Moral hazard is only applicable for MAS and the government because they play the role of regulators. It does not apply to victimised investors and financial institutions which have clearly defined their position. It also does not apply to people who has already chosen what side they will take.

In 1990, Mr Lee was appointed Deputy Prime Minister with responsibilities for economic and civil service matters. He also concurrently served as Chairman of the Monetary Authority of Singapore (MAS) from 1998 until 2004, and Minister for Finance from 2001 until 2007.

At the MAS, Mr Lee initiated reforms to liberalise the financial sector and to shift the emphasis from one-size-fits-all regulation towards a lighter supervisory touch, relying more on disclosure and caveat emptor.

Does this suggest that over-zealous middle managers at MAS may hesitate to go against policies that LHL had spearheaded when he was Chairman of MAS?

Fence-sitting is the least effective mean to pressure for action.

Also, fairness should be looked from both sides. – Singasoft (#126)

Yes. In the case of DBS High Notes 2 and 5, the legal and commercial set-up is already unfair right from the start. DBS is the issuer, arranger and distributor. Moreover, the same contract is used for both financial advisory and sales of investment product. The set-up is already unfair.

I’d like to cautious people not to give mis-leading hope to those investors and to be realistic. Please be aware of the “moral hazard” issues. Also, fairness should be looked from both sides.

I also think everyone and every hero can agree that not all should be compensated as that could create moral hazard and it’s not fair to the shareholders of the FI.

When the relationship manager is trying to hard sell you and attempts to distract you from reading the prospectus, what should you do? Downplaying the risk is mis-representation. Distracting the retail investor from reading the prospectus until the contract has been signed is also mis-representation.

If the prospectus denies the distributor of any liability relating to financial advisory, while the distributor is also acting as a financial advisor to the retail investor, there is no way financial institutions cannot see any conflict of interest and that the set-up undermines the retail investor right from the start.

“Prospective investors in the Notes should note that there are many different types of notes or bonds in the market
place, many of which will have unique and distinctive features. Not all notes or bonds are capital protected. Notes
which are sold or redeemed before their maturity date will be subject to unwinding or other transaction costs, and the
amount received by prospective investors may be lower than the initial amount invested.
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.”

Vincent said…

Just want to share a personal experience. I am a Malaysian working in Singapore & married to a local Singapore girl. My in-law sold their property in 2007 & went to a local bank to deposit the proceeds & they were persuaded to invest in Lehman mini-bonds. Fortunately, I found out about it the same day & I brought them down to the bank to see the manager; I asked them to explain clearly & in absolute details what product has been sold to my in-laws …. they could not satisfactorily explained. Now, I have been an investment professional for more than 10 years & I have gone through the documents myself 3 times & I could not even understand what this product is! Luckily, the bank agreed to void this deal. Shh, lucky.

The best advice to all is still prudence in investment and goodwill to mankind. There is more to ife than money and materialism. Learn to smell the roses along the way in life.

Thanks all.

Gilbert
NSW Sydney

There is no mis-representation here, but your mis-interpretation. In the course of his campaign for rightful compensation for victimised retail investors, did he ever give out specific investment advice? No, not at all. Your presumption that being a former CEO of NTUC Income makes him an investment expert is flawed. Being CEO only meant that he is an acknowledged expert in business management of the insurance industry.

The gist of the content is more important. Level of tone and emotion just gives it added flavour or bad taste depending on which side you stand.

Emotion will definitely show for some who are more invested into the issue and / or delibrately choose not to hold back this emotion for the purpose of effect or who may not have the predisposition to hold back this emotion.

A rose by any other name still smells like a rose.

In any thread, contributions of various persuasions (the more the merrier) will either reinforce or convert an existing view. A balanced view is still the same whether it is said in a tone of an uncouth person with barely any education or some cultured Phd material.

To be fair to everyone, we can’t compensate people category in (c) and (d). I’m sure there are people who have taken the risks willing but still want to have a free-ride on any possible compensate for genuine victims of unethical selling.

People in (c) and (d) should NOT be compensated. They have to shoulder their own responsibility just like unethical businesses.

I believe the comment from Mr. TKL (TKL’s blog FAQ from investors) is more sensible.

Fair compensation
…..to investors who have been misled. A fair compensation is for the loss to be shared equally between the investor and the distributor.
Some investors expect 100% compensation. This is unreasonable. The distributor expects to get away with no compensation. This is unreasonable also.

yes, I hope we are moving towards that direction. But this issue itself deserves another separate thread.

Here, I think it is suffice to say we should not be overly sensitive towards opposing comments. These comments can give a more balanced view.

You must be joking to have even brought up this example. They way they go about open discussion and debate will make us look like boy scouts. They have developed into a fine art of how spinning and mud slinging is being done.

If we are in anyway close to them, similar form of our engagement (perhaps by more well known persons) would have already been done and aired in our so-called MSM – so that weakness or strength of any view / counter-view can be
seen through by a much wider audience.

You should know by now that maturity comes from both people and the good system by design which feed on one another.

I hope the community here can debate things as mature as possible.

Look at the debate between Obama and McCain…I’m hoping that we can be as matured as them when debating over an issue.

I believe most who are affected will want to be compensated fully by the FI, but let’s realize that it is not something fair to the other parties. However, I hope that those affected to be compensated as much as possible. But, be mentally prepared that in many cases you will probably lose much of your monies.