advice by the bank or adviser.

but their advices cannot be trusted because if they have the goal of just selling the product and earn a lot of commission, surely they will not be 100% truthful.

we should never believe in banks and advisers again but need to do find out more ourselves.

so mas what are you going to do about this now?

or mas yourself are still reading these things and have not finish reading and understand them?

so how to you expect common folks to understand them and not be cheated by the banks and advisers?

So basically, what MAS is saying, is, it is not their fault. Their responsibility is up to the part where the prospectus is defined properly. HOW the RMs sell the bond, even lying that it is low-risk, is not their problem, but the problem of DBS to investigate. I seriously dun think MAS can wash their hands off this fiasco so easily. IF anyone has their ears on the ground, they would have known that this kind of mis-selling had been rampant. I mean, seriously… didn’t anyone get a bad feeling inside them whenever we walk down orchard road and see all the roadshows put up by the banks and think… something is gonna happen soon? Oh, silly me. MAS’s role is not to protect the common folks of course…

MAS MUST make the FIs and the advisers responsible for the fair dealing outcome.
How? Have only one rule.. and that is section 27 of the FAA
Currently MAS allows few options for the advisers to deal with the consumers., product advise or need analysis before product recommendation. Most unscrupulous advisers and insurance agents will choose product advice. Why? no need knowledge except some positive features to tell and sell the clients. Fast and easy to make commission. If the deal goes wrong they can claim
Caveat Emptor for protection. Just throw the prospectus at the clients.

The prospectus, as with all others, is written to cover the ass of all parties involved except the buyer. It will be relied heavily upon as a piece of document in any legal case and there will be many lawyers who will not make it clear to their clients, the impact of such clauses on the success of a case.

Reading today’s MSM, it is clear that many people are seeking legal advice but do not seem to be getting sufficiently clear advice, just like how they did not get clear advice on investment. Suits are incredibly expensive and even class action suits are still likely to cost investors significant amounts of money for very little chance of success.

People need to understand what mountains client lawyers will have to climb to even get a positive judgment much less enforceability. The last thing is not only lose money on investment, now also spend loads on legal fees.

Clauses like the below are very significant. If you’re thinking of legal action, make sure you get your lawyer to explain the effects of these clauses to you.

btw, just for clarification, I don’t work for any law firm, Govt or financial institution.

For myself, I would suggest finding ways to show illegality and breach of contract. Not easy to do or I would have clearly defined the way out already.

Clauses:

“It is important that you familiarise yourself with, and ensure that you understand and accept, the terms and conditions imposed by the Distributors.” – Pg 11.

“The purchase of the Notes involves certain risks including market risk, credit risk and liquidity risk. Investors should ensure that they understand the nature of all these risks before making a decision to invest in the Notes. In addition, on the occurrence of a Credit Event (as defined herein) in respect of a Reference
Entity, Noteholders could lose all or a substantial part of their investment in the Notes.” – Pg 17

“For the avoidance of doubt, none of the Trustee, the Arranger, the Issuer, the Agents, the Swap Counterparty, the Swap Guarantor or guarantor of any Underlying Securities and any entity on whose condition the payments on the Notes are dependent has any obligation to any Noteholder for payment of any amount by the Issuer in respect of the Notes. There is no guarantee from any entity to Noteholders that they will recover any amounts payable under the Notes.” – Pg 19

Does anybody have the DBS High Notes 5 Prospectus? No doubt there are too many jargons. The prospectus is written to protect the issuer, the arranger and the guarantor.

It is not written to educate the retail investor. There are some people who think bonds only refer to government bonds, while in reality, the debt market has a variety of debt instruments, from commercial papers to CDOs, senior secured notes to mezzanine debt.

Who would think that Swap Agreement (in the plain English sense) refers to the Credit Default Swap? The standard of the prospectus clarity is appalling. If the prospectus is to target retail investors, it should be written in such a way that assumes the retail investor has zero background knowledge.

Key information such as the weightages of different securities and derivatives and cash flow modelling are also missing. Even an ordinary equity research report can do better.

HOW CAN INVESTORS UNDERSTAND ALL THESE MUMBO JUMBO ?

CASE should educate the public how difficult it is to UNDERSTAND THESE Jargons.

Is it not commonsense that unless you are a FI expert with strong legal knowledge, one cannot understand fully the fine prints and that its unwise to purchase investment products when its difficult to know what you are getting into?

I hope now people wake up their minds.

YOU are responsible based on contract law when you sign on the dotted line. This is the system.

#6. I would have seek legal redress too if i am involved for they are looking out for the “previlege few” only. If you are educate, it would assume you should know never mind the 84 pgs of jargons or the FI advisor sales pitch

“Investors should ensure that they understand the nature of all these risks before making a decision to invest in the Notes.”

“Noteholders could lose all or a substantial part of their investment in the Notes.”

It will be difficult to demonstrate in court that one can’t understand the above sentences as the financial institution’s defence lawyers will point out.

Still, I appreciate greatly the efforts of people like Mr Tan Kin Lian who spends his valuable time explaining/advising ordinary people above financial products.

Its exactly the same situation in insurance where clauses like “pre-existing” condition aren’t even explained to people who buy medical insurance until the claims kena rejected.

We need to encourage more people like Mr Tan but most people who have the time, don’t bother. Often too, those who do bother often get bombarded by ignoramuses and internet trolls.

Thank you for sharing the article.

When I bought my HDB property, inside also got a lot of engrish words, but i read them anyway because i think i should because i going to put $500/mth into the property. i get a friend to explain to me when i come across words i don’t understand and use a dictionary.

Sometimes, my favourite paper for learning engrish, the Straits times also have more than 50 papers in total, i got free time, i read every page.

Based on my limited engrish, i read 1st page last two paragraphs in bold, it already said Notes are not guaranteed and investor can lose everything. i see this kind of words normally i stop reading and walk away, because it already said not guaranteed and can lose money. i dunno why people want to continue after reading 1st page.

furthermore 1st page tell me this document is important. If i am in any doubt as to the action i should take, i should consult your legal,financial, tax, or other professional adviser. i guess those who invested already consulted their legal, financial, tax or other professional advisor. i don’t ave any friends advising, so i would have walked away from such products.

i follow the 1st page advice, turn to “risk factors” and read: pg 17-20 details the risk, including bankruptcy of issuer and that investor can lose everything. seems to me the prospectus has got many detail, which is a good thing. it also strongly recommend investor to consult their financial, legal and other advisers before making any investment decision.

i think whether one are engrish educated or not, got degree or not, one should be careful with money and do not buy things one do not understand. like i don’t understand how a car works so i don’t buy a car, just take taxi, public transport or walk. i don’t understand how microwave works, so i don’t buy microwave. see 1st page of prospectus and still proceed to put in $100K – $200K … i personally think these type of people very brave, the high risk type, not low risk like myself.

i live a simple life, understand simple reasoning, do simple things. i buy things because i understand how they works. i heard an elderly man in USA, for many years, also tell people to buy only the things that they know, sori i can’t remember his name, my engrish poor, but i thing it is old good advice.

We lease from HDB even if you pay in full. Is this not true?

I hope from now on, everyone when TRUSTING something, anything, should TRUST based on PROVE, black and white that is understood. ‘Blind Trust’ should be erased from our vocabularies.

No more Blind Trust and Believe! People Wake UP!!! Else, experience another fiasco in time to cum!

#9. I am not here to say it is wrong to go down the legal route. If I’m in the investor’s position, I’d like to sue as well.

I am here to say that if you choose to go down the legal route, make sure you spend your legal fees (and there will be) wisely.

Lawyers charge by time spent. Get an understanding of how much legal fees are going to cost and ways to maximise your cost. Losers in a case often have to pay the legal fees of the other party (and it won’t be your lawyer forking the cash). Often, the other party has absolutely no qualms about spending millions on the best lawyers to defend their position and financial institutions can afford the best lawyers. 2 days in court by Mr Davinder Singh costs $50k. Such cases could take months due to the complexity.

Don’t make an assumption that the legal route WILL be successful. That’s a mistake.

someone with poor engrish,
how long did it take you to sign on the dotted line. After one month? one year?
but these poor old folks were made to sign after 30 minutes. They didn’t have a lawyer or a financial expert at their side ready to check on their behalf.
They weren’t allowed to bring home to read in the toilet. Yes they had superb engrish but they weren’t that smart like you, albeit poor engrish.

i’m not sure where to post suggestions for the forum, so i thought i might post it here.

we have seen many good articles and comments in this site. it does create awareness of current issues and promote exchange of ideas among forum-ers. but i find that the rapid news update put yesterday news into the archive and thus no attention is given to yesterday news. however, the problems of the issues are still not resolved.

i suggest a column specifically set for a summary of the hot debated articles with proposals put froward by comments of poster. this will give a summary of what’s happening around us and our citizen’s views on these issues. this also facilitate the review of such cases, especially in those that required actions to be taken or to be brought up to higher authority.

to a poor man who is a victim, i wonder
how much of a top lawyer’s time he can get compared a rich but evil t-rex ?

Mumbo Jumbo?

The first section of the “RISK FACTORS” explicitly states:

Risks relating to the nature of the Notes

Suitability of the Notes

The purchase of the Notes involves certain risks including market risk, credit risk and liquidity risk.Investors should ensure that they understand the nature of all these risks before making a decision to invest in the Notes. In addition, on the occurrence of a Credit Event (as defined herein) in respect of a Reference Entity, Noteholders could lose all or a substantial part of their investment in the Notes. This Base Prospectus and the Pricing Statement are not and do not purport to be investment advice. You should conduct such independent investigation and analysis regarding the Notes and the other assets on which theobligations of the Issuer under the Notes are secured as you deem appropriate. You should make an investment only after you have determined that such investment is suitable for your financial investment objectives. You should consider carefully whether the Notes are suitable for you in light of your experience, objectives, financial position and other relevant circumstances.

———————

this is such simple and straightforward English that does not even start to define what a credit default swap is, and people are calling it “mumbo jumbo”? hilarious indeed.

and for those who didn’t understand english, then why touch the investment in the first place???

to “trust” the advisor or RM completely with such an important investment decision is to engage in a complete abdication of one’s responsibility to be clear about what one is investing in…

i seriously don’t see how this is defensible in a lawsuit.

You should conduct such independent investigation and analysis regarding the Notes and the other assets on which theobligations of the Issuer under the Notes are secured as you deem appropriate. You should make an investment only after you have determined that such investment is suitable for your financial investment objectives. – Lehman Minibond Prospectus

to “trust” the advisor or RM completely with such an important investment decision is to engage in a complete abdication of one’s responsibility to be clear about what one is investing in… – inspir3d (#18)

inspir3d (#18),

Do you know that fiduciary duty is expected of RM?

Is the Hong Lim event still on for this weekend?
Can anyone confirm?

16) blade

Indeed, I was about to write something similar but you beat me to it.
I second your suggestion!

Inspir3d,
going by your reasoning that every one should make independent investigation and anaylsis and also to determine whether the investment meets objective and only after all this done then one should only invest . I tell you, only 5% of the population can invest and you won’t have this problem as we have now. This savvy 5% buy at their own risk. Buyer beware…caveat emptor and in this case you don’t need the banks or RMs or the insurance companies or advisers, they can buy online and save the commission.
The real world is even CPA, doctors, engineers, PhDs when ti comes to financail products they are idiots. They need help and from the expert advisers to tell them whether they are GOOD or BAD products for them. There are bad and good products.Some are good for the goose and some are good for the gander and NOT what is good for goose is good for the gander attitude.The advisers must be competent to assess the suitability for different people.Very simple you need someone who will put YOUR INTEREST FIRST and is COMPETENT to advise you that. This should be the rule of MAS and not you read and understand and then invest and bear all the risk and by yourself..
The sellers must be responsible for warranty and defects if they are manufacturing defects. Mis-selling and misrepresentation are manufacturing defects and the buyers should be entitled to a new replacement or compensation.

To: inspir3d

What is hilarious is that according to the prspectus, to make that extra 2 to 3%, I would need to pay an independent financial adviser to go through 84 pages of technical jargon!! I would probably incur more costs that the returns that I may get from the investment.

22) zhummmeng on October 22nd, 2008 1.16 pm

Like you posted your comment in other related articles. These RMs, Insurer, Financial Advisors are “chek Ark?”. I termed them professional “buaya”. But then again, they are paid to do their job right. You can only sigh and said that the bait is enticing enough to lure unwary people eager to make some good returns with their hard earn cash. This all sounds reasonable when things are working. Nothing wrong with that right?

I am in full agreement with “someone with poor English” very candid perspective. On the other hand, as a human being and fellow conscience Singaporeans, whether you are affected or not, the empathy is there for those poor souls who are seriously affected.

I am assuming the minimum sum of investment is S$10,000 (honestly, I have no idea). Previously, some had claimed that they were told that these bonds were safe investments and low risk but was never being told that it was Lehman related. I wonder were they issued this prospectus to read through or being brief through or they just signed blindly without even bothering to read a line or two? I seriously doubt that anyone (whether you are savvy or not, educated or less-educated, understand English or have no idea of the language at all) will part your hard earned money within 30 minutes without ever knowing what you are signing up for. The Ah Soh and Ah Kong going to market will bargain over the $$ items they are buying (even if they can get the price down by a small percentage.

Reading from the posted prospectus like many other similar IPOs “and the fact that many people will just ignore most part of it, who would read all 84 pages long?”, that itself is already a trap if you want to call it one. If ever there is going to be litigation, it is for the breach of “Trust” (could be the RM and the Client or Issuance Company and the Client) and it is a hard to prove as the arguments in court for damages or claims assessment will largely be based on the prospectus signed by any investors. Some can also argue there is mis-representation or “mis-selling”, it is your words against the RMs or FI’s and they can backed it up with this signed prospectus if you have no witness or recordings or anything in writings that prove otherwise. Clearly, the advantage is not on the investor’s side.

[...] the 84-page minibonds prospectus is available on the TOC website, here. A brief browse into the contents of the prospectus reveals some interesting information. On [...]

23) Tiang on October 22nd, 2008 1.17 pm To: inspir3d

What is hilarious is that according to the prspectus, to make that extra 2 to 3%, I would need to pay an independent financial adviser to go through 84 pages of technical jargon!! I would probably incur more costs that the returns that I may get from the investment.

——————————–

EXACTLY! precisely my point!!! You are a smart man!!!

if you dont understand the prospectus and it costs too much to pay an independent financial advisor, then JUST MOVE ON AND DON’t INVEST.

*clap* *clap*

“22) zhummmeng on October 22nd, 2008 1.16 pm

The advisers must be competent to assess the suitability for different people.Very simple you need someone who will put YOUR INTEREST FIRST and is COMPETENT to advise you that. ”

——————————

Yes. CORRECT!!!

But how in the world is the government going to assure this???

There is no qualification or accreditation in the world that will gaurantee that an advisor will be ethical and competent!!!

Even CFAs and finance PhDs underperform the market!!!

Welcome to the wild wild world of investing!!!! =) =)

#15: zhummmeng

i know you like to push all the blame to intermediaries/agents/whatever, that’s your choice. maybe to you, “investors” are always innocent, blur blur, dunno anything, naive, simple-minded.

but i was commenting only on prospectus.

it is not a matter of being “smart”. even if everything is super-clear, clear until transparent, everything disclothes until naked, would you part $10,000, $50,000 or $100,000 in 30 mins? I won’t. if i put money in fixed deposit i also check with all the banks for a few days (coz I am old, dun no how to use computer, have to call the banks to ask), wait to see if the rates will increase, discuss with my old friends, talk to my children, before i take my money from safe/saving account and put inside fixed deposits.

my points are related to prospectus and nothing else:
1. mis-selling is one person’s words against the other – i am not commenting on this as i don’t know the actual facts and circumstances when the person bought the product;

2. the prospectus, as far as my limited engrish is concerned, let me know from 1st page onwards that none of my money is guaranteed. Investment is not guaranteed and can lose entire sum. what else you want it to do – have pictures drawn for you? maybe write out in font size 40 and bold in red ink and say “no capital guarantee”, maybe translate to 5 different languages: engrish, chinese, malay, hindi and with pictures?

3. people who invest one large lump sum into any product that do not have a guaranteed return, within 2 hours, is hardly considered “low-risk” investors. low risk investors, like me, leave money in saving bank account or in my safe and we very kiasi one, will check with other banks or friends or our children and think about it for a few days.

i feel sorry for those who lost money, but that’s another issue altogether. i am commenting on the prospectus and whether those who purchased Lehman Brothers-backed Minibond notes had the risks of these products adequately explained to them in the prospectus. 1st page already tell me in bold that i can lose all and nothing is guaranteed. Cannot take this kind of risk, don’t touch it.

“There will be no guarantee from any entity to you that you will recover any amount payable under the Notes and you could lose all or a substantial part
of your investment in the Notes.”

If cannot understand 1st page but yet willing to put in $100,000 or more, well … i can only say good luck to you and your investment.

Bottomline is – if you don’t understand, then don’t invest. Period.

Stated in NORMAL print (and not small print) and in BOLD on the FRONT page in the second last paragraph in SIMPLE, PLAIN English is the following:

The purchase of any Notes to be issued under the Programme involves certain risks. You should ensure that you understand the nature of the Notes, in particular, the section headed “Risk Factors”, and should carefully study the matters set out in the relevant Pricing Statement, before you invest in the Notes. There will be no guarantee from any entity to you that you will recover any amount payable under the Notes and you could lose all or a substantial part of your investment in the Notes.

To my knowledge, the relationship managers aggressively marketed the products to the aunties, uncles or people with poor english.
How the RMs sweet-talked and conned them is an art.
They wanted them to make the decision on-the-spot after vaguely explaining the terms and benefits to them.
Do you think they will bother to read the prospectus at all when they have the assurance that it is supposed to work like a fixed deposit?

someone with poor English,
you said that you feel sorry for those who lost money, and yet you said “If cannot understand 1st page but yet willing to put in $100,000 or more, well … i can only say good luck to you and your investment”.
Although i’d applaud you for not falling into the trick of the banks, i would like to appeal to you that things are not as simple as you see.
People are being tricked, yes being cheated.
It is not simply a case of negligence.
Please think deeper.

31) don on October 22nd, 2008 4.34 pm

Given any conscience fellow citizens, I believe, the empathy is there. In cases like these, emotions always rule. I am not speaking up for “someone with poor English”, but I think he meant well and within the context of the prospectus, he is absolutely correct in his judgment.

The hard fact now is to prove there is clear breach of “Trust” if ever cases are to be won in any litigation. That is easier say then done. The evidence and fact may not be present at all to indict those FIs, RMs and the likes for any wrong doings. Even if they (investors) have won their case, I do not think the hope of full recovery is possible. At the end of the day, it will end up lawyers making a healthy sum for sure. So, we may want to make a plea to all professional lawyers to have a conscience heart to do some samaritan work to aide these helpless souls. These Institutions are no lame ducks.

In Hong Kong, the Hong Kong Consumer Advocate CASE is trying to help those investors but their reserves to file court cases proceedings is limited, they are thinking that the HK Government will top up to help, but then I want to ask, is this fair to those “tax payers who have to pick up this tab” who had nothing to do with these at all?

Have you all noticed this? When you talk to a relationship manager at the bank about some financial products, in the process they always write things on a plain piece of paper, the key points, interest payout, at what pt. in time…etc.

When you are done, even if you sign and buy the product, they keep the piece of paper they had been writing on? They won’t let you keep it. So your only way to keep evidence of how they sold a product is carry a tape recorder with you and tape that conversation.

I think BANK owners are lucky businessmen.

The interest rates to people who give their money to banks for keeping receive extremely low interest rates. Factor in INFLATION, I think its like near zero interest.

So, BANKS are lucky.

I want to own a bank. Can use people’s money for investments and then when the depositors want to withdraw, then only banks return money to depositors.

People so kind, give banks money to use, and then withdraw as needed.

Bank owners are so so luck. They should thank the PEOPLE.

If the intermediaries have conscience half the battle is won for the consumers.
In other words there is INTENTION to put the clients’ interest first. Cannot play play with cleints’ hard earned money is in mind. Next is how to grow the money for them? The question to ask is ” is it safe for him or her”. What if i burned their money, or I burned their retirement, it is very check ark. . Worse they are 70 years old, there is no safe instrument appropriate for them except FD. “Hey, Miss Teller this is not a suitable candidate for structured product. Can I send her back to you for FD? ” “Aiya, don’t care, lah, we have quotas to meet.Upstairs will come after me for not sending victims to you” replied the teller..
The adviser with conscience will reply the teller, “Aiyo, suddenly i have a headache, I am taking a day off.”. “I have enough . I am not getting involved with unethical practices, very chek ark. I may hand in my resignation tomorrow., Tell Boss, OK?”

To Inspir3d;
You know section 27 of the FAA the minister mentioned that if the advisers follow
the steps to approach the consumers’ needs then there will be less of this problem.Yes, It will not eradicate the problem but will reduce the problem drastically because if the adviser chooses to circumvent the law he or she is taking risk and the evidence of mis-selling or misrepresentation may bear out in the fact finding form…or the KYC
Of course, to raise the standard of advice the industry may consider raising the syllabus and curriculum of the licensing requirement to, eg minimum diploma in financial planning with focus on wealth planning, investment and insurance planning., no need CFA.
However ,the key to reducing malpractices is still compliance with section 27 and to make it compulsory. Product selling or pushing must be stopped. In the KYC the “product advice” option should be removed.
Imagine if the RMs did comply with section 27 by conducting a need analysis with the uncles, Ah Peks and Ah Sohs do you think that RMs dare to recommend structured products and justify it? Unlikely , becuase she or he will not take the risk… Why then, selling to old folks was rampant is because the RMs used the product advice option which normally this option is meant for savvy investors who have prior knowledge of structured products. These people buy and not sold. Do you think the old folks and Ah Peks and Ah Sohs asked for the products? Of course not. They were unethically sold.
MAS will play a key role in preventing future fiasco by tweaking and enforcing this section of the law and other laws pertaining to products and the FIs.
The ball is in the MAS’s court and I hope they will not give the crappy excuse of over regulation.

#31) don:

thank you for your comment.

maybe you are right.

whether anyone read the prospectus, i do not know. i know i would, especially when it is stated that it is an important document.

i am only commenting on the prospectus and its content – as mentioned by TOC. Nothing more. i have no facts to who was actually being cheated and how, and i would not like to jump in conclusion and speculate what happened.

cheers.

Observer (SG-HK),
I agree with you.
Thus it should not simply be a case of negligence when more than thousands are involved. As Mr Tan KL has said, investors are willing to share the blame, anything from 50% -70% is a good compensation.

Indeed, those invested should have an out-of-court settlement, this is the best solution. But given the circumstances that banks and MAS (CASE has been silence) act as if nothing big happens and they take their own sweet time to response to the issue, people are forced to find alternative solutions.
They seem to think that time & tide will wash away everything.
People will forget and accept, everything will be swept under carpet.

I believe those affected are not asking compensation from the government but from the loaded banks. What they want is for MAS to show some leadership to pressure the banks, after all the banks are mostly at fault. Inaction will only stir up more dissension, people are already wondering whether MAS has conflict of interest. By not acting in the public’s interest, MAS has proved itself to be in cahoots with the banks.

gemami (#21):
it’s encouraging to hear that you too share the same views as me.

This is just the base prospectus. Each series of mini-bond has an additional prospectus document known as the pricing statement. The pricing statement also contains information on the basket of entities for each mini-bond and the promised interest rate. We need more information to be made public.

37) don on October 22nd, 2008 9.46 pm

The news is out last evening that DBS has begun their compensation process to some of investors both in HK and SG. So this is at least some eoncouraging news to those who are affected the most. Let’s hope there are better news coming their way.

Coming back to your point that it should not simply be a neglience case when so many are involved… I really can express no views on this as we (at least I am) not one of them who invested and do not know the details of the transaction process then. I can only say, at a time like this, each individual will use its best effort to safe guard their interest. I am not implying that they will deny what had been agreed verbally when investments paper were signed (if there are no written evidence), it is human nature behavior commonly found in each one of us (unless you are a saint).

As a fellow Singapore citizen and as a conscience fellow human being of planet earth. I certainly hope for the best settlement outcome for these affected folks. if there is one lesson they need to learn, I think fundamentally, take the noble advice of “someone with poor English”. Live is always necessary measured with wealth albeit a majority of people in this world particularly those who are capitalistic would agree. That’s us, HUMAN. We are all different in many perspectives.

Oops. It should read “Live is not always necessary measured with Wealth…” Please accept my sincere apology for the typo error.

The news is out last evening that DBS has begun their compensation process to some of investors both in HK and SG. So this is at least some eoncouraging news to those who are affected the most. Let’s hope there are better news coming their way. – Observer (SG-HK) (#40)

http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_293690.html

ST made an omission in the above news article. ST claims that DBS will compensate S$70-80M to DBS High Notes 5 investors. This is true, but what ST didn´t say that is that this S$70-80M is the expected compensation sum for all DBS High Notes 5 investors in Singapore and Hongkong. DBS High Notes 5 Investors from Singapore and Hongkong has invested a total of S$360M, so the compensation is actually less than 25%.

42) Donaldson Tan on October 23rd, 2008 11.07 am

Look at the positive side, they are at least willing to take the first steps to compensate. As to the percentage compensated versus amount invested by those investors, let the investor’s be their own judge to see whether it is reasonable.

Whether ST choose to omit whichever portion has no bearing to the actual proceeding of the case. ST is just reporting it as news and it is subjective to their edditorial.

Any comments from news people out there researching on the internet and happen to see this question?

re: zhummmeng on October 22nd, 2008 6.25 pm

Imagine if the RMs did comply with section 27 by conducting a need analysis with the uncles, Ah Peks and Ah Sohs do you think that RMs dare to recommend structured products and justify it? Unlikely , becuase she or he will not take the risk…

i can imagine the following converstion:

ah pek: this one “oon boh” woo wee hiam boh?

RM: ah pek, everything also got risk lah. you walk out of this bank, someone throw flower pot from upstairs also can hit you on the head! But lau seet kong, very oon (safe) want. big ang moh bank, buay toh. risk very very very small. SUIT YOUR RISK PROFILE. why not, earn 5 times FD interests!

before we put all the blame on RMs, if they really believe that the product carries very low risks and yet earns 5 times the interests paid on FD, they may honestly be thinking it benefits the Ah Pek.

44)

never, never, NEVER ask such a question.

reason is, you will never get to hear them criticise themselves.
these people are so brain-dead that their job is just to echo what they hear from the top. the very junior ones even have to wipe backsides when told to.

and all of them will tell you they have ‘contributed’ to society – because they live in a different society of their own.

so please, never, never, NEVER ask such a question even though it is a good one for one to examine his conscience at the end of each day.

cst,
the episode continues with the one kindergarten engrish educated one.
.
Teller to potential investor or would be victim,
Sir, you want good return , no risk?
Inv: got huh? good, good , tell me more.
Teller: wait, I introduce you one very good RM, you sure invest with her.
she can give good return.
Teller to RM: “hey, i got one fat one with fat account. Want or not? i already presold you and the product.” she whispered to RM.
RM: Sir, If i can grow your money 5 times would you be interested?. FD only earns you less 1%, this one gives 5%. This one is called Minibomb. When it explodes your money will explode 5 times that you cannot recognise your house
Inv :wow!! so powderful, interest rate must be very high.
RM: OK? i take out forms and you sign.
Inv: Can i put all?
RM: sure!!! you got any under your bed , also can put here.
Inv: No, lah.. this is all I got, $500K
RM: Ok, $500K also good. Now take this prospectus, you go home read. Don’t say I never give you but you sign here first.
Inv: but I haven’t read, you ask me to sign.
RM: same, lah, read now or at home you read same thing right?
Inv: ya lah.. Ok. where to sign? Wah, so many to sign.
RM: this is to make you safe…
After every thing completed.
RM: Sir ,you are very good man. I wish you luck.
Inv: what luck? I don’t play 4-D.
RM: same like 4-D, you also need luck.. I want to give you a gift. Here is $5 voucher to eat ice cream at Siansen Icecream.

Singapore’s news may report it as financial hub and 1st world.
Can I ask them, in light of this Fiasco causing much greive in investors, is Singapore able to provide a 1st world Financial services?

Relationship managers and FI and banks, Ask yourselves!

I have purchased other notes not affected my this current crisis. I don’t have the chance to read the prospectus cos it was never sent to me in the first place (the RM told me that it will be sent to me later)! Based on the RM’s recommendation and the full assurance that it works like a FD (capital protected), I was persuaded to buy the notes. What I have is the brochure which indicates in fine print that “Investment involves risk. You must read the Prospectus before deciding whether to invest…”. If this is the case, how come the bank can sell the product without presenting the prospectus to me?

You must read the Prospectus before deciding whether to invest…”. If this is the case, how come the bank can sell the product without presenting the prospectus to me? – Fedup (#49)

The base prospectus and the pricing statement are provided individually to the retail investor. This practice has to stop.

That is the question.
Lesson forgotten can only be relearnt by having another boo boo another of their lifetime savings.

39) Donaldson,

the pricing statement of one of the series can be found here:

http://www.lioninvestor.com/minibonds-update/

The reality is that despite the alleged risk disclosures, financial advisors, brokers or promoters usually do not emphasize the risk, only the return and safety of the investment. In the US, it is against just and fair principals of trade to sell an investment by only trying to sell how safe an investment may be, when the prospectus discloses substantial risk. This is a serious violation of the duty of the seller’s agent because they are not giving a balanced presentation of the risks, only the rewards. It is misleading to sell something just based on the size of the company that underwrites the product, without disclosing that the true collateral, being very risky collateralized debt obligations or subprime collateralized mortgage obligations, are instruments that were created by the firms to sell to the public, where the lower tranches of the investment are likely never to pay off. There was no reasonable efforts to perform underwriting on the very products that were serving as the collateral for these so called mini-bonds. We feel that the sellers, agents and promoters have some responsibility here for not truely knowing the product they sold before they sold it.

Lots of people seem to be worried about the prospectus shifting the blame back onto the buyers.
But there are other key questions too.
Did the government imposed conditions to protect the buyers? E.g. prohibiting selling to anybody who cannot understand the prospectus?
It may be a criminal offense to hand out application forms and advertising flyers without also making available a copy of the registered prospectus. Did this happen to anybody? If so, just have the selling banker arrested for criminal investigation. This offense can be committed even if there is no misrepresentation.
Finally, things may change materially from the date of the prospectus registration. That invalidates a prospectus unless it is updated. By early 2007, the US mortgage crisis was generally known and over 25 large mortgage lenders declared bankruptcy, with underlying securities prices plunging. But some banks were still selling this stuff well into 2007. The question is not whether they knew, but should they have known if they exercised due care?

Many questions have been raised over whether those who purchased Lehman Brothers-backed Minibond notes had the risks of these products adequately explained to them…. The 84-page document was issued in some cases to illiterate retirees.

I don’t find this reason practical enough to win this case in court. Even an illiterate person will buy and use a refrigerator without reading through all the terms of usage and risk. So if a refrigerator somewhere explodes and injure someone, can everyone who has a refrigerator at home ask for a refund?

On pragmatic grounds, chances of showing that the structured product is so complicated that it is unfit to be sold in the first place (but not other types of investment products or any other merchandise) is incredibly remote.

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there is hope for Lehman minibond notes victims.
an investors action group has engaged a lawyer to seek redress.
http://www.minibondsg.blogspot.com