The following is a comment by Observer (SG-HK) which was posted under the article, “Many investors have lost faith in Government and MAS: Tan Kin Lian”. We publish it without edits.
Kin Lian’s relentless effort in wanting to help affected investors is laudable without a doubt. I too have personally called him up to share with him concerns and that he may be targeted by others as acting upon personal interest (which I know is not true).
The same is not to be said to one of the Hong Kong legislative member who is also a lawyer by professional and charge a fee in helping people who are affected to lobby for support from fellow legislative members to invoke a rule that allows them to directly investigate all transactions that took place in all involved banks regarding this investment issue. It is after his cover was blow that he decided to withdraw his participation of the investigation citing a conflict of interest.
Like many others, I have nothing to do with this minibonds debacle but have been following closely the development. I contemplated whether to continue to pen comment with regard to this issue and to share what I have heard and read from the development in Hong Kong. May be these information may have already become public domain knowledge but out of concern as a fellow Singaporean for those affected, I decided to share it from my perspective.
It is true that MAS was slow in reacting (that is a fact) and that Hong Kong Legco (legislative Council) had invoked a rule that was vested in all law makers to investigate right to the details of Bank’s transaction (that some Hong Kong citizens had expressed that it may be seen as intrusion of personal data as well as intervention of Banking industry operation). Now it has been supported through voting and the litigation process is due to commence in Hong Kong soon. Many institutional experts had predicted that they expect the litigation process will go on for a prolong period (as it is believe that involved Banks are expected to mount a concerted effort to safe guard their interest) that many agree that it may affect any expedition of any out-of court settlement (if not entirely halted) between banks and affected investors. There are indeed some investors had settled out of court with some banks and do get back their investment (although the amount was not disclosed). At the end of the day, it could turn out to be a situation that there are no eventual winners.
The Hong Kong government officials (including Donald Tsang) had voiced their concerns whether this will actually hurt the investors and threaten Hong Kong’s reputation as Asia Financial Hub that will have far more severed repercussion. There is some truth to it if a nation prides itself as a strong advocate of free market economy. No one knows at moment and even legislative members who voted to support this litigation process are out in force to ensure that they will exercise extreme caution when handling this case. All eyes are now trained to see how this debacle will evolve. I believe MAS or the Singapore government is taking a leaf from Hong Kong and decided to apply the wait and see strategy.
Albeit it is quite apparent that Banks are applying the stalling tactics in an attempt to drain the energy of angry investors, I think an effort to arrange direct negotiation rather than collective class action suit may turn out to be more beneficial to affected investors (albeit, it will be hard press that investors are able to get full refund of their lost invested sum). It is indeed a very sticky situation. I think if it is a genuine case of mislead investment with proven hard facts, the authority indeed should or can make an attempt to assist to look into it on a case basis (if a similar situation like Hong Kong is to be avoided) rather than taking an entire hands off approach (when the dust settled and proven that it does no good to all parties involved). This is just my honest thought.
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Observer(SG-HK),
Could you elaborate on what direct negotiation is? My take looking at the DBS forum with HN2 and HN5 investors is they deal with DBS management, yet they themselves are not sufficiently sophisticated to handle with senior management.
The playing field has to be levelled with a financial advisor to aid the HN2 and HN5 investors against DBS, which may or may not introduce mis-information in their forum. There is simply no way any HN2 or HN5 investor can verify this themselves immediately at the forum.
Hence, I applaud TKL’s effort to have an independent complaint unit to keep the playing field levelled for both the investors and financial institutions. You can’t start negotiating unless both sides start trusting each other again.
Remember, these HN2 and HN5 investors felt they were cheated by DBS in the first place.
My feeling – USA govt stepped in to support AIG, an insurance company.
unknowing investors have been made to ‘sell’ insurance to such CD swaps. If our govt can spend billions saving UBS / Citi / ABC learning centre, the govt can also help act against such mischevious bankers who sold such toxic products.
Now govt has guaranteed deposits, including Citibank deposits. And their credit card and car loans in USA are starting to unwind.
It is fanciful how we are all for supporting FIs (understand MM is advisor to citibank?) but not to her citizens.
MM Lee, how could you?
smallvice585
Let me attempt to elaborate a little to your query. I am sharing this based on what had been made known in Hong Kong but has been kept in a very low profile. One of the most difficult situations to tackle is to convince the Bank to want to engage in direct negotiation. Overly “Publicized” direct negotiation will impede on the settlement process and publicity is not what the banks need for this case.
I believe if compensation had set in for some investors in Hong Kong, there is some truth to the “mis-selling”, “mis-representation” or “mis-leading” allegations. It will be more damaging to these banks if hard evidence are there to justify investors claim and it will be a grave mistake for banks to continue to play hard ball. There must be genuine cases (out of the 10,000?) that can through this mean. Be it a handful or a dozen. At least, these genuine cases can be processed and these investors are rid of their worries. I believe genuine integrity from both ends plays an important role in settlement.
Let me also pen my thoughts. I understand and agree with what is written here. At least, as far as democracy (fairness justice and equality) is concerned, topmarks to Hong Kong.
Its for sure, at times we cannot and do not really think and rationalise what the outcome can be played out before one can take action. Similarly, juxtapose, why the authorities did not put the cart before the horse – scrutinise the feasibility of the products for sale (just like certain govt bodies approve this-approve that in pre sale kind of thing, or aprove this or disapprove that in relation to building constructions for example). And surely too, they have not had thought what the consequences would be if they had or had they not allowed such high risk products for sale by the banks.
So I am for one, since the govt said to the banks do the right thing, I suppose its perfectly ok similarly to aggrieved invstors to do the right things themselves, who cares whats going to happen to a financial centre’s reputation.
smallvice585
Let me attempt to elaborate a little to your query. I am sharing this based on what had been made known in Hong Kong but has been kept in a very low profile. One of the most difficult situations to tackle is to convince the Bank to want to engage in direct negotiation. Overly “Publicized” direct negotiation will impede on the settlement process and publicity is not what the banks need for this case.
I believe if compensation had set in for some investors in Hong Kong, there is some truth to the “mis-selling”, “mis-representation” or “mis-leading” allegations. It will be more damaging to these banks if hard evidence are there to justify investors claim and it will be a grave mistake for banks to continue to play hard ball. There must be genuine cases (out of the 10,000) that can through this mean. Be it a handful or a dozen. At least, these genuine cases can be processed and these investors are rid of their worries. I believe genuine integrity from both ends plays an important role in settlement.
Is direct negotiation case by case or collective body against the financial institution? In such direct negotiation, how is the playing field levelled? Would there be an external arbitrator to moderate the forum?
smallvice585
I beleive case by case basis will stand a better chance. Collective body works if you have hard fact evidence (which I believe is hard to come by as noe one envisage this “credit event” saga will evolve for an iconic institution that is around for over a century). It also requires aligned synergy and concurrence from all investors in this group (which I do not know whether that can be done given the fact of the amount invested could vary by a huge range, and the human factor). Sometime getting two people to agree on an issue is already hard press let alone this case (you know what i mean?).
In after math reflection, due diligence should had prevented it but that is altogether a different issue (I am sure even this will to be brought to open discourse, there will no short of sling shots from either end). The question here is does the continuing with the same out-cry yield any good for the investors (in the perspective of our nation’s policy)? That is my honest thoughts and by no means is a prudent remedy.
In the case of DBS, they don’t even negotiate. DBS interviews, and decide whether to go up the next stage or just reject your claim. This is not negotiation. This is outright corporate bullying. Direct negotiation is a bad idea. An individual investor remains vulnerable to a huge organisation in such a setting because information asymmetry and lack of independent arbitrator still favours the corporation.
Hi, i think case by case would led no where. I understand tat many investors has already received letters saying their claims is rejected without any explanation.
But i also agree tat if go into law suit, will dmg SG reputation. But then again, our Reputation isn’t tat good now anyway right? =X