From the above, I feel there is a case against the banks for either un-ethical mis-selling or not knowing the product they are selling well enough. Due to point 3 alone, I feel all investors should be compensated. It is either a bond or not a bond. Don’t confuse and mislead.

Response from authority
1) M$MIW (million $ men in white) appoints independent parties to investigate and to work out a solution betw banks and investors. So far, banks have agreed to compensate retirees above a certain age and will investigate all cases. Maybe all will get money back, maybe only some will get money back.

Nothing wrong with that except it appears that Singapore is 1 step behind HK. Government don’t seem to be doing much until citizens protest. Bad PR.

My view
1) I agree that govenment is not in position to guarantee what is safe and not safe. We are a free market, and you are free to invest in what you like. Probably the only thing that MAS can fully control is what is considered “safe” for CPF investment. Key word is “guarantee”.
2) MAS as I understand has a policy that only sofisicate (and rich) investor can invest in hedge funds because they are complex and entails high risk that is not suitable for normal folks. I think this policy needs to be tweaked to include some of these high risk notes and bonds.
3) Regulation can be strenghtened to enure that marketing brochure for investment product must include key investment risk.
4) If it has been found that wrong selling is isolated and not wide-spread, banks should punish the errant RM. If it is widespread, MAS should punish the banks.

Whatever the case, it seems like MAS is not doing a good enough job regulating what can be sold in banks. Don’t let the problem blow up in your face before solving them. Otherwise, you will never get a grade that is above C.

just close down mas and sack the staffs.

just have ministry of finance can already.

The government we have is ornamental, they can’t guarantee shit.

However, looking at all the developments, I don’t think the investors will get a fair resolution nor in good time.

I don’t think the banks will go unscathed even if they need not compensate. Consumer confidence will take a beating. Here, we are not talking about the penny savers but those with means of at least a hundred thousand.

Overall, it’s going to be a lose lose for all.

But in terms of crisis management, I think the banks could have done better. MAS shud at least look into this area?

since when the citizen determine these gahmens’ astronomical pay, let alone guarantee their pay ? These gahmen guarantee their own pay and is their own guarantor and boss themselves. They are the one who determine their own performance rating and give themselves Hi-Five.

“attend tea party at Mercy Relief.”
Look like hip-hoping went out of fashion, now tea party is the trend !

If it is not fit for consumption (very high risk products in this context) for most people, it just means that it is not fit for consumption. If the queen wants to buy it, it just means the queen wants to buy it. Period. Do not impute more than that.

Now a lot of financial institutions in the world are now beginning or have already begun to relook into all these instruments. Perhaps, we are still adopting a wait and see attitude and just tag along at the end of the end.

“If Lehman did not collapse and the investments were carried to full maturity”, it just means that some people just got lucky without knowing that it is high risk all this while and still think that it is safe. That’s all.

No country is without Laws and Regulations as freedom tends to be badly abused by the unscrupulous in any society. High calibres and if possible the best are elected and picked to run a nation, these calibres are to be able to pre-empt whatever foreseeable contrivement and scheme. They are tasked, by nature of their appointments(parliamentary), to look into every injustice, solve them and cover every loophole arising from any incident, it is a duty they have to fulfill to the maximun. Every society is latent with frauds and felonies, the REASON FOR GOVERNMENT IN THE FIRST PLACE.

What we Singaporeans are witnessing in our country is that our parliamentarians are involved in running PRIVATISED STATE ENTERPRISES IN INVESTMENT AND BANKING(financial), ESSENTIAL GOODS AND SERVICES, HEALTHCARES, TRANSPORTATIONS, EDUCATIONAL AND EVEN FUNERAL SERVICES. Of course conflicts of interests are everywhere, an aspect of governance where all RULERS ARE DUTY BOUND TO ERADICATE AND IF NOT, ENSURE THAT THEY BE AT THE LEAST DAMAGING.

Poster Anon(#89) has succinctly described the wish and expectation of the investing public and it simply means an effective and efficient regulator. A regulator that is impartial, neutral with wisdom in dispensing justice.

Over the years, our Government has evolved into the largest, strongest and most aggressive entrepreneur within the confine of our geographical boundary. It is a giant cartel in everything edible, useable and MOST IMPORTANTLY ESSENTIAL.
Pardon me for the digression.

Food manufacturers have to ensure the safeties of their products, failing which they are liable to answer to the Laws or a regulator as an intermediator between both. A regulator, as can be seen here, is neither the manufacturer non the Laws(Government/Judiciary) so the role of a regulator is like that of the police in modern day administrations. The Police is not only to enforce Laws and Orders and to bring law breakers to justice, on top of this specific duty, the POLICE IS DOING CRIME PREVENTION.

PREVENTION OF FLAWS, FOULS AND UNDESIRABLE DEEDS(MISDEEDS) IS CLEARLY THE LEGISLATED DUTY AND FUNCTION OF ANY REGULATOR. A regulator that fails to fulfill its’ duty is liable to negligent or failure of duty, it could also be failure of diligence and competency. Here we are talking about an agency made up of professionals and not an individual with definite power and wisdom.

There are much heat, anger and coarseness in the discussions in this thread and elsewhere. May I join jemami in calling for more constructive and less personal confrontational discussions and debates.

Who asked the government to guarantee what is safe?

The issue is MAS failed to oversee the financial products and respective promotion materials are fairly packaged in plain English that is easy to understand and that it failed to react to mis-selling tactics used by bank staff.

Now MAS is talking about all these improvements that it is looking into. These “improvements” are actually the “shortcomings” it failed to address for quite some time.

a) the failure of MAS in its regulatory role in the financial, banking and stock markets just as Alan Greenspan has admitted recently on the collapse of Wall Street, sub-primes and ABCP and the whole American financial and banking systems.

b) what percentage has the government invested taxpayers’ funds/money in these public and private or quasi government financial institutions?

c) how many of these institutions’ board members are MPs or government apoiinted key players or PAP associates or next-of-kin of PAP?

d) how many of these institutions have Lee & Lee as legal advisors?

e) he hasn’t got the guts to admit the failure and/or incompetence of his A Team in these institutions in the eyes of world leaders in Beijing.

It’ll be interesting if some academics could do a research in these areas.

what say you?

point is, the product should not have been marketed as a low risk product. it should have been marketed with full presentation of all the risks that the purchase of such a product entailed. – chorus (#65)

At least we agree with each other on some points. Obviously, the government is in no position to guarantee that investment products are safe, but the government is in the position to ensure that investment products are not mis-represented, retail banks do not use hard-sell tactics to effect sales and that prospectus are written for retail investors in mind.

Revive plain English for retail investment prospectus. Forget legal English.

Selling a car is very different from selling financial products – so lets not compare.

What intrigues me is that a lot of those who got caught with these minibond issues are fixed deposits customers.

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I agree with your use of the phrase ` a lot of those’, and not most. Even in the number of `a lot of those’ can we be sure that they do not have appetite to take bigger risks to get higher returns?
After all, when they invested, times are good, and FD’s interests are almost rock bottom.

If you are referring to the vulnerable group, I would totally agree with you. Here I’m talking about people who knowingly wanted higher interest through investments. They do know that what they will hear ( like from a car salesman ) will be all the good points about the product. And, like all cars, they also know that there will be some defects in all types and models.

Of course like all buyers of cars they can and should complain about the defects, and demand rectifications or compensations, but they cannot expect to get a full refund.

TKL stated that such structured products should not be put on sale in the first place. Some use Malaysia as an example, where such products are not sold. As fars as I know most Malaysians do not have much investments, if not any at all. The Muslims there invest in Islamic form of investments, which do not include such structured products.

Having said that, can we really justified a ban on such products, when even NUS Dean bought Lehman-related investments? What about the Town Council as stated in a comment in TKL’s blog? What if Lehman did not collapse and the investments were carried to full maturity?

Of course I would definitely agree if the structured products carry a clearer warning of being high-risk investments.

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I would agree to that, IF we can actually find someone with such an ability. The fact is, there is no such person, although perhaps Warren Buffet may come close. Standard Chartered Head could not even be sure. Even NUS Dean of Business School was burnt. All who deal in stocks are now looking at a much reduced asset. Indonesian richest man saw his asset shrunk overnight.

So can we in all fairness expect MAS to be the Oracle for investors?

point is, the product should not have been marketed as a low risk product. it should have been marketed with full presentation of all the risks that the purchase of such a product entailed. – chorus (#65)

At least we agree with each other on some points. Obviously, the government is in no position to guarantee that investment products are safe, but the government is in the position to ensure that investment products are mis-represented and that retail banks do not use hard-sell tactics to effect sales.

Again, it boils down to whether ah kong was told that it was a 100% sure win situation. – chorus (#84)

Playing down the risk is just wrong, absolutely. I had worked in M&A advisory and it was my job to provide independent non-biased assessment of the acquisition target for the client. Often, the prospectus provided by the seller contains over-hyped expectation of the target´s senior management team.

My team had to conduct our own independent review of the target´s market outlook and see how it affects the valuation of the acquisition target. If there are downside, it is also our job to advise on how to mitigate risk related to the downsides.

We sometimes also have to inspect the physical assets belonging to the acquisition target with industry consultants to verify their values. For example, the balance sheet might say there are 100,000 tons of perishable goods that is worthed $200M.

However, the expiry date of the goods is not made available, so there is a possibility that these goods will expire as soon as the acquisition is completed, resulting in the write down of the target´s value.

Do you seriously expect ordinary retail investors to have sophisticated means (as I had elaborated) to ensure their investment is prudent when they have to depend on the relationship manager to make an investment decision?

While the prospectus is written in such a way to inform the retail investor to make their conduct their own investment research, the relationship managerś job is to provide investment advice and sell the investment product at the same time.

This conflict of interest is so obvious that it is far from impossible for banks to see this, yet banks still aggressively adopt this model of marketing investment products.