The following is a letter sent to the Prime Minister by Mr Tan Kin Lian on Nov 10, 2008.
10 November 2008
Mr. Lee Hsien Loong
Prime Minister
Republic of Singapore
Dear Prime Minister,
I appeal to you to look into the plight and financial losses suffered by about 10,000 investors from the Mini-bonds, High notes, Pinnacle Notes, Jubilee Notes and other credit-linked notes that have been sold to them by the financial institutions.
This appeal is made in accordance with the following statements made by you as chairman of the Monetary Authority of Singapore at a staff seminar held on 29 October 2002 on the topic of “Market Discipline and Caveat Emptor”:
QUOTE
Our efforts to promote market discipline and a caveat emptor regime have focused on enhancing the amount, quality and timeliness of information disclosed by institutions. We have shifted from a merit-based supervisory approach to a disclosure-based approach that emphasises market discipline to incentivise financial institutions to conduct their business in a sound, efficient, and professional manner. The local banks in particular have significantly improved their disclosure practices.
We must continue to update our disclosure standards in line with industry developments and international best practice. Furthermore, the mindset change is not yet complete. The public still expects to be protected from downside risks, for example when playing the stock market, but more so when depositing their money in banks. Hence one major motivation for introducing deposit insurance is to change this mindset, and get people to understand that only a limited first tranche of their deposits with a bank is protected should the bank run into trouble.
But disclosure by itself is not enough. It must be accompanied by investor education. Investors have to understand and use the information provided to them. They must learn to make sense of this information and use it to look after their own interests. We also need a pool of knowledgeable analysts and journalists who will shine the spotlight on any obscure fine print that the lay investor fails to notice. A more informed and sophisticated investor base will reinforce market discipline and form the basis for a more vibrant and mature financial sector. In all these respects, we have a long way to go.
Market discipline also requires an effective enforcement regime. To preserve investor confidence, penalties for transgressions must be swift and appropriate. MAS now has the power to investigate and bring a court action for market misconduct under the new civil penalty regime. This will complement the existing criminal penalty regime administered by CAD.”
UNQUOTE
On 10 October 2008, I submitted a Petition signed by 983 people addressed to the Singapore Government. It was handed over to Dr. Andrew Khoo, Executive Director of the Monetary Authority of Singapore, who received it on behalf of the chairman, Mr. Goh Chok Tong. This Petition said:
QUOTE
We, the undersigned, write to petition the Singapore Government, particularly the Commercial Affairs Department (Singapore Police Force) and/or the Monetary Authority of Singapore, to conduct a full and independent inquiry in relation to the credit linked securities sold by various financial institutions in Singapore. These structured products include the Lehman Minibonds, DBS High Notes, Morgan Stanley Pinnacle Notes and Merrill Lynch Jubilee Notes.
Singaporeans, including the persons who have signed this petition, lost their hardearned savings by investing in these financial products. Such products clearly did not suit the risk profiles of these consumers. The consumers were not made aware of the high risks involved in the financial product when buying the product. They became innocent victims of misrepresentation by the financial institutions that distributed the structured products.
We now wish to be assured that those who invested in such financial products have not been victims of negligent and/or dishonest conduct and/or fraud by these financial institutions.
The Government has a duty to ensure that investment products are marketed and sold appropriately in our jurisdiction. Such products must be sold in a manner compliant with the laws of Singapore. Financial institutions, including their respective key management, that do not follow the laws or regulations applicable to them must be held accountable for such breaches.
Please commence a full and independent inquiry into the sale of structured products by various financial institutions in Singapore. If the inquiry deems necessary, the Attorney-General of Singapore should act against these financial institutions. We also ask the Government to help these investors to claim fair and adequate compensation from these financial institutions for their losses which are caused by the misconduct of these financial institutions.
We ask the Government to act now and restore the peoples’ faith in our financial System.
UNQUOTE
In a supporting letter to the Monetary Authority of Singapore, I have mentioned some of the possible areas where the laws of Singapore might have been breached. They are set out in annex 1.
I have received an acknowledgement from MAS of the Petition. Nearly one month has passed. I have not heard from MAS if they intend to act on the requests contained in the Petition, namely to commence a full and independent inquiry into the sale of structured products by various financial institutions in Singapore and, if the inquiry deems necessary, to act against these financial institutions.
I appeal to you, Prime Minister, to ask the MAS to act more swiftly and appropriately, in line with this vision:
QUOTE
Market discipline also requires an effective enforcement regime. To preserve investor confidence, penalties for transgressions must be swift and appropriate. MAS now has the power to investigate and bring a court action for market misconduct under the new civil penalty regime. This will complement the existing criminal penalty regime administered by CAD.”
UNQUOTE
Annex 2 contains an article written from the perspective of an investor.
Thank you.
Tan Kin Lian
———
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do replace impartiality with partiality, must have posted too fast.
do replace impartiality with partiality, must have posted too fast. – daniel (#100)
Yes. It is a typo. I miss out typing “not“. Here’s the correction to post #98.
Judging from the tactic use against Gopalan Nair, the court can use prolonged and delay tactic to increase the cost of burden of investors. All they need to do is to tell the investors it may take years to resolve and that lawsuit cost may even overrun their cost, therefore discouraging the investors. – Daniel (#97)
Until the retail investors have attempted to take the banks to court, I disagree with your pessimistic assessment because it would suggest that our Singapore Court is already not an impartial forum for matters of the ordinary citizens. Until proven otherwise, we should not question the integrity of the Singapore Court. There is no political cost in taking the banks to courts. With the ongoing protest against MAS, DBS and other FIs, MAS’ hands are already tied from taking side. If not now, when to take the FIs to court?
smallvice585 on November 14th, 2008 9.38 am
It only goes to show that you very very very naive.
Think the issue here is whether court settlement or settlement with the bank would be in the best interests of the investors at large, no?
I take it that there’s political ramifications for the PAP if the issue is contested in courts, but how certain of which the case would succeed?
In Singapore, if we cannot look to our beloved Goh Chok Tong, MM Lee, PM Lee President Nathan to look after the common people and come down hard on those who mis-sold the products,
We just need to look to Donald Tsang and how the HK courts are coming.
The damage to the Singapore leaders will be long and heartfelt.
History will judge them.
Maybe the election machinery is for a new President ??
How come HK law makers voted for official inquiry and SG MP all silent? Two observations:
(a) multiple-party partliament alleviates the risk of monopoly of opinion.
(b) ppl-MP has a social contract. This social contract functions as it should be in a multiple-party system.
Anonymous i think you are the salesman who sell minibonds.
good luck to you.
you will be sue as well.
together with the banks.
and also the lehman brothers.
ask your bank to cover you up.
but i think they will not help you also.
all the best then.
i remember chen liping and chen tai ming from mediacorp was sue by their collegues few years ago.
win or lose is not important.
most important is to sue and sue to create public and international awareness.
to educate the public.
now i never ever dare to eat any fat slimming products because of chen liping case.
It only goes to show that you very very very naive. – bigvice858 (#102)
Don’t mistake political correctness for naivety.
“Don’t mistake political correctness for naivety.”- smallvice585
Thanks for teling us. If it is so, would anyone have delibrately (political correctness ?) mentioned something giving the impression of his support for the other opposite side. Still, I find that you are very very naive.
bigvice858 (#110): Do you work at the bank or are you from PAP?
For the benefit of others, I think fgf (106) was responding to Anonymous (82) and NOT Anonymous(105).
I still feel that investors who put their fat money for fat returns in any investments, for the matter, need to carry losts on their shoulders…pretty sure if there was gains they would spurge on themselves only.
All investments are directly linked to market sentiments…if they did not know this, then they should have put it a bank – FD ior savings. These cronies knew what they were getting and got hemselves deeply entrenched for higher returns and now come running foul when rug is pull under them…
DEALING WITN CONCERNED FINANCIAL INSTITUTIONS OR BANK IS PROPER, IDEAL AND APPROPRIATE!!!
smallvice 585:
No she is staying in a contested ward. I am saying that the elderly will sure vote for PAP as they have given them HDB flats to live in and much stability when Singapore is still a fishing port.
There is hardly a chance for opposition with this group of die-hard elderly PAP voters. Die die they will vote for the men in white. No one else…
DEALING WITN CONCERNED FINANCIAL INSTITUTIONS OR BANK IS PROPER, IDEAL AND APPROPRIATE!!! – VS RAAJ
The dealing should not exclude law suit and collective action. If the bank or financial institution demonstrated organisational failure that led to mis-selling, there should still be blanket compensation policy.
) V S RAAJ
“I still feel that investors who put their fat money for fat returns in any investments,”
“All investments are directly linked to market sentiments…if they did not know this, then they should have put it a bank – FD ior savings.”
5% per annum fat return ? in exchange of your principal sum of 100% ?
Hey this is not fiddling with stock and shares.
FD ior savings – if this is safe, why was the guarantee up to only sgd20,000/- at first until they made the change later on.
Some institutions are previleged to handle your money and earn money out of it. In return from this previleged which is not extended to tom, dick, harry and V S RAAJ, rules should also be in such that innocent people putting money in good faith shall be protected.
Banks used to be places where you only put in money for safekeeping and earn decent interests – and this belief still recides in a lot of people. However, the role of banking institutions has expanded over the years and sadly the belief of some still has not caught up.
There are 7 PAP MPs in Parliament who work or used to work in the financial services sector. One of them is MP Liang Eng Hwa, who so happens to be managing director at DBS currently. Which MP in parliament represents the victimised retail investors?
Here is what I translated from a Chinese editorial shown in the TOC TV titled [i]“An investigation will be launched in Hong Kong into the sale of financial products.” [/i]
The Eastern newspaper editorial:- “The Legislative Council has passed the resolution to activate the special power regulation to investigate Lehman Brothers Minibonds. What make people most puzzled is that the HK Government is not standing by the side of the victims to pursue their interest, but instead siding with the bankers. This can lead to rumours that the Government is protecting the bankers and businessmen. Frankly, if this affair is not investigated and allowed to drag on, it will only make people harbouring doubtful impression that the HK financial market is lacking transparency. Such an impression will do the utmost harm to the international reputation of HK.”
What an editorial pertinent to SG too!
‘smallvice 585′,
Psst. The state of being naive is better as ‘naivete’, not ‘naivety’.
Anyway, was the Declaration written prior, post or mid the French Revolution?
I reckon all these calls for asking the investors to sue the banks are valid, but granted realistically, what are the chances of them getting their money back through the courts as opposed to other means?
Before I leave this thread permanently I would like to say that the most poignant thing about the structured product ‘fiasco’ was pointed out by a number of persons, including if not most notably Mr Tan Kin Lian, who mentioned that the risks were ill-matched with the risk profiles of investors. As to whether there was misrepresentation only each RM or equivalent and the client would know; I suppose action by banks which had distributed these products is in the direction of getting RMs to resolve matters with investors who made losses.
” Until proven otherwise, we should not question the integrity of the Singapore Court. There is no political cost in taking the banks to courts. ”
If proven otherwise, what can the citizen do other than to swallow the bitterness and regret ? A good court should able to stand scrutiny, unfortunately the Dr Chee saga shows that this court cannot stand scrutiny. This is a sad fact.
Anyway, was the Declaration written prior, post or mid the French Revolution? – moderate (#119)
It was written during the French Revolution and for the French Revolution against the Monarch.
If proven otherwise, what can the citizen do other than to swallow the bitterness and regret ? A good court should able to stand scrutiny, unfortunately the Dr Chee saga shows that this court cannot stand scrutiny. This is a sad fact. – daniel (#122)
In the people’s eye, the court may be seen as an instrument of political oppression in Singapore, but it still viewed as a impartial forum for matters relating to commerce. If the Singapore court fails to be an impartial forum for commerce, then Singapore’s future as global hub for finance, trading and oil refining would be threatened.
No she is staying in a contested ward. I am saying that the elderly will sure vote for PAP as they have given them HDB flats to live in and much stability when Singapore is still a fishing port – Gilbert Goh (#114)
Perhaps it is time to remind these old folks to vote for Singapore’s future and not vote for the fruits of past success they had enjoyed.
Now Pinnacle investors also got into trouble – they may get back zero return.
I am sure they will sue the banks for misrepresentation again. This thing will go on forever and the aunties and uncles fortunately may be compensated due to their supposed ignorance and innocence.
I have seen more aunties and uncles at the Stock Exchange looking at the screens and buying stocks than men in ties. I sincerely doubt that they are so gullible. I have relatives who are uneducated ah sohs making a tidy sum from the stock market boom when I am still struggling in a 8 to 5 shit hole. I may have to learn more from them how to invest than from those silly stock analysts.
Educated investors may want to bring these FIs to court over mis selling. Do HLP wants to take up their issue again? I hope there will be another TKL to rise up to act on behalf of these investors again.
#125
These notes investors placed their money for 5 years with a 4-5% pittance pa return & a potential 100% loss
Nobody will do this type of investment if honestly explained.
Many stock & share players (fortunately not all) want a return of 10 to 15% return in a few months times.They can sell their paid shares if they need the money urgently. They short, they contra, they take SGX, NYSE, etc as casinoes. Young or old, they are just GAMBLERS
NOBODY WILL ACT ON BEHALF OF GAMBLERS
‘smallvice 585′,
It wasn’t that same work written by Rousseau, was it? Have lost touch with world history, as with local history. Lol. Anyway, the Revolution was one of the bloodiest events in Europe. You said that you’re, in your own words, ‘very much influenced’ by the Declaration. Are you sure that you’re in a way advocating violence; or are you sure that you’re not advocating violent uprisings in your claim to be influenced by that work?
To our most esteemed minister who deride us with this statement “…..eyes open”?
My humble answer is: “yes i do. However, “smoke” gets into my eyes …at the point of transaction. ”
How I wish I had never step into the Bank on that ill-fated day.
Now every sour grape is quoting his statement +/-.
I do wish everyone of us be more compassionate; to victims who had suffer loses.
I observed that even “Jackpots” in the Cruise Casino have this warning sign: “…betting is a game of chance.”
And I remembered the RM telling me confidentally my purchases were “very safe”.
I leave this message to prick the conscience of those concerned.
moderate (#127),
Roussea didn’t write the French Declaration. I am very much influenced by the ideas written inside the French Declaration, but not the French Revolution itself. Whether Singapore needs a revolution is an issue still open to debate.
Why are you concerned with violent uprising anyway? If it is the right way required by the circumstances of the times, why should we condone it? However, I will not join into any pre-mature conclusion that we must avoid an uprising.
Anyway, this is off-topic from the Article itself.
‘smallvice’,
Quote: ‘However, I will not join into any pre-mature conclusion that we must avoid an uprising.’
Just as I guessed. Ok, back to the main topic. So what do you think is the most poignant thing mentioned about the structured product ‘fiasco’ thus far? I’ve given my take in post #121, which is along the lines of the risks involved with the structured products being ill-matched with the risk profiles of investors.
My own personal opinion is that those investors were seduced by the name of the products. For instance, ‘bonds’, real bonds, are generally considered conservative investments, but it’s turned out that the Minibonds and other structured products had more risks involved than some investors really knew. I mean, retirees, unless they are foolish, don’t usually even invest in equities, and if they did, they’re more likely in put their money in blue-chip stocks. Individual investors with a low-risk profile usually go for fixed deposits, bonds, mutual funds with low-risk, low return ratings or funds with low management fees, like money-market funds. Incidentally, the last, since I mentioned the fact about individual investors being ‘seduced’ by the name of financial products, also turns a lot of conservative investors off, if only because the word ‘money’ brings to mind currency and speculation. That is not true about money-market funds at all. They are probably one of the safest types of funds you can put your money in, besides index funds, because something like a currency unit or an index does not often go bust and close shop. Besides that, money-market funds and index funds usually involve low managment fees, and sometimes no management fees at all.
YA it is all about greed personified.
Greed in wanting to grow our so-low interest rate on our deposit. If it is safe and can provide 5% annual return for 5 years why not? Our principal is also guaranteed? Why not?
If GIC can produce close to 8-9% return annually for the past ten over years, I wonder why they can’t do something for our retirement CPF fund. We have to suffer the low 2.5% interest rate on the ordinary account all these decades when they could borrow from our CPF money and grow theirs. This doesn’t make sense.
In Australia, mutual pension funds with good track record, will receive billions to invest for pensioners who have all along dump their money on such funds. They then receive a regular payout base on the amount they put in and how the fund has performed. An annual return of between 7- 8 % is not uncommon. Of course, now they are suffering the effect of the slow down. Nevertheless, all these years, they have being receiving good returns.
Unless the govt can find a good solution to help retirees growm their moeny for retirement, people will continue to place money in stocks, unit trusts and properties subjecting themselves to high risk and forfeiture.
It wasn’t that same work written by Rousseau, was it? Have lost touch with world history, as with local history. Lol. Anyway, the Revolution was one of the bloodiest events in Europe. – Moderate (#127)
This French Declaration is among the founding documents that led to democracy and also exalts its merits. By associating it to the French Revolution which seek to overthrow the oppressive monarch, you had completely overlooked the intrinsic merits of the French Declaration itself.
While the roles of banks have evolved, the people’s expectation of banks have yet to evolve with time too. Deregulation of the financial service sector may be good for the economy, but the regulator has failed miserably in ensuring citizens are sufficiently sophisticated. There ought to be public programs to provide general discussion on fundamentals, merits and demerits of investment products and strategies in future.
It is really surprising that depsite appeals to MAS and our beloved PM Lee to conduct an investigation into “potential mis-selling” by the banks have gone on deaf ears. I think this is a very basic thing to do, we are not asking MAS or PM Lee to accuse the banks without due evidence but instead just to conduct an investigation to see if there were any wrong doing or misreprentations. A couple of incidents could be isolated cases but 10,000?!!!
Look at PAP speed and ferocity over a bloody misplaced election form? CTV footage were extracted and made public, played over national TV within a couple of days, scores of ministers ragged poor Gomez over a a FORM!! Sometimes, you wonder whose interests the PAP is working for. Remember this clearly when you vote in the next GE, especially those 66.6% of our fellow countrymen. U sure u are voting in a government who is taking care of you?
133) Steven:
I think the FIs have indicated that they will finish their investigation before the end of the year.
I don’t blame them as we are talking about 10,000 individual cases with different stories and background. I believe they may compensate some but not the whole lot. The rest can then sue using class action.
I think the most frustrating thing out of this mayhew is:
1. Lack of accountability and haste in answering to the investors from banks and FIs.
2. Lack of support shown from the authorities especially MPs, ministers, CASE, etc. It is obvious that they want to wash their hands off the issue.
3. Lack of options available for the investors. If not for TKL, investors will do what the govt advocates all along. File your complaints with the FIs and if you are still unhappy go to the FIDR and complaint. The next stage after this is of course class action.
4. Lack of consumer activism within our society. This case clearly highlights how lacking we are in consumer rights. The rights of the consumer needs to be boosted from now on but if you ask me how. I don’t know. CASE and FIDR are not really doing their part in advocating consumer rights for reasons best known to them. DBS can also retrench workers without first informing their own bank union. This is in fact violation of the company labour law. But no one will take action as our workers do not know how to use people power yet.
5. Lack of unity among investors. For a total strength of 10,000 investors, 400-500 that showed up for HLP protest is really not a significant figure. It is not even 10%.
I hope that investors will get back something from the protest. Nevertheless, one significant oitcome of this protest that money can’t buy is that we have see what SIngapore can do when they are frustrated and led by a good leader. This is only good for democracy per se. History will only show how significant the minibond protest will turn out to be in time to come.
I think our PM just sit back, relaxed and thinking of ways to fix the opposition only and how to buy more votes. I don’t know whether will he be bothered by this mis-selling of the financial products. Anyway, he still get his million dollar pay and doing some useless stunts. We should vote them out of their irresponsible governance in the next election. It’s time Singaporean should wake up their idea and vote really for the MP that can help us; not those who just sit and do nothing. Wake up! Wake up! Don’t wait for the next next election.
‘smallvice’,
Quote: ‘This French Declaration is among the founding documents that led to democracy and also exalts its merits. By associating it to the French Revolution which seek to overthrow the oppressive monarch, you had completely overlooked the intrinsic merits of the French Declaration itself.’
I find the comparison here, usually used by critics to distinguish between the ‘textual’ and the ‘contextual’ in a piece of fiction, odd. When the subject is political upheaval in non-fiction, it usually is a “a-call-to-arms” kind of work and, strictly speaking, only works of fiction may have the kind of intrinsic value you’ve described.
As to the positive statement you made about public education, I can only make the normative one about the onus being often on individual investors themselves to know what they are buying into. Anyway, do you think public education on investing should come at a fee or not?
I agree. It is time to remind not only these old folks but all Singaporeans to vote for Singapore’s future. We must insure our future in case the PAP fails to deliver after the next few GEs.