Sep 15 2008
What Will Happen to my Lehman Minibond?
The minibond series by Lehman Brothers had been sold in Singapore for the last couple of years and some retail investors have purchased them. In the recent uncertainty facing Lehman Brothers, many of these investors are now wondering what will happen to their Lehman Minibonds investment.
First of all, recall that the Lehman Minibonds is not a normal bond in the normal sense of the word. It’s a structured note which exposes you to the default of the reference entitles and has assets backed by the underlying securities (which are different from the reference entities).
The money you gave to Lehman Brothers is used by them to purchase the underlying securities and enter into contracts for interest rate and/or currency swap. They also sell credit default swap on the reference entities.
The swap counterparty is Lehman Brothers Special Financing, Inc.
A few months ago, I was particularly concerned what the underlying securities of my Lehman Minibonds were. I wanted to know the extent they were affected by the current credit crisis and whether my principal would be affected. At that time, the worst case scenario I thought possible was that the underlying securities had enough credit default events which would result in a significant loss of capital (This is different from the default of the reference entities which was the one heavily marketed).
Well, I certainly didn’t factor the collapse of Lehman Brothers as one of the scenarios.
So, what will happen to the Lehman Minibonds if something happens to Lehman Brothers? There are a few possible scenarios.
1) There is no bailout and Lehman Brothers goes under
According to the pricing statement of the Minibonds, the notes might be redeemed early if the swap arrangements for the notes are terminated for any reason. This is likely to happen if Lehman Brother collapses.
The swap will terminate and the notes will redeemed early in an amount equal to the liquidation value of the underlying securities plus/minus the swap termination value. Lehman will have a claim for any swap termination value owing to it. The creditors of Lehman will have no direct claim to the assets of Minibond.
The liquidation value is an unknown but when I checked the market valuation of my Minibonds a few months ago, it had a face value of around 80% of the purchase price.
2) Lehman gets taken over by another party which assumes their Minibond Obligations
In a takeover, it is likely that the acquirer will have to assume all of Lehman’s obligations. They will then take over the swap counterparty role of the Minibonds. In this scenario, nothing would have changed for the Minibond holders.
3) Lehman gets taken over by another party which does not assume their Minibond Obligations
In the unlikely event that the acquirer does not take over the obligations of the Minibonds, the notes will be redeemed in a way similar that described in 1) above.
It will take some time for any takeover of Lehman Brothers to be completed as you can imagine the acquirer will have to look into all the obligations of Lehman Brothers, with the Minibonds just one very small component of it.
Added: You can contact the HSBC Institutional Trust Services for updates. The hotline is 62167449.
Added more updates: Minibonds Update
Click here to leave a comment.
Lehman has just filed for Chapter 11 and likely that we will be getting only a faction of our money back and who know how long do we have to wait.
OCBC securities has a reply from Lehman Brothers and we just have to keep our finger crossed that a White Knight will appear. Otherwise, my saving will be gone…..
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Hi Steve,
What you get back if the minibonds are terminated will depend on which series you bought into as the underlying securities will differ from series to series.
The underlying securities that back the minibonds will be sold and the proceeds returned to you.
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[...] For Lehman Minibond holders, this means that scenario one will play out. [...]
i invested in minibond via ABN amro which became RBS. i was told that lehmann bros is lead organiser & investment shall go to fund various assets. who shall manage the asset liquidation of lehmann bros now & how do we know the balance proceed amount.
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This is ridiculous. A bond that I thought was rather risk free is now producing negative returns.
I’ve the Minibond series also. Just read on Straits Times (16 Sep) that sources say it should be 30 cents for every $1 invested we’ll be getting back.
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Ya man, kind of worried what should i do now since I’ve invested $10000 of my hard earned money in lehman’s minibonds. Really no heart to work today…
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uncleyue Reply:
October 12th, 2008 at 1:24 am
Hi Kenneth, take heart that your exposure is just 10K, there are many retired uncles and aunties who are ruined/heart-broken by putting in much more - their life savings of 50 or 100 times more. If you are still young there is ample opportunity to recover this manangeable amount.
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Bhawe,
I suppose Lehman Brothers will inform us of the final liquidation value.
Yi Chie,
Unfortunately, the minibond is not really a pure type of bond. And in any kind of bond, there will always be the default risk that investors have to bear. While the $0.30 is an estimate even by unnamed experts, it is likely that the liquidation value of the different series will vary by a bit.
Once again, retail investors have found themselves getting a raw deal.
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Simon Wong Reply:
April 24th, 2009 at 11:49 pm
I was told by my friend in USA that the Lehman Brother Minibond was NOT qualified to be sold in USA. If a product was not approved to be sold in USA, why it was allowed to be sold in Hong Kong?
I was also told that HSBC was the agent to bring this product to Hong Kong. HSBC is the 总代理.
Another news I learnt: In England, people purchased the 馬可夫基金are集体訴讼HSBC as HSBCwas the 总代理. Could those purchase the Lehman Minibond do the same thing in Hong Kong, 集体訴讼汇HSBCas the 总代理？
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Hi,
I’m also the sufferer of this crisis and I owe 2 minbond issued by Lehman…. which costed me 16% of my asset…. really worried now….
My bonds linked with 7 so-called BIG banks in USA. Anyway, no matter now safe the banks are, the most dangerous is LB!!
I will never touch any of those “structural products” anymore! They are just utility for releasing the issuers’ risks and put them into us!!
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I just called Lehman Brothers Singapore, they told me to call the banker where I bought the minibonds for, in this case OCBC at 65384775. The guy said liquidation will probably get back 20-40%, not confirmed. Time at which money will be returned also not confirmed. They will update via email.
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I have obtained an estimate of the valuation of the various minibond series as of last week.
http://www.lioninvestor.com/minibond-indicative-prices/
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What about Minibond series 9?
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i’m also in the same boat with mini series 9
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common - the issuing and paying agent is HSBC. The organiser is Lehman. Lehman has no obligations in the minibond.
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i call Maybank but i didnt get any info on Minibond series 2. Thank gdness i found this info on this site…so my savings is gone too….sign..
will keep checking in this site, thanks for sharing
ciao
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I had minibond 2, how ? Anyone can advice?
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Hi Iris,
Unfortunately, that’s the nature of these kind of products. We are paid a premium for undertaking the credit risk of certain companies.
While credit events might not happen all the time, they do and will happen.
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I redeemed part of my minibond last yr at 60%. Should have took the 40% loss. Now total loss if I can get back 30% means I lost 55% of my capital. A very good lesson for a retiree. Can anyone offer me work?
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So how does this news in the link below means to minibond ltd?
http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_279461.html
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Guess everyone was looking at the underlying entities for any possible credit events. Instead we should have been looking at LB. When I was sold the minibonds (by ABN), they were touted to be safe based on the underlying entities. Now when you ask ABN what will happen, I was told no one really knows. Just be prepared to lose most of your money. They will keep me updated when they can.
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My mum’s & mine savings are all gone now …. wonder how to break the news to her ???
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Will the buying of part of Lehman Brothers by Barclays business after the minibonds?
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since Barlcays is buying Lehman investment, am i right to assume that the minibond will not be redeemed and not affected at this stage. if we dont know yet, when will we know?
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Minibond is an First To Default basket.
Let me explain how it works and why any unwinding of Minibond is disatrous.
It is actually a layer of first-to-default credit default swaps(CDS-simply speaking it is like insurance) , whose liabilities are secured against a basket of mixed bonds with collective ratings of A or AA depending on tranche. By selling CDS, they earn premiums, on top of whatever the underlying bonds fetch.
For example. if underlying bonds getting average of 5%, premium earn another 5% they get 10%.
They give client 5%, (who shoulders all the risk), 3% to distributors, and they can still earn something.
Guess what Lehman sold to Minibond as the underlying collateral? hmm…. No comments on that.
Lets now retrace.
Assume minibond is sold/unwinded. They have to go back to the “insurance policies buyers” and buy back the coverage they sold. Which will cost money esp in this market.
On top of that, they will have to sell the AA or A bond baskets to other people to pay the insurance holders. The problem is this, these bond baskets(aka CDOs) are worth very little now. The market condition do not help. The balance will then be returned to you.
If Lehman sold coverage(against the reference entities) for about 80mil, they will secure enough bonds/bond basket for max about 100 million to 110 million against it to make up for any price fluctuation. Reason is that 5 year price volatility on AA bond basket should be only about 15-20%. There is no reason for Lehman to secure MORE bonds than is absolutely necessary.
For Lehman, it frees up capital, earn money and recycle whatever they don’t want, by feeding them to the retail guys.
Now, in this case there is no call on their liability, no default on the entities. ie you do NOT have to pay out on the insurance. (which is actually what happened to the HIGH Notes, they have to pay the guys that they insured, since Lehman was a reference entity that defaulted)
Just that the underlying CDOS have drastically reduced values. Not to mention flooding the market with millions of dollars of these stuff at one time. Minus away the cost of buying the policies back. There you go.
Hope this helps you guys understand why you are losing money.
At least you know why!
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Chong,
There’s actually both the reference entities (which was heavily emphasised during the marketing) and the underlying entities. The underlying entities are the ones that will provide the liquidation value.
kk,
Until we get a clarification from the parties involved, it’s probably too early to speculate whether Barclays took over the obligations of the Minibonds.
http://www.newsroom.barclays.co.uk/Content/Detail.asp?ReleaseID=1435&NewsAreaID=2
But even if the minibonds are not redeemed, given the current climate, we do not know whether something might trigger their redemption in the future at an even lower price if the value of the underlying securities drop even further.
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How can i sell my minibonds?
If i do not sell or no buyer, who is responsible to contact me about the eventual value, Barclays?
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Some more news: “MAS says Lehman minibonds trustee HSBC has engaged legal counsel” -> http://www.channelnewsasia.com/stories/singaporebusinessnews/view/376655/1/.html
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Henry,
There is no secondary market for the minibonds now so you can’t sell it.
We are told to contact the distributor we bought the Minibonds from for further details.
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MAS advised investors to contact the financial institution from where they had purchased the product but it is quite useless as ABN and Maybank staff said that they have no idea what will happen. Just wait and see.
I get more info from lioninvestor than from them.
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I had the same experience as Chong when I contacted UOB Kay Hian. Unfortunately, I also had the Jubilee Series 3. Can anyone share with me what is the “indicative price” for them at this point of time? This is a stressful time for the ignorant investors like us…
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Has anyone dwelled on the idea of legal representation? Obviously if we are not warned on the real risk of CDS, it tantamounts to misrepresentation.
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Edward Reply:
September 21st, 2008 at 9:24 pm
I have MiniBond 3. The sale of MiniBond is nothing but misrepresentation of info. The Reference Entities were highlighted in the sales brochure, but LB was mentioned in small print as the “Arranger”. This is pure misleading. I wonder how MAS allowed such a product to be sold in the first place?
Perhaps we can we gang up and go to CASE for help?
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Anyone have new please udate, I bought it throught Maybank.
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As stated in Today (18 Sept) under B3 page, Legal counsel is being sought on behalf of thousands of Singaporeans. MAS has contacted the trustees for the notes, HSBC Institutional Trust Services (Singapore) which has the power to enforce the rights of noteholders.
MAS advised concerned noteholders to contact either HSBC Institutional Trust Services, besides the financial institution that sold these minibonds on Lehman’s behalf.
I guess we have to wait for further news from HSBC Institutional Trust Services.
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Hi T,
Thank you for the wonderful illustration.
To add on to that, the underlying assets (ie the bonds) might vary from series to series.
So the liquidation value of different series will be different.
And yes, liquidating all of them at once would be very bad.
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Equity got trashing, Lehman’s min-bonds also kena bomb….better leave your funds with CPF and sleep soundly nevermind 2.5% Betters Safe than sorry. I believe the worst is yet to come!
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lioninvestor:
Thanks. Just wanted to do my part to help.
All,
Barclays has not bought Minibond, which is a standalone subsidiary.
Call your distributors or HSBC, but they have very little info to offer you now.
Everyone waiting for Lehman. The company guranteeing the policies have gone bust. Thus people who bought the CDS will need to get another “insurer”. They would probably have already bought new policies to secure their positions. They will want to claim their money back. Logical consequences will then apply.
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I just spoke to HSBC trustee. No updates for now but they are trying to work out the best outcome for minibond holders.
It will probably take a bit of time.
Will post an update on the site if I get any more news.
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Thanks lioninestor,
What is the number you call to HSBC, can I have the number? I will call them few day later. Hope have some update.
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Here’s the number but try to refrain from calling them for the time being. Let’s give them a bit of time to find the best solution for minibond holders.
HSBC INSTITUTIONAL TRUST SERVICES (SINGAPORE) LIMITED
Company
category : Capital Markets Services Licence Holder
Regulated Activities : Providing Custodial Services for Securities
Exempt Financial Adviser : No
Exempt Insurance Broker : No
Company : HSBC INSTITUTIONAL TRUST SERVICES (SINGAPORE) LIMITED
Incorporated in : SINGAPORE
Address : 21 COLLYER QUAY #10-01, HSBC BUILDING, Singapore 049320
Telephone : 62167449 (minibond hotline)
FAX number : 65331077
SGS Market Primary Dealer : No
Chief Executive Officer: Arjun Kumar Bambawale
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HSBC no. to call is 62167449. It’s their call centre. I just checked with them but no news yet. sigh…let’s all hope for the best!
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Hi,
lehman’s role is Arranger/Issuer of Minibonds, it isn’t a reference entity in minibonds series 3 that i have.. and I understand from the terms and brochures that only if any of the entities in minibond series 3 will to default will result in credit event..
my question is does minibond series 3 still consitute as a credit event?
can someone enlghten me?
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I heard those who bought DBS High Note 5 will get the worse hit than mini bond holders as they had been advised by DBS that their value is zero..all money is down the drain…
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HSBC had set hot line for mini bond holders call them@ 62167449
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lehman’s role is Arranger/Issuer of Minibonds, all minibonds are not hold by lehmam’b.
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Hi Tan,
Yes, it’s not a credit event.
But bear in mind that your capital was used to buy a portfolio of securities.
If Lehman stops paying the coupons, then the series might terminate and the underlying securities sold.
The proceeds of the sale will then be returned. At this point, we have no idea what those securities are worth hence the uncertainty.
For the DBS high notes and Jubilee Series 3 which had Lehman Brothers as the reference entity, they would be harder hit as theirs is considered a default event.
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since the minibonds where lehman’s role is merely Arranger/Issuer, and not as an entity in the minibonds, and nowhere in the factsheet or brochures (correct me if i am wrong) of minibond says that minibond will unwind if Arranger/issuer default, so why should we not even get back more or even the principal amout invested? or can anyone else assume lehman’s role as Arranger/issuer??
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hi all, i am also a victim of lehman minibond series 1 i sank 200k into it , frankly speaking even though in every investment ‘caveat emptor’ but since we are all buying through reputable bank in singapore like maybank, ocbc, abn, etc…why they never excercise due diligence in the first place before launching this product ? i myself am not into finance or banking, has no clue on the complexity of all these product but if any institution can come up with a ‘tool’ like minibond to suck our hard earned money, then it is really becoming a situation of ‘uncontrolled investment environment in singapore’. worst of all, when an event like this magnitude occur, all the dealer include abn who sold me this product claiming ignorance ….(we have to wait for further news). if this is the way a bank service the clients, frankly speaking why bother to study so much to work in bank…any one with good command of english can do it or maybe do it better.
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probably this is a good wake up call to all singaporean, in future - never believed the face value of any bankers who promote you a products, drilled them to the extent of telling you the exposure of any party listed in the prospectus if they go bust. after lehman brother event, who dare to say ‘they are too big to fall’ , no one is ever too big to fall…(in 2006 when i brought this product, this was my question, i am being brushed off with the fact that lehman is a 156 years old establishment…ignorance, stupidity, this is the school fee that i pay 200k most expensive lesson in my life)
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As I have paid dearly in 1997, the best way to deal with this mini-bond is to write it off totally. Assume zero return.
I went into mini Bond, searching for the best reference entities. Did ask the same questions as andrew & got the same reply… 150+years of history… blah blah blah…
Still I chose to invest. At 5%+ returns it is the best investment. This is the 2nd school fees I am paying…
Well life goes on… I still sleep peacefully as I have totally written my mini-bonds off. I also have pinnicle notes. Will write it off if MS goes bust. Good nite..
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Just like clob, I’ve already written off everything already. Anything that I can get back I’ll just consider as a bonus.
I’m done with all these investment crap. Rather than letting people burn my money, I’ll be burning my own in the future. I’m going to start a business, something that’s on my mind for years.
If the investment is risky, why not start a business for the same risk, you can over thousands % in returns.
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The name “minibond” is kind of misleading. It gives any man on the street a idea that it is a bond product which repackaged from a big basket of bonds for retail invetsors.
The marketing materials printed by the distributors mentioned that “Invest with confidence: with our Minibond Series 5 &6 credit-linked to six major financial institutions ( i.e. Citi, DBS, Goldman Sachs, HSBC, Merrill Lynch, Standard Chart), you can enjoy the returns you reserve with peace of mind.” is also king of misleading.
Other sub-prime reference entities were not mentioned at all.
Are prior MAS’s approvals required for the misleading naming of product and misleading marketing materials?
Does the distributor have any responsibility for printng such misleading message?
Can anyone advise.
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Hi Tan,
I have posted an update which will address your question very clearly here. The rest of you might also want to read it as it has some updates that I got from HSBC Trust.
http://www.lioninvestor.com/minibonds-update/
Hi Andrew and clob,
Sorry to hear about your plight. Unfortunately, the term ‘caveat emptor’ is widely applied here.
But if there is any gross misrepresentation from the dealer who sold you this product, you might want to consider taking it up with them/MAS.
Hi coffee-o,
I believe a big time bomb has exploded. Many retail investors have lost money from these products. MAS will have to work hard to find a best solution for us, and to prevent such things from occuring again.
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lioninvestor, thank for your comforting comments. The bank do not even have the courtesy like you who do not owe me a minute/hour/day in my life to say such comforting comments. like many other bro/sis here, life has to go on but no longer with confidence that we are living in a protected investment environment. Mas has been very cautious before launching a product that is meant for every men on the street. That is why certain risky product who are not subjected to mas vetting has to signed a ‘SI’ DECLARATION by investor themselve (sophiscated investor - with liquid asset of more than sin dollar 1 or 2 million to qualify). this is another trap ahead, when a banker come to you, mr abc, your are our esteem customer who holding such a big account and we have tailor a special product that only meant for people with holding like you, etc….(hahahaha this is really another plot i suppose)…
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I have everything …. Jubilee, Minibonds & Pinnacles. Even drag my family in cos of the GYC adviser told me “very safe” cos all “As” rated entities. Pls help if have info n whether I sould let go Pinnacles as heard trading around $0.37 ….. Sigh !!!
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Engel,
Which series are you vested in?
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Hi lioninvestor,
Ihave series 2 minibond will i lost everything?
Any legal counsel can advice?
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Lioninvestor,
Can I ask you the following:
1) How can we find out if Barclays has taken/will take on role of swap counterparty or guarantor? I understand that Barclays is taking over the North america operations of Lehman and am wondering if they are taking over lehman special financing inc which hasn’t filed for bankruptcy yet?
2) In the event of a default of payment by the issuer (whenever it is due under the different series), HSBC says it will take action to protect rights of noteholders which appears to only mean to liquidate the underlying securites. However, at this point of time, this would be worth very little. As the swap counterparty does not assume any risk since the risk falls on the noteholders, would HSBC look into getting a new swap counterparty and guarantor instead or even asking Barclays (who is very much in this business of swap counterparty and guarantors) or even getting one of their HSBC subsidiaries to take over this. The only risk I can see for the swap counterparty is having to pay the 5% pa out, and they still probably make a profit in the process. Since HSBC purports to act in the noteholders interest, could they examine if it is in the best interest of noteholders to force liquidate. In 4/5 years when the principle is due, the value of the underlying securities must be better than what it is now and if noteholders could all agree not to collect interest or a lower interest on condition that the swap counterparty does not liquidate now to avoid forced liquidation of underlying securities, could that be a better solution? I’m sure most noteholders would be more than willinng to get no/less interest as long as the principle is protected. And if so, how would we best communicate to HSBC on what we would prefer since? What are your views?
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Hi lioninvestor, thanks for updating yr site so rigorously over the past days. Do you have any particular thoughts on Minibond series 3? Have bought quite abit of them.
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Really have too many till lost track. Minibonds have Series 1, 3 & last 2 series. Jubilee S 3, Pinnalces S 2 & S3. Pls advise. Thanks !
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Andrew,
You are right. For sophisticated investors, the protection is slightly less compared to the men in the street as they are deemed to be knowledgeable enough.
Choon,
It’s unlikely to be a 100% loss. Unless you have other issues that you want to bring up legally, otherwise we probably should just let things run their own course and wait for news.
Worried,
I’m not too sure what the underlying securities of series 3 are. It’s a black box that only Lehman knows. What I have is the list of securities under Series 2 which I got from them a few months ago. Then again, it’s not much use as I can’t work out the market valuation (there are 100+ companies in the list).
Sad,
You can contact HSBC Institutional Trust to voice your concerns. Their minibond hotline is 62167449. My views:
1) It will take time for Barclays to look through the holdings of Lehman.
2) We do not really know the valuation of the underlying securities now. My estimate is they could range from 20-70+% of face value. Yes, someone can take over the swap counterparty but at the end of the day, it might or might not lead to the best outcome for us.
What happens if there’s a reference entity default 6 months down the road? Then we would be getting back even less. These are all issues that HSBC has to consider carefully. No one can guarantee that there’s no default in the future and also that the underlying securities will increase in value sufficiently to cover our principal.
Engel,
I suggest you contact your original advisor to give you a summary of what you have, what each of the series is exposed to, which distributor they bought it from, the current market valuation (obtained from distributor), and the trust where the notes are held.
To all,
The only thing most of us can do now is to wait (order of weeks or months). If there is any material updates, HSBC will contact us. If you need to contact them, their number is 62167449.
If I receive any news, I will also be updating this site.
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it reall seem this mini ‘bomb’ fragments has hit too many of us….
bro engel - i know how u feel now - ‘complete lost’…(at least for me).
only solace is to read this lioninvestor website for more information, the bank which i brough from is now as silent as graveyard.
is about time, MAS should set a ruling ‘banker cannot solicit investment products unless voluntary enquired by customer’ (probably sound stupid, but at least can prevent old folks from being sweet talked into a products like lehman). 20 years ago , when you walked into posb or dbs - who is there to sweet talked you on investment products - they are more concern to attend to your need of saving and withdrawal. frankly speaking, see how credit cards have harmed so many of those who canot controlled themselve, and in future with younger generation getting more ambitious and probably more greedy - it will be easier to sweet talk them into all these investment bullshit…’why deposit in saving account, when interest is so low. this product can promised u this return etc…etc…(imagine how many more youngster will be sold into this)’ . probably after this event, i am baised toward all banks…(you dun like them but you still need them - exactly the role of ‘casket company)
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Just received an update call from Maybank at 1530hrs. No news on how much i can get back. Was told to wait as they are still awaiting instructions from HSBC.
Anyone thinking of setting up a committee and voice our concerns to the relevant authorities, as a single voice. I’ll be interested to join, if there is one. I’m sure this issue of Lehman’s minibond affect many people on their hard earned money, retirement income, our ricebowl and most importantly affect lives, if everything goes down the drain…
Thanks to Lioninvestor for the constant updates for layman like me. I’ve learned a big lesson.
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Does setting up a committee and voice our concerns to the relevant aithorities (who? MAS which is busy with AIA matters? or HSBC which is busy dealing with the underlying securities?)help?
I don’t have much faith because this is “buyers be aware” and nobody has been forced to buy these products.
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The real counterparty risk is with Lehman instead of the underlying securities. You will only get the underlying security when the underlying companies default. If they don’t Lehman keeps paying you. When Lehman deafults, then he stops paying you. Nothing said about giving the underlying to you. But that is a nice posibility if they want to unwind this properly.
Should stick to more conventional investments if not familiar with things like these. The public seems to be not ready for “Credit Deafault Swaps”.
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Jay,
Not to confuse everyone, the underlying securities is different from the reference entities. I think you got mixed up with the terminology I was using.
The relationship is explained clearly here:
http://www.lioninvestor.com/minibonds-update/
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Just call HSBS the ans. to me is wait.
Kenneth i agreed with you setting up a committee and voice our concerns. Someone who know about legal please voice it up or advice to us.
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I want to be in the committee… really no confidence with all the bank product.. outfront can tell you very safe… principle protected… on the other hand can allow this thing to happen…. MAS should also take some responsibility in approving all these investment product… at least… have some buffles in case thing goes wrong….
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but to who can we voice ??? mas / hsbc ???
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can any one here tell me what will happen to my mini bond 9 i just brought it in july 2008 interest also haven take one time and then this THING happen what will happen to my money and at the time of sales the investment manager did not tell me if lehman collapsed, my money will be lost , she keep telling me if any of the 6 reference entiles collapsed then my money lose can MAS do something to all this ???????????
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some more from start to finish the sales manager did not even mention to me that LEHMAN BROTHERS is INVOLVED in this minibond thing had i know a american company is involved i would not have touch this bond can we do something to those investment person as they did not tell us the actual thing ???
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sorry take back what i say all just now what i want to know now is what is going to happen to the minibonds ???
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I am one of the many who were sold the MiniBond on the impression that it is a bond and many I think were unaware that the underlying instruments were linked to CDOs. In view of this, can all the retail investors sue the distributors for misrepresentating a product?
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Count me in if a committee is to be formed. Hope a petition will help ? All these advisers now are as dead as graveyard. They earned our commissions, so should we direct to MAS n hold them responsible for misleading us ? We were not being informed of the underlying risks n juz know of the credit event that does not include Lehman Brothers.
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Received notification on Minibond Series 1-3 from the company. The underlying basket got subsituted.
Just like to add my opinion:
1) Minibond Limited is a SPV in bankruptcy-remote Cayman Islands; it is not bankrupt.
2) As far as Series 3 is concerned, there was no credit event, i.e. the CDS will be be called & Lehman does not owe Minibond money.
3) So long as Minibond does not terminate, the underlying basket will still be held to maturity if no events of default occur.
4) As many had highlighted, the MTM value of the underlying basket is approx 40cents to $1. However, as we do not require to mark ourselves to market, we can choose not to realise the paper loss.
5) As pointed out, this is a CDO/1st to default stucture. If the SPV losses money on the CDS, the loss will not be accross all Series. Depending on “protection” offered by individual tranches, not all will be affected the same way.
6) But I think there is a risk that some investors may start legal proceeding against Minibond. For me, that would be worst case scenario as there will be forced redemption at market price.
[Reply]
Hi All;
Just to share.
Today I received a letter from Minibond limited dated 15 August 2008. I shall try typing all in here:
Minibond Limited (the “issuer”) Series 1,2 and 3 (each a “Series” and together, the “Notes”) issued under its Secured Note Programme arranged by Lehman Brothers Singapore Pte Ltd.
Notice is hereby given to the Holders of each Series of Notes in accordance with Condition 15 that, pursuant to Condition 4(e) of the Notes, the Issuer has substituted the Securities currently forming part of the Martgaged Property of each Series of Notes as set out in the column headed (Existing Securities: in the Annex hereto with the securities set out in the column headed “New Securities” in the Annex hereto.
The New Securities have substantially the same terms as the Existing Securities except that the New Securities shall be issued on 15 August 2008 (The “settlement date”) and will have the ISIN as set out in the Annex hereto. The Existing Securities will be cancelled as of the Settlement Date with no accrued interest payable for the period from (and including) the Interest Payment Date (as defined in the terms of the Existing Securities) immediately preceding the Settlement Date to the Settlement Date. For each Series of the New Securities, the Interest Accrual Period (as defined in the terms of the New Securities) in respect of the Interest Payment Date (as defined in the terms of the New Securities) immediately following the Settlement Date (the “First interest Payment Date”) shall begin on (and including) the Interest Payment Date immediately preceding the Settlement Date (the “Interest Commencement Date”) and ending on (but excluding) the First Interest Payment Date. Upon issuance, the New Securities will have the same credit ratings as the Existing Securities as of the Settlement Date. The Dealer will not be acting as dealer in respect of any series of the New Securities.
As of the date of this notice, the New Securities shall become the Securities forming part of the Mortgaged Property of the relevent Series of Notes and be subject to the security created in favour of the Trustee by the relevant Trust Deed. Based on the representations and warranties of the Issuer to the Trustee relating to the substitution of the New Securities for the Existing Securities, the Trustee is satisfied that such substitution is not materially prejudicial to the interests of the relevent Noteholders and has agreed to such substitution. The Derivatives Counterparty has given its written consent to such substitution.
Noteholders do not need to take any action in connection with the substitution of the Securities. If Noteholders have any questions regarding their investment in the Notes, there are advised to contact their Distributor.
Capitalised terms used in this notice but not defined herein shall have the meaning given to them in the COnditions unless the context does not allow.
—–
My fingers are sore typing. Cannot type in the Annex. Issuer has changed to Beryl Finance Limited.
This news should calm those investors for MINIBOnd 1,2,3.
[Reply]
whyagainman Reply:
September 23rd, 2008 at 2:06 pm
What’s the implication of this letter?
Does this mean that Minibond 1 - 3 is “safe” for now… the letter was dated way back 15th August, 2008, why only reached us on 19th September, 2008, only just days after Lehman kaput.
All these while there was no communication from them since I bought this product in 2006. Only received quarterly payout through CDP… future payout from Beryl Finance Limited or zero?
Pardon my ignorant!
[Reply]
Parka Reply:
September 23rd, 2008 at 2:27 pm
I think it means that there will be notices for other series should there be no money paid on the interest payment day.
[Reply]
lioninvestor
Re your reponse
============
2) We do not really know the valuation of the underlying securities now. My estimate is they could range from 20-70+% of face value. Yes, someone can take over the swap counterparty but at the end of the day, it might or might not lead to the best outcome for us.
What happens if there’s a reference entity default 6 months down the road? Then we would be getting back even less. These are all issues that HSBC has to consider carefully. No one can guarantee that there’s no default in the future and also that the underlying securities will increase in value sufficiently to cover our principal.
============
As you have said, liquidation of the underlying securities results in certain loss, especially in present market conditions. In my view, getting a new swap counterparty and reverting to a position where there is a future risk of reference entity default simply puts us back in the position we were when we first bought the Minibond. The risk of future default (which we already took the moment we bought the Minibond) has got to be better than the certainty of loss by “forced” liquidation.
Unless HSBC as trustee can show evidence that there is actually significant or imminent risk of reference entity default (and hopefully the US govt’s effort last night means this risk is diminishing), I would rather not take the certainty of disastrous liquidation.
So, to reiterate, I think it would be best for our trustee HSBC to try to facilitate a solution which would keep the Minibond arrangement rolling on by getting a new swap counterparty to replace Lehman Bros. Even for those who are not comfortable with the arrangement continuing, I believe anyone who then still wants to take his loss and get out can still do so by redeeming his Minibonds, at least after the admin confusion following Lehman’s bankruptcy is sorted out.
By the way, to clarify, are you saying that even if there is no default of the reference entities, but there is depreciation or default on the underlying securities, we will not get back the principal at maturity?
[Reply]
I confirm the letter is dated 15 August 2008. That is why I almost threw it away until someone called me to re-read the letter. Looks like it is back dated 1 month to execute the transfer of issuer.
My interpretation is these series of notes has been transfered/sold by LB to Beryl Finance Limited
[Reply]
ho clob / lioninvestor,
what’s the implication of this and how will it affect the minibond holders? this time round i think we have to be very very very careful with such complex financial instruments.
i also have jubilee series 3 where LB is one of the reference entity and label as “sound investment” in the brochure.i remeber someone mentioned the reference entity is not important, it’s the underlying entity that is important??? plse can anyone tell me what is happening to jubilee series 3? thanks.
[Reply]
Don’t know how to upload a scanned copy of my letter, the first block of the annex for Series 1 is below:
Annex
Series: 1
Description of Notes:
SGD Credit-Linked Notes due 2011 (”Tranche A Notes”) and USD Credit-Linked Notes due 2011 (Tranche B Notes”)
Supplemental Trust Deed:
First Supplemental Trust Deed dated 15 May 2006
Issue Date:
15 May 2006
Existing Securities:
Series 2006-4 USD 40,600,000 Synthetic Portfolio Notes due 2011 issued by Beryl Finance Limited (ISIN: XS0254427254)
New Securities:
Seroes 2008-15 USD 40,600,000 Synthetic Portfolio Notes due 2011 issued by Beryl Finance Limited (ISIN: XS0382664547)
—————————–
Hope my interpretation that these notes have been taken over is correct. Anyway, I am going to sleep now. As I have said before, I have written all my minibonds off. It can’t get any worst than that.
[Reply]
Henry,
As there is a default event, the proceeds from the Jubilee Series 3 is likely to be lower than that from Minibonds.
Sad,
You are right. I was just trying to point out the downside. The current environment is certainly very much different from when we bought the notes. So it is an unknown whether it will turn out better for us.
If there is sufficient default in the underlying securities, it can also trigger an early redemption of the minibond.
Clob,
Thank you for taking the time to post that letter. I do not like the contents at all.
What the letter says is that on 15 Aug, Lehman substituted part of the underlying securities of minibond 1,2,3 with some other underlying securities.
They have the right to do it by the way. It’s mentioned in the prospectus. The Trustee is satisfied that the transfer is not materially prejudicial to the interests of the relevent Noteholders and has agreed to the substitution.
Well, we were not informed that this substitution took place and the notice is only sent out now. This means there was a delay somewhere.
[Reply]
with all the those notication letter for series 1-3 with regard to beryl limited - it seem getting messier and dodgy ….
[Reply]
Clob,
Thank you for taking the time to post that letter. I had same interpretation with you that these notes have been taken over by
beryl limited. Please correct me it I’m wrong.
[Reply]
Choon,
I had posted my comments on the letter above. It’s definitely not a takeover.
[Reply]
Certainly these structured investments are too complicated for me. I am an engineer all my life where 1+1=2. This is like quantum physics.
I do understand my investment will be linked to the reference entities. If any one has defaulted, I will lose a high percentage, if not all.
LB’s arm Minibond, the supposedly issuer, collects our monies, invest them in a basket of a supposedly high rating bonds, collects “premium” from the reference entites, collects dividends from the basket, gives some of the returns to us as dividends.
If Minibond liquidate the Series, they will sell all the invested bonds. The value of these bonds should not have dropped so drastically. Don’t know how to check these as the invested basket of bonds is over 100+ and was never disclosed to me.
After selling off the bonds, they may have to pay for
- cost of selling
- pay penalty to the reference entities?
- pay us?
Did the high rating bond mkt crash between the issuance of these notes to now? I did not follow the bonds mkt at all. Only monitor the US T-bill. Totally in the dark. Only holding the concept that when interest goes up, bonds value drop and of course, junk bonds is worthless. If >10 bonds in the basket has defaulted, LB is supposedly to inform us. So far this has not happened.
[Reply]
lioninvestor Reply:
September 21st, 2008 at 10:16 am
Clob,
Just to clarify, the proceeds are used to purchase a basket of AA rated credit-linked Notes, which has exposure to credit default events of 100+ entities.
The exact pricing of it I’m not too sure.
But recent events would have caused the price of providing credit default insurance to increase. Accordingly, the market valuation of the CLN would have come down by quite a bit….
[Reply]
Just read today’s paper. Poof… there goes Minibond series 3… i have to change my name to Clob-Bond. This serves as a reminder of my own ignorance.
Lesson Learnt:
“Don’t invest into something that you don’t understand.”
In 97 was “Invest with only money that you can afford to lose”
[Reply]
Hi Clob,
Is there something about minibonds in today’s papers?
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lion investor can i ask if there is different value of all the different bond such as minibond series 2 and 9????? i brought a series 9 recently and this thing happen such unfortunate !!
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Does it really mean “all” my money in Series 3 gone? Felt so misled by the bank, tot was getting into bonds
[Reply]
Hi Lioninvestor;
Straits Times main section. Review section by R. Sivanithy titled “Hiding the ugly truth in the fine print”. I did not understand the Credit Default Swap and still do not.
What i understand from Sivanithy is Minibond 3 is actually providing LB some sort of insurance from credit defaults. If he is correct, $200m invested in this series is gone.
[Reply]
My heart really goes out for those aunties that bought these products.
I have seen and approached by the banks counter girls speaking to aunties and uncles pushing them such products that gives out “high interest” as compared to the current FDs.
I am educated, I entered into this with open eyes, and yet failed miserably to understand fully the impact of such products. How can the aunties ever come to terms with such collapse!
“Invest only in things you understand”
[Reply]
Wealth Creation gone upside down and let’s recap:
1) Clob Shares - Got clobbed?
2) Oilpods - Now Cracked Pods?
3) Mini-Bonds - Got Bombed?
4) Equities - Got wacked recently?
5) Unit Trust - Can trust ?
The list goes on and on so CASH$$$ IS KING!!!
[Reply]
Hey guys, I’ve uploaded my scanned copy of the Pricing Statement and Base Prospectus from the Minibond Series 2. Available for download (42mb zip & 50mb zip) at
http://www.mediafire.com/download.php?dwwjkgn3j5o
http://www.mediafire.com/download.php?nyimhmjzzvd
[Reply]
hi, is minibond really gone? can someone enlighten again?
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btw, i haven’t rece any news on Jubilee notes 8 where lehman is part of entity.
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lioninvestor,
what about minibond series 9? it was only recently launched and i had bought it. will i be as badly hit as the rest of the previous series? please enlighten me. thanks
[Reply]
i heard tha barclays bank is going to buy over lehman holding so how is this decision going to affect our payout of our bonds?????
[Reply]
My fellow mini bond sufferers. My symthasies with you. I invested quite a big amount and a friend invested an even bigger amount (retirement savings). I cannot describe how very, very painful it is as we thought we are buying a safe instrument.
But instead of sitting around and feeling sorry for ourselves, why don’t we sign a petition to submit to MAS/ HSBC to ask them to appoint another swap counterplay or to negotiate with Barclays or even to ask HSBC to consider this? I agree with previous comment that letting the mini bond run on is better than forced unwinding at today’s depressed prices. If we can come together, we have a louder voice. Who cares more about our interests than ourselves?
[Reply]
anynews? my mum placed 50k of her cpf on this series 3..
according to tan kin kian blog, its not advisable to invest in this.. found out the website too late..
haiz
[Reply]
Mini Series 3
As a layman struggling in the Financial web and jargons, I hope my understanding in layman’s language the where and how our hard earned money went to.
Retail investor pays $100 to get $4 every year paid quarterly ($1) each year. The $100 went into buying the “underlying securities” which is a basket of “bonds from 6 AA rated financial institutions / reference entities”. These bonds pays different rates and have different maturity dates for the bonds. Minibond Ltd is incorporated in Cayman Islands for the purpose of making the purchase.
Our problem is that Lehman Brothers has this arrangment with Minibond Ltd to exchange the varying interest / principal collection upon maturity of any of the 6 underlying securities and in return give a fixed $1 every quarter for distribution to holders / retail investors like us. I suppose it’s called Interest rate swap/currency swap as they also collect in US dollar but deliver our $1 in Singapore dollar.
In addition, to cover Lehman’s arse, Lehman paid an insurance premium to Minibond Ltd for Minibond Ltd to protect Lehman in case anyone of the 6 reference entities defaulted or not pay the bond coupon. If 1 reference entity defaults, Minibond Ltd will have the obligation in this arrangment to give the outstanding active securities to Lehman and Lehman will probably sell the securities and pay Minibond Ltd the redemption amount whatever the fire sale of securities maybe.
Basically, the above is a win win for Lehman. In the current situation, I am not clear what happens when Lehman is the defaulter as they cannot pay the quarterly $1 to us.
One way as mentioned earlier, for another company to take over the function. No loss to the New Company as a Counterparty. Alternatively, to liquidate the securities hopefully not by fire sale as the bonds may still be good quality. I thing the earlier proposal will keep our quarterly payment of $1 intact if the new counterparty agrees and hopefully there will not be a credit event by the reference entities and we will still receive our principle at the end of minibond series 3 maturity.
Please let me know if the above makes sense or I have misunderstood. Thanks
[Reply]
Will the US govt injecting extra funds to rescue bad debts soothe minibond issue?
[Reply]
Hi mat bond;
Totally agreed cash is king… but then again watch this.. you will need an hour. No debt, no money! and cash is only on paper. Maybe should buy gold and land.
http://video.google.com/videoplay?docid=-9050474362583451279
[Reply]
Hi Henry
Just dug out Jubilee Series 3 pricing statement. Summary:
Note Type: First-to-default credit-linked notes.
Reference Entity: LB, Macquarie bk, MStanley, OCBC, UOB
Be mentally prepared. LB goes bust means the reference entity has defaulted.
I don’t want to speculate as to how much you will get back but, if you write it off like me, you will feel better.
[Reply]
Hi Tan
With the US govn help, just hope for the rest of the notes do not default. I am sure people here, like me, owns not only minibonds.
As promised by Maybank relation officer, they or HSBC trustee will send out a memo by end week, I will wait for this.
Not sure if anybody wants to buy the minibond. It is a debt insurance. Maybe US govn will buy over then hopefully we may see some $.
[Reply]
This is the pdf version (smaller download) for the base prospectus.
Good to read if anyone’s taking legal action.
[Reply]
i guess we will need to be more careful when we put our money in foreign products. best to diversify our money in different basket rather than whole chunk in one single asket.
[Reply]
andrew Reply:
September 21st, 2008 at 4:09 pm
frankly the root of the problem which led many of us to buy this minibond is due to the FACT that all if not most of us are conservative investor who seek for a 4-5 percent return rather than expose ourself to the risker products like stock market. therefore ‘diversification’ rarely appear in the mind of conservative investor.
can we be termed as greedy investor ??? frankly, how can we be greedy when a product only promised 4-5 percent but we are not told that entire investment could be wipe out. if any prospecctus will to highlight ‘buyer beware, your entire investment will become zero if any credit event’ - who will have purchase it for just 4-5 percent return ???
probably termed us as ‘ignorant’ or ’stupid’, smart investor probably now laughing at us being this group of ‘minibond victim’.
This product has been masked heavily to a layman who do not have a hawk eye to unmasked it. no matter how much more we say, it seem no one in singapore able to help us (at least how i feel). Hsbc being trustee do not have a legal obligation to investor (correct me if i am wrong).
to prove mis representation in the court of law will require concrete evidence to support our claims otherwise we can be counter sue for defamation (correct me if i am wrong again). his/her words during the marketing promotion do not constitue an offer in the contract law as whatever investment products is back by a prospectus which outline the term and conditions.
any legal proffessional can shed some light to us ???
by virtue of us agreeing,signing up and paid for an investment products, we are as good as dead right ? Even if our court of law determined that there is unfair contract terms in lehman minibond prospectus that was presented to investor - what is there to recover against a company who went bust….????
[Reply]
About a hundred Hong Kong people, who bought Lehman Brothers mini-bonds, have sought help from the Monetary Authority and the Securities and Futures Commission. They say they were misled into buying the investment products. They claim staff didn’t properly explain the risks they were taking. They want the government to intervene and protect their investments. The investors plan to march from Chater Garden to the Central Government Offices tomorrow.
[Reply]
Clob,
Just saw today’s newspaper. Looks like they reproduced the article from Business Times. What he wrote is similar to what I explained. Lehman provided default insurance on the reference entities and passed it on to us. Try looking at this diagram again:
http://www.lioninvestor.com/minibonds-update/
Alvin,
Yes, different series will have a different value as the underlying securities would be different.
Mewdeedi,
Unlikely to be all but might be significant.
Chan,
Not too sure about series 9 but the drop in value should be less than the rest.
Yeo,
The underlying securities is not related to the 6 reference entities. It’s a basket portfolio of credit-linked notes and collateralised debt obligations.
[Reply]
Thanks Lionivestor for yr reply. really appreciate it
I will sign on the petition suggested by SH.
[Reply]
what i can hope now is that the new bank that takes over lehman brothers can continue to carry on our bonds thing and not give us back a little $$$$ right???
[Reply]
where is the petition located at i want to sign too!!!
[Reply]
Below test from Tan Kin Lian’s blog
“Two months ago, the New York State Attorney took action against several financial institutions for marketing the “auction rate securities” to retail investors on the representation that they are liquid investments and can be redeemed at any time. The financial institions had to buy back these securities at no loss to the investors.
I hope that the Monetary Authority of Singapore or the Attorney General can take similar action on behalf of retail investors who had been misled into investing in the Mini-Bonds and similar structured products by their bank’s relationship managers in the belief that these investments are safe.
It is time to hold the financial institutions accountable for their mis-selling activities and for our regulators to be pro-active.”
I agree totally as i was definitely misled.
[Reply]
Hi everyone,
Due to the many comments on this minibond issue, I have just enhanced the blog to enable anyone to post replies directly to specific comments. The replies will appear directly below that comment.
This will make it easier for everyone to follow and keep track of the comments.
[Reply]
hi all,
I believe there is a case of misrepresentation.
HSBC told me that there are a couple of thousands people bought this Minibond. So I think if there are enough of us petition, the authority will have to treat it seriously. We should be more proactive like Hong Kong Minibond noteholders.
Maybe SIAS can also help us.
My email is lyekf@hotmail.com. Those serious can contact me.
[Reply]
hi, i want to sign the partition to MAS. who’s writing it and where to go to sign it. we should support the Hong Kong investors. i’m really disppointed that reputable banks and broking houses can misled us into buying something by terming it “sound investment” in the marketing materials. MAS must step in since it is the regulatory authority. Yes i agree with “buyer beware” but provided all the info were correctly presented to investors which is not the case here. i was shocked to learn that the $ goes into CDO, who told us???
[Reply]
lioninvestor Reply:
September 21st, 2008 at 12:20 pm
Taken from MAS website:
MAS can…
Investigate wrongdoings by financial institutions.
Take regulatory action against financial institutions that have breached our rules and regulations.
MAS cannot…
Intervene in matters relating to service standards, commercial decisions such as pricing policies of financial institutions, contractual arrangements and civil disputes.
Give legal advice or comment on cases that have been heard in court or are pending legal action.
Order financial institutions to compensate you.
Disclose the outcome of any investigations or actions taken against individual financial institutions.
Q17: Can MAS tell me what action it has taken against the financial institution or its staff?
A: For confidentiality reasons, MAS does not inform the public of its dealings with specific financial institutions. We are therefore unable to inform you of the outcome of any investigations or actions we have taken against a financial institution or its staff. This is also the practice of other overseas regulators.
Q18: Can MAS order a financial institution to pay compensation to me?
A: MAS does not have the power to order financial institutions to pay compensation to you. If you are seeking compensation, you should deal directly with the financial institution concerned, approach the independent industry-based dispute resolution scheme or take legal action.
[Reply]
Any one will legal knowledge can help to write petition here?
Else all of us can gather and go to MAS to complain together.
[Reply]
lioninvestor Reply:
September 21st, 2008 at 10:29 am
Lye,
There are a few (official) avenues for financial disputes of such kind. You might want to refer to the guidelines here to see which is the best course of action.
[Reply]
if the voice is not huge, most often than not, the cries will fall to deaf ear. i am not sure what can be done. the issues is not so much about the swap or the underlying assets but the downfall of the product owner who is the lehman brother. in this case, can we still get back our money as lehman brother is oredi gone and dead?
if yes who is to be held accountable for the losses minibond investors has suffered?
500 mil is involved. if mas declared that there were indeed a misrepresentation, will it still guarantee our money back?
will the distrbutor compensate the whole chunk of 500mil?
i do not think so and wish not to be dreamy and wishful.
at the first place if swap of the derivatives is so risky, this product shouldnt have been approved to be distributed at all in our lion shore.
my qn is how come the expert (so called in the distributor as well as the mas review board) did not go tru in details before it’s being served to us the public?
i wont feel so hard pained if my value lost 70% in a high risk investment like commodities or equities but not in a product that yield me 5-6%p.a.
this grief is unbearable.
at this moment of time, i shall just forget n write it off from my book and move on and treat it as a lesson…
[Reply]
anyway guys,
just to inform that nobody is to blame who and who for what took place. nobody expect lehman brothers to fall. i spoke to one of my good friend who is a banker. herself was also involved and she losses her entire savings. worse when this series was out, her family and relatives also did the same investment.
one thing for sure is about herd mentality. back then in hk, it was sold like hot cakes. just same in singapore.
who can imagine it will suffer such a fate?
i was advised not to expect much.
[Reply]
sianzz Reply:
September 21st, 2008 at 5:18 am
sorry, is ur friend a personal banker?
[Reply]
the letter doesnt mean anything?. can somebody explain more in details.. i also recieved the letter
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Until now I have not understand how did I walk into a mess like this, the last few days has been very tough for me.
I believe that like most of us who has bought this MD, I was a FD guy and take no risk. I have told the bank rep that sold me this MB that the money that I was sinking in was a big portion of my funds for retirement and can take ” zero risk “, ” I know, don’t worry ” was the reply. He then went on to explain how safe this instrument is as it’s basically a bond product and also on the advantage on this MB that spread the risk among the reference entities as compare to buying a bond with just one company, that is why it’s known as a mini-bonds. I have also ask him when I saw the fine print of lehman brothers as to what is their role, as I did not know who LB was then and what happed if they goes down, the reply was ” LB will never goes down, and even if they do, they are just the arranger of this MB and nothing will happened to our money”. This is something close to a FD was his meaning and the down side was the very most 20-30%, which was very unlikely as they are spread among a few REs.
This is not about a case of investment gone wrong, it feels more like a case of a scam whereby how these so call financial advisors, that represents most of our local banks, on their tactics of selling while hiding the real risk involes.Just like the Chinese saying ” gua yang tou, mai gou rou “, meaning advertising as selling lamb meat but serving dog meat as a replacement. Had the banks been more revealling during their selling, I think they may not have been able to achieve their good selling results especially with most of MB note holders, whereby these money are our live savings and retirement funds.
I sincerely appeal to the MAS or other rellevant authorities to do some investigation especailly with the local banks here, where they play a major role in this misrepresentation.
[Reply]
I have a large amount of savings invested in the Minibonds series and this has caused me sleepless nights lately.
I am really upset being led to believe that these are bond-like safe investment. I agree with the BT article that such complicated instruments should not have been offered to the retail public at all in the first place. If there is a petition I would like to sign it. If MAS or CASE read this, I hope they will help us given their greater financial and legal expertise, given that many have been affected.
[Reply]
How to fight mis-representation?
As I counted for the MB3, there are a total of 9 distributors!
The arranger is dead.
[Reply]
Lion Investor
Thanks for your enlightenment. There is a list of bonds from the 6 reference entities. Are part of the bonds purchased from the sale proceeds of Lehman minibonds ? If so, are the underlying securities in addition to the bonds from the reference entities that Minibond Ltd purchased ?
Thanks
[Reply]
lioninvestor Reply:
September 22nd, 2008 at 12:51 am
Yeo,
The sales proceeds are not used to buy bonds from the 6 reference entities.
But Lehman (or some other party) will have these bonds.
So in the event of a reference entity default, what will happen is that these lousy bonds will be given to us, while we hand over our underlying securities to them.
The underlying securities are credit-linked notes linked to many other corporate entities, the identities of which we don’t know before we buy the minibond.
[Reply]
Thanks lioninvestor for explaining everything so well through this episode - I wouldn’t have understood anything at all otherwise.
Thanks to your explanation and the comments on this blog, two things stand out.
First, the distributors should have made proper disclosure. Unfortunately, I bet if you ask most of the distributors’ staff, they would not be able to explain it. In fact, the only person who has been able to give a proper explanation to me so far is lioninvestor! So, in retrospect, I am not surprised that the distributors have misrepresented the risk to us. The marketing materials used by the distributors are completely misleading and talk only about the reference entities (no ref to Lehman and underlying securities except in the encyclopedia-like prospectus) plus, the staff themselves probably don’t understand anyway!
Second, MAS itself should have checked the prospectus/marketing materials and required the distributors/Lehman to highlight that the risk of default for the MiniBond (and probably lots of other similar structured products) is NOT linked ONLY to the reference entities, but also the swap counterparty and the 100s of underlying securities! All the materials, including the risk statement, prominently highlight only the reference entities whereas the swap counterparty and underlying securities are buried in hundreds of pages of other info. This is very misleading for lay investors.
So, MAS should take collective action against all the distributors involved (brokers, banks, whoever) and compel them to make compensation to investors, just like in US where distributors like Merrill, UBS etc paid compensation for misrepresenting auction rate securities. I don’t even think that lay investors should be put to the trouble of engaging their own lawyers and costs to recover their losses, when the authorities and distributors have let us down. Perhaps a public petition and press coverage would help to convince MAS!
MAS itself should improve, by examining these structured products’ marketing materials and requiring distributors to make better disclosure, ESPECIALLY for opaque OTC structured products like the Minibond!
[Reply]
lioninvestor Reply:
September 21st, 2008 at 12:11 pm
These kind of notes are structured in a complicated manner and quite difficult to understand.
I had to read through the prospectus a number of times and even after that, I’m not sure I have everything 100% correct.
I bought my minibond in 2006 when the subprime issue was still not so evident. It was meant to be a less aggressive part of my portfolio. I think most people at that time (including the guys at MAS) under-estimated the risks.
Except Warren Buffett who mentioned as far back as 4-5 years ago that derivatives were too hard for him to understand (a time bomb waiting to explode) and he sold off all his positions at a loss.
After the subprime mess erupted less year, I realised that the risk of such products was too high for the returns they were giving. Even then, there were a spate of new Notes being sold.
I considered selling my minibond a few months back. Unfortunately, I didn’t follow through on the process - a mistake on my part but thankfully, the amount was small.
I sympathise with all of you who have used the bulk of your retirement funds to buy the minibond. From what I read and understand, a lot of you are of the lower risk profile - a product with so much uncertainty really shouldn’t have a place in your portfolio.
[Reply]
Hi,
where is the petition located at i want to sign too.
[Reply]
Hi All and lioninvestor
US govt injecting extra funds to buy back all the bad debts will the minibonds one of the bad debts that the US govt buy back?
[Reply]
lioninvestor Reply:
September 22nd, 2008 at 12:47 am
Read that they are only buying back from US companies. Not too sure whether they will do that for Lehman, which has already filed for bankruptcy.
[Reply]
Yes, plenty of such products eg LB “minibombs”, Pinnacle “bombs”, Jubilee “bombs”, … etc, flooded the banks and papers during the past 2 years. They “promised” attractive interest rates and linked to very solid and big financial institutions.
The agents were very aggressive in selling. I bought them and thought they were safe.
Now I lose most of the my money and what can I do except to blame myself for being so naive and ignorant.
[Reply]
It was saddening to see so many people investing in products which they do not fully understand. With assurance from the financial advisers and the mentality that “big banks are too huge to fail”, we as retail investors thought these products are actually safe to dabble with.
When I fast read about the troubles of Lehman Brothers last week, my heart sank. Called my mom immediately to bring out all the brochures and whatever not for me to look through and see if we will be affected.
Was relieved when I first saw that LB wasn’t one of the 6 reference entities in the minibond that my parents bought. However, the devastating news came when I then realise that LB is actually the arranger of the Minibonds series!
My parents invested a huge amount of money in this and I felt extremely bad! I am a finance graduate and was in the banking sales when my parents bought it last year. I should have read through the prospectus more carefully and by doing so will have warned my parents of the potential risks that this product entails to.
I thought this product is linked to the bonds that are isused to the RE and nothing got to do with the CDOs!
Who is to be blamed? Each of us has got a part to play in this.
I view myself as a balance investor with a long investment horizon. But after this whole series of fianancial crisis that took place ever since 2007, I have become risk averse! Money shall be placed only in fixed deposits or the most structured deposits!
But even if we are to place our monies in financial institutions, the most we can get back is only 20k (combined from all the accounts we hold with the FIs) in times of systemic bank failure!
Banking is really about the “business of confidence”. Once the market players lose confidence, panic sets in and we are doom to fail.
I am seeing the textbook coming alive.
Once bitten, twice shy.
Our money is hard earned.
Any petition?
[Reply]
There are also some discussion on Minibond in tan kin lian blog, http://tankinlian.blogspot.com. Tan kin lian is the ex-ceo of NTUC Income. He urges retail investors who feel misled by financial insitutions to lodge complaints to MAS. Please act so that MAS knows there are a lot of investors got affected.
[Reply]
HK investors protest losses on Lehman products (today’s article from Reuters.com)
A number of protesters, who sat cross-legged in front to the government office while chanting slogans and raising clenched fists, noted the products had been sold to elderly clients, who invested a large proportion of their savings believing them to be relatively secure.
“I also buy shares and forex products. If I lose I don’t complain,” said Daniel Chan, a 40-year-old computer engineer.
“This was not a bond. It was a structured note. The name was misleading. A lot of old people believed them.”
Chan said he had bought HK$500,000 ($64,300) worth of minibonds through a branch of the Bank of East Asia, which had told him they were waiting for further information.
He said the Hong Kong government had a moral obligation to help the small investors burned by the investments because the advertisements used to sell them had been authorized by the Securities and Futures Commission. Chan said he didn’t have the “knowledge or the money” to pursue legal action on his own.
“The government should step in. If the government don’t pay, the should force the bank to pay,” said Marty Chou, the managing director of a import firm. He said he’d invested US$1 million in Lehman-linked products.
The losses were devastating for some protesters. A 34-year old accountant who gave her family name as Yau said she came to the event because her elderly shopkeeper father had lost US$250,000, a large portion of his life savings.
“They told him ‘It’s very safe. It’s just right for you. I just found out that it’s a credit-linked derivative,” she said. “He never thought that he would suffer any loss.”
She said her mother had been unable to sleep for three nights because of the losses.
“Right now, I don’t know how long they will have to postpone their retirement. It’s very sad,” she said. “It’s a very emotional event for them. They just don’t trust banks anymore.”
http://www.reuters.com/article/topNews/idUSPEK7193220080921?pageNumber=2&virtualBrandChannel=0
[Reply]
i am not leaglly trained but i can helpdraft the petition. It will say:
- that most of us who bought the mini bonds are conservative investors who wanted safe instruments that pay a slighly higher yield than fixed deposits. That some of us have even put a large part of our retirement savings into it, thinking that they are safe.
- that there is misrepresentation of the risks involved because the default risks of the REs are prominently higlighted in the marketing of the product, misleading investors into thinking that they are only exposed to the credit risks of these highly rated REs and that the risks of the underlying securities have not been sufficiently or properly highlighted to investors. That most of us have bought into the product under the mistaken impression that we are buying into the bonds of the REs when in fact, we have been exposed to CDOs / CDS, complex financial instruments that retail investors cannot be expected to ufully understand, all the more because they have not even been explained in the marketing.
- that we ask MAS to explore all options to safeguard investors’ interest, including asking the trustee bank, HSBC to negotiate with Barclays or any interested parties to take over the mini bond because we are worried that forced unwiinding of the underlying securities at this depressed market would result in significant losses to investors. That given the choice, we would like to have the option to hold on the mini bond to maturity or at least, look at redeeming only when market conditions improve.
- that MAS highlights all other structured products / notes in the market that carry similiar risks and informs investors so they can decide what action to take before they run into problems like the mini bond investors.
I need help to get the petition signed. I don’t know how to do it online. Any ideas?
[Reply]
lye Reply:
September 22nd, 2008 at 1:19 pm
Hi SH, is the online petition ready? Or u need some help?
[Reply]
lye Reply:
September 22nd, 2008 at 1:19 pm
Hi SH, is the online petition ready? Or u need some help?
I hope those who are seriously impacted by this to be more proactive, else your notes are likely to get liquidated at distressed price.
The amount I put in is not going to ruin me, but I don’t want to be misrepresented like this. None of us know that our money goes to Lehman Brothers for the subprime loans. We all thought we bought high investment grades bonds linked to the 6 ref entities(I have series 2 which does not include Lehman as ref entity).
[Reply]
Hi Lioninvester,
I have been keeping an eye on this post since Thursday 11th, when the rumour regarding LB’s collapse started.
Thank you very much for clearing up our confusions from time to time.
I have invested in this minibond series 23 in HK, though the referencing entities are different, but the structure of if is similar to that of Singapore.
In HK, there are more than 28000 investors, with a total contribution of more than 14billion dollars. Many of them are at retirement age and the money were hard earned. Today, a small amount of these investors, about 300, in a short notice organised a rally in Central demanding government’s help. The main accusation for this rally was how the distributing banks mislead the investors. They have promised this minibond is capital protected in 5 years, however they mentioned nothing regarding LB’s involvement and the credit risks involved. The personal managers just wanted to sell and reach their quota. Tomorrow 50 investors with evidence are going to have a meeting with Monetary Authority and discuss possible ways for prosecuting the bank and regarding compensation to us, not very well informed investors.
In mainland China, government will offer 100% protection to investors….now I realised that Communism is actually not bad…
Anyway, let this be a lesson for us all.
Hope all the investors can think of this incident from another angel and be well.
[Reply]
IB Reply:
September 21st, 2008 at 10:47 pm
I read with great interest the messages here. I am from HK and I had invested in minibond series 35. I am an academic and usually have the habit of reading through the prospectus before investing. But I really consider myself to be a fool not to have realized that the arranger’s credit risk is a major factor. Of course, the bank where I bought this from carefully avoided describing LB’s involvement in the notes. They highlighted credit events for HK listed entities which were sound at that time and are still sound today.
TT, thanks for letting me know about the rally in Central. If I knew about it I would have joined. I do invest in stocks and ELN and for them I am willing to take risks. But what makes me mad is that mini bonds are supposed to be risk free. The banks in HK seriously underplayed the risk. I am definitely going to seek legal counsel either individually or better still as a group. Please let me know your contact so that we can work together on this. I am willing to spend time to recover lost dollars from them. Banks in HK are surely liable for taking part in a scam.
[Reply]
Victim Reply:
September 22nd, 2008 at 12:06 am
IB
I also have invested in minibond series 35. I totally agree with you that if we invested in high risk product, we should prepare to take the risk but definitely not this everyone will think of a suppose “risk-free product. I am prepared to join you and TT for any action we can take for I considered that I have been cheated.
[Reply]
TT Reply:
September 22nd, 2008 at 1:29 pm
Hello IB,
There was a short Q&A questions with the Securities and Futures Committee HK and MA. Representatives from certain banks also attended but they did not speak a word.
Chairman of the Democratic Party Mr. Albert Ho Chun-yan (何俊仁) organised it. All of our concerns have been well understood by the authorities. Nearly all of the attendees had a chance to speak, and to summarise, I can say 100% of us the investors have been cheated by the bank as none of us been told about the complexity involved in this product, and most importantly, majority of us DO NOT HAVE the prospectus of this product. When they sell they told us ONLY about the 7 referencing entities.A bank even pushed a sufferer to buy on 12 Sep!!
Anyway, for HK investors, there will be another meeting tonight at 8pm for you to ask questions to the authority:坚道2号明爱社区会堂。 MA will also setup a hotline to answer your enquiries. They will release the hotline this afternoon or tomorrow.
Alternatively, the best method of lodging your complaint is through writing, which can be sent to 金融管理局投诉组。
[Reply]
lioninvestor Reply:
September 23rd, 2008 at 1:27 am
TT,
The amount of money lost in minibond series by retail investors all over the world is huge. The sad thing about all these is that a lot of the investors are the low risk types and have sinked their retirement funds into it. This is sickening.
[Reply]
Hi TT,
I don’t think our government or MAS will act like the China government. But I do hope I will be proven wrong, may be by HSBC, Temasek or GIC or somebody.
Hi SH,
Thank you. Let me know where and when I can sign it.
Misrepresentation is the case here, we can find plenety of envidents in their marketing materials. The verbal conversations with the banks and broking houses sales people are difficult to prove I think.
I follow this blog everyday, the belief that “we were buying into a bond (mini) used to purchase the bonds of those 6 banks” are what we believed when we spend our hard-earned money. As I mentioned a few days back, I was shocked and angry when a UOB Kay Hian officer told me that the money was actually used to buy CDO, and not those bonds listed in the prospectus. Why didn’t they say so before taking the money? If this was highlighted and the risks was explained, I can only blame myself if I still buy it.
[Reply]
We really need to start something collectively to get MAS to do something and get compensations for all who are affected. On-line petition will be a good start.
Those who bought into DBS hign notes should join too as they have been hoodwinked too. The issuer DBS has not collapsed but is already saying one reference entity out of 8, Lehman collapsed and the rest of the notes are worthless next to zero!
[Reply]
Thanks SH for crafting the petition. I think it’s quite well written.
I googled and found this place for writing online petition. http://www.petitionspot.com/petitions/u2singapore
Seems quite straightforward. Just click on the ‘Start A Petition’, fill in some particulars and u can submit the petition.
I think we have to act fast before our Minibond being force -liquidated.
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I would like to appeal to all who’s considering legal action NOT to as this would definitely trigger forced redemption at current mkt px (about 40cents). If the NEW entity does not do that, and continue to service interest, there’s a good chance this will hold out to maturity and they can refinance themselves.
The reason why Minibond is set up with $1000 in Cayman, it’s for a bankruptcy-remote status. That means it’s protected from Lehman’s Chap 11 filling.
Definitely there are risks involved, but I think it’s each investor’s responsibility to verify/understand before making a commitment. At the time when Minibond was launched, SGS T-bills was paying just around 1%. For 4% risk premium, one should expect risks.
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Anyone holding series 3 here? Is tomorrow the interest payment date?
[Reply]
Hi K,
Lehman Brothers Holding, the swap guarantor, has filed for bankruptcy. This will trigger a credit event.
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I was one of the victims as well. Bought the series 5 back in early jun 07. The name mini”Bond” was really a mis-representation. I always thought that I was buying a bond (which with my relatively limited knowledge at that time is a rather safe investment). Furthermore, the interest of 5.25% per year is considered low in my mind compared with fixed deposit back in my home country (Indonesia) at that time which was 7-8%. Hence further confide me on the low-riskness of the investment.
When I bought it, the agent did highlight to me about the 100+ companies and the swap thing. But I thought that all the 100+ company thing was linked to the company “bond”. I never thought that it’s linked to such a high risk instrument.
Now I’m really upset that they really mis-represented the name by putting “bond” inside while it has nothing to do with bond. It’s almost as bad as those Nigerian scam!!
[Reply]
The flwg appears on SGX website at http://www.sgx.com/:-
=========================================
Lehman Brothers Pte Ltd has no outstanding financial obligations owing to SGX-DC and CDP 19 Sep
SGX confirms that Lehman Brothers Pte Ltd (“LBPL”) does not have any outstanding financial obligations owing to the Singapore Exchange Derivatives Clearing Ltd (“SGX-DC”) and The Central Depository Pte Ltd (“CDP”).
All LBPL’s securities positions have been settled with CDP. Its derivatives house positions have been closed out and customers’ positions successfully transferred to other brokers.
SGX remains vigilant in monitoring the financial resources and risk exposure of our Members. This is part of SGX’s on-going efforts to maintain the orderly functioning of the markets.
=========================================
How will this help MB noteholders?
I support Lye’s suggestion to start a petition. Perhaps we should not use it to force MAS to act against the banks, but rather to just voice our joint feelings to MAS on how the MB sale was handled, its misrepresentations, the misleadings, the non-disclosure of pertinent info, the role of LB etc. We have the numbers, so unity is strength.
Should a copy of it be also sent to FIDrec, Association of Banks etc. I know we are jumping the gun here as HSBC has not finished its job yet.
[Reply]
From http://www.news.gov.hk/en/category/businessandfinance/080921/html/080921en03002.htm
Gov’t seeks to help Lehman minibond investors
The Securities & Futures Commission and the Hong Kong Monetary Authority have been in close contact with the representatives of Lehman Brothers - the Lehman Minibonds’ distributors and trustees - to find ways to protect investors’ interest.
The two bodies have also met with the minibond holders to understand their concern, and both will act on individual malpractice complaints.
The collateral assets backing the minibonds are now in the custody of the trustees, who are actively exploring options in relation to the assets’ treatment.
The trustees also agreed to provide the latest information to investors as soon as possible.
Distributors for the minibonds have been looking at ways to improve the communications channel with investors.
The HKMA has arranged a meeting tomorrow to facilitate communication among investors, representatives of banks that sold Lehman-related products and the trustees who are holding the collateral for the investments.
The authority understands the trustee for several of the affected products will issue a notice tomorrow clarifying its role and the actions it is taking.
Hotlines to be set up
It has also required banks to establish public hotlines to answer questions on Lehman Brothers-related investment products they sold. Details will be announced and updated on the authority’s website.
The authority will established a hotline shortly to receive complaints related to the banks’ sale of Lehman Brothers’ products.
[Reply]
lioninvestor Reply:
September 22nd, 2008 at 12:43 am
Seems that things in HK are moving in the correct direction.
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sianzz Reply:
September 22nd, 2008 at 12:47 am
wat abt in singapore?
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got the letter, dated 15 sept..
does it means the minibonds resumed?
beryl finance is the new issuer?
anyone can explain/clarify?
[Reply]
lioninvestor Reply:
September 22nd, 2008 at 12:53 am
Sianzz,
What was written in the letter dated 15 Sep?
Or was it the letter dated 15 Aug?
[Reply]
sianzz Reply:
September 22nd, 2008 at 12:55 am
hi lion,
sorry typo, its 15 aug. u got tat too?
[Reply]
lioninvestor Reply:
September 22nd, 2008 at 1:15 am
sianzz,
I posted a comment on that earlier.
http://www.lioninvestor.com/what-will-happen-to-my-lehman-minibond/#comment-1512
[Reply]
I am glad to hear that things are moving in Hong Kong. Whatever happens to my money, we should not rest till the relationship managers who deliberately misled the unsuspecting public are duly punished. I strongly believe country specific monetary authorities should make these retail banks pay for their misdeeds. The first thing to do is probably to seek help from the press. SCMP of Hong Kong has started putting this on the front page. Bravo!
[Reply]
TT Reply:
September 22nd, 2008 at 1:33 pm
Hello IB,
There was a short Q&A questions with the Securities and Futures Committee HK and MA. Representatives from certain banks also attended but did not speak a word.
Chairman of the Democratic Party Mr. Albert Ho Chun-yan (何俊仁) organised it. All of our concerns have been well understood by the authorities and bank representatives. Nearly all of the attendees had a chance to speak, and to summarise, I can say 100% of us the investors have been cheated by the bank as none of us been told about the complexity involved in this product, and most importantly, majority of us DO NOT HAVE the prospectus of this product. When they sell they told us ONLY about the 7 referencing entities. A bank even pushed a sufferer to buy on 12 Sep!!
Anyway, for HK investors, there will be another meeting tonight at 8pm for you to ask questions to the authority:坚道2号明爱社区会堂。 MA is also setting up a hotline to answer your enquiries. They will release the hotline this afternoon or tomorrow.
Alternatively, the best method of lodging your complaint is through writing, which can be sent to 金融管理局投诉组。
[Reply]
IB Reply:
September 22nd, 2008 at 2:49 pm
Hi TT,
Can you please post the addresses in english. Unfortunately, I don’t read Chinese. Also, where will tonight’s meeting at 8pm be held. Please let me know.
I do carry the prospectus of minibond series 35. So if someone needs it I am happy to share.
IB
[Reply]
TT Reply:
September 23rd, 2008 at 8:46 am
I am very sorry …I just saw your reply..it’s a bit too late now..
Anyway, to update you with further info, check out this page released yesterday from MA:
http://www.info.gov.hk/hkma/eng/press/2008/20080922e3_index.htm
This page has the complaint form for download and useful hotline numbers for lodging your complaints:
http://www.info.gov.hk/hkma/eng/new/lehman/lehman.htm
[Reply]
Will our government helps us as the HK authority is doing?
Instead of concentrating only on LB minibonds, what about DBS High Notes and other such similar products? Are they facing the same fate? If so, then we should all gathered our feelings and voices to make an impact.
[Reply]
lioninvestor Reply:
September 22nd, 2008 at 8:25 am
The DBS High Notes holders are worse off than we are. But these were not sold to the retail segment. I bet some of their owners will not let the matter rest if there was misrepresentation.
[Reply]
I hope the Singapore authorities will step in to help the plight of the Singapore unitholders. Article on SCMP on HK situation:
Lehman minibond investors seek government help to recover money
Jasmine Wang
Sep 22, 2008
Hundreds of Hong Kong investors of minibonds issued by collapsed US investment bank Lehman Brothers Holdings staged a protest in Central yesterday, urging the government to fully protect their interests and settle claims against allegedly misleading sales practices by the city’s banks….
http://www.scmp.com/portal/site/SCMP/menuitem.2c913216495213d5df646910cba0a0a0/?vgnextoid=b4164a8df658c110VgnVCM100000360a0a0aRCRD&vgnextfmt=teaser&ss=Companies&s=Business
[Reply]
HK investors sending message across to government for help:
Full article on:
http://www.reuters.com/article/topNews/idUSPEK7193220080921
HK investors protest losses on Lehman products
Sun Sep 21, 2008 6:05am
By Jeffrey Hodgson
HONG KONG (Reuters) - More than 100 angry Hong Kong investors marched on government offices on Sunday, calling for action after losing money on structured products linked to failed U.S. investment bank Lehman Brothers Holdings Inc.
The protesters, many of them elderly retirees, accused the government of failing to provide proper oversight and said local banks did not do enough to warn of them of the risks involved.
Many had purchased so-called “minibond” products, notes secured by swap obligations guaranteed by Lehman.
“They were misleading investors on the risk. They said the minibonds were highly stable,” said W.H. Chiu, a 66-year-old retiree.
Lehman filed the largest U.S. bankruptcy case in history this month after collapsing under the weight of toxic assets, mainly related to real estate, that are now worth only a fraction of their original prices.
Chiu said he purchased about US$20,000 worth of minibonds from a branch of the Hong Kong subsidiary of Industrial and Commercial Bank of China (ICBC). He said he was still fighting to get information on the fate of his investment and feared it would end up as “rubbish”.
An advertisement issued by a unit of Sun Hung Kai & Co Ltd touted the product as “a strong collection letting you invest with peace of mind”, while noting in fine print that the notes involved “a high degree of risk” ……….. [con't]
[Reply]
Hi Lye,
Series 1 today interest payment date.
Anyone holding series 1? Not sure about Series 3.
[Reply]
lye Reply:
September 22nd, 2008 at 9:16 am
If those holding series 1 do not receive interest paymen today, this will be a confirmation of credit event. HSBC trustee will have to take formal action on this. I urge those holding series 1 to check with HSBC. Ask them not to force liquidate your notes.
[Reply]
I don’t have DBS High Notes. Do you mean these Notes were not sold to small investors like us?
But somebody in Mr TANKL’s blog mentioned he bought them.
http://tankinlian.blogspot.com/2008/09/loss-of-hard-earned-money.html
[Reply]
Anyone holding series 1? Please update it not interset pay out that mean the issuer forced redemption.
[Reply]
Foolish Investor Reply:
September 22nd, 2008 at 9:58 am
Choon
I hold Series 1 and 2, bought during mid-2006.
The interest payments are on Aug, Nov, etc.
The Aug 08 interest was credited…the next one being Nov 08.
[Reply]
Choon Reply:
September 22nd, 2008 at 10:09 am
Foolish Investor thanks. Called HSBC on Firday and Know that Series 1 interest pay out today. Can try to call HSBC to confirm it?mini bond holders call them@ 62167449
[Reply]
Just saw a latest news headline : Stanchart, Noruma, and Barclay are seeking Lehman Asia operation…
Wonder any relation to Minibond.
[Reply]
sadma Reply:
September 22nd, 2008 at 5:24 pm
Hi, lye where can I sign the petition?
we can’t just let money fly away like this !
[Reply]
my mum on serie 3 got the interest before they went bust
[Reply]
Folks,
Just spoke with HSBC Trustee on MB 3. He feels that the whole thing hinges on Beryl Finance (the new Issuer) more than the numerous underlying securities. He feels that as long as Beryl is a good boy for the rest of the term, then we should be fine.
Beryl will decide whether to continue with the notes or call it off. Should Beryl call it off, then we will get back at least something (may not be zero). He feels that the credit rating of the underlying securities is less important than that of Beryl’s.
We may have an opening here. Can lioninvestor or anyone else comment on this pls? Tks.
[Reply]
Just got off the phone with OCBC securities on the letter posted by clob on 9th Sep above.
The manager confirmed that the letter is confusing and it does not means that the series 1 to 3 is safe.
As long as Lehman Bros is in bankruptcy, it is a credit event for all series of minibond. So far there is no info from Lehman Bros or the HSBC trustees.
I figure that everyone in the chain of this fiasco is waiting to find out from the auditors/accountants/lawyer on how to untangled the mess and in what way is the securities are to be sold off. Just prepare to lose 80% of your investment.
Just like fiasco of escape terrorist, bogus degrees of private institution, now we have biggest fiasco of insufficient supervision by MAS that stole away our hard-earn saving and retirement plan.
[Reply]
Foolish Investor Reply:
September 22nd, 2008 at 10:32 am
Steve
…As long as Lehman Bros is in bankruptcy, it is a credit event for all series of minibond…
If I understand the Pricing Stt correctly, LB bankruptcy does not constitute a Credit Event, at least for Series 1 & 2 since LB is not a reference entity.
However LB is a swap counterparty (presumedly for all series of Minibonds)…its insolvency will trigger early termination of the Notes, i.e. selling the underlying securities, +/- the swap payments & other expenses, and return the balance to Noteholders (i.e. us).
If LB had gone bankrupt before the underlying securities are required to be marked-to-market (I think effective only in 2008), it might have been better for us as the value of the underlying securities should have been higher. Now, can only hope for the best, but prepared for the worst.
[Reply]
WHAT I AM NOT PREPARED TO LOST 80% OF MY INVESTMENTS JUST LIKE THAT !!!
[Reply]
Whether LB is involved directly or indirectly in all the series, it is confirmed that LB has declared bankrupt. This will have impacts on all the minibonds.
The worst is we don’t know what is going on and nobody seems to know what exactly is happening despite repeatedly calling Maybank (I bought series 2 there).
[Reply]
Choon Reply:
September 22nd, 2008 at 11:03 am
Hi Jasmn
I bought through Maybank call them and y=the ans is wait.
Update us if you call them. It look all of us are was misrepresentation by the banks.
[Reply]
i have brought a series 9 but seems no one here brought series 9 right???
[Reply]
Thanks for providing so much information in this site. I have been keeping in touch with my bank for my minibond series 2 and they keep telling me to expect very little if not nothing at all.
Is it really as hopeless as that? Or is the bank trying to paint the worst case scenario so that if you can get back say 30% you would be celebrating instead of trying to find ways to get them in trouble for misrepresentation?
I helped my mum sink in a substantial amount of her savings in this thinking it is as safe as a FD. My distributor did not tell me it is a risky investment as described in the papers.
It’s like I can’t wake up from my nightmare!
[Reply]
Hi Alvin, I am another of the victim here, i bought both the series 6 last year & series 9. just 2 months back .
I am suppose to receive my interest for series 6 on the 20/9/08.But check my CDP account,no money is in yet?Seem like it is as good as lost.
[Reply]
How can let our hard earn money gone in this way… if give it to charity at least we have done some good deeds.. but not like bubbles disappear in the air…. very upset and angry with our MAS and bankers for their misrepresentation.., I called myself a low risk taker… and have checked and get assurance from the banker that it is safe to put the money in it and the risk is very low… and capital protected at maturity…. never never expect banker also a liar…. just interested to get business and never give proper advices to the investors…. a bigger liar… and how abt MAS now is so slient and dare not proper or giving any assurance to their investors… should we trust them in future!!!!!
[Reply]
Does any one can advise ? Other than MB series 3, LB is one of the reference entities, any other series with LB as one of the reference entities? I believed all of us are drawn our focus to the 6 reference entities by the bankers and no one was told about the risk involved with the arranger/issuer. I was told the risk involvement occured if any one of the reference entities collapse or default, but not the arranger or issuer…. this misrepresentation caused the most unhappiness which can be avoided if the investors were told earlier on about the same risk go to arranger/issuers. The bankers have to responsible for causing all these loss.
[Reply]
i brought series 9 but lehman brothers is only the arranger and is not included in the 6 reference entities!!!
[Reply]
Have just read the blog of Mr.Tan Kin Lian with him saying that he has spoken to a Lawyer asking if they can take up the case on behalf of the MB victims who were misled into buying. And also with his hope that MAS will help us to look into this.
Would like to thank Mr.Tan Kin Lian for his effort in a time like this, when most of us are lost as to what to do , to speak for us.
[Reply]
Choon Reply:
September 22nd, 2008 at 2:17 pm
Hi ST thanks.
Yes all of us are lost and did not know what to do?
[Reply]
Choo Reply:
September 22nd, 2008 at 2:22 pm
Hi ST,
Can you put the link of Mr tan Blog?
[Reply]
Teoh Yi Chie Reply:
September 22nd, 2008 at 2:26 pm
http://tankinlian.blogspot.com/2008/09/sad-experience-of-minibond-investor.html
[Reply]
ST Reply:
September 22nd, 2008 at 2:31 pm
Hi Choo,
I don’t really know how to attach his link here, you may visit his website : http://www.tankinlian.com
[Reply]
Hi
Read below info form this website…very very angry with the bankers for being so irresponsible
http://sgbluechip.blogspot.com/2008/09/have-you-bought-lehman-mini-bonds-and.html
[Reply]
Sian,
Totally agree with you, I ask my banker when I made my purchase what happen if LB goes down. His reply was as LB is only the arranger, nothing will happened to our money, very much like nothing will happened to our housing property if the agent that sells us our house goes bankrupt.
[Reply]
Hi All,
so far only 3 of u have responded to Lye call.
We need more people stand out, those who are more financially literate, those who have sunk a significant portion of their savings, especially the retired elderly.
It’s 500 million dollars, few thousand people affected.
Simply complaining in internet won’t help u get your money back. At least engage proactively with HSBC Trustee.
Please reply to Ley and SH
[Reply]
Just picking up news Nomura wins auction of Lehman Brothers Asia Assets. Would anyone know if this has any bearing on our minibonds? Or Lehman is a dead dog and we should only set our lookout on HSBC trustees?
[Reply]
The only problem now is how are we able to reach out to investors like you and me who are still clueless on what is going on?
[Reply]
Hi All,
so far only 3 of u have responded toLye and SH call.
We need more people stand out, those who are more financially literate, those who have sunk a significant portion of their savings, especially the retired elderly.
It’s 500 million dollars, few thousand people affected.
Simply complaining in internet won’t help u get your money back. At least engage proactively with HSBC Trustee.
Please we need to work together and let MAS and HSBC Trustee know that we was was misrepresentation by the banks and invert into the minibonds.
Thanks SH for crafting the petition and where can I sign it?
[Reply]
if MAS or HSBC never do something to this $500 MILLION worht of assest belonging to singaporeans is going to fly away to USA
[Reply]
tell you all something the best thing to get attention is to appear on TV so that singaporeans know what is happening to us on this minibonds thing if not only does affected will know those people who never buy minibond thing does not know such a thing is happening to us and partly is not our fault it is the ….. fault
[Reply]
Guess what! Just read the Chinese paper Hong Kong people who affected by LB Minibond about 100 people go to their MAS and financial institution to lodge complaints on their misrepresentation by their bankers in believing the product is a bond and save to purchase. The authority has agreed to look into it and investigate the cases. We should also do something to our local people especially those badly affected… your entired saving .. you know… must let them know that it is not ethical to do the business in these way. It may have badly affected one family or one life if the situation does not favour the “poor and innocent” investors.
[Reply]
to all of you who are affected :
I was intimately involved in these products from 95. I would like to think that I know these stuffs inside out. 2 immediate actions you guys need to take are :
1) you all need to form an “investors action” group ASAP. You need to have a collective voice so that your concerns will be heard and, more importantly, pressure can be applied on a collective basis. My fear is that decisions will be made without your knowledge, and this could potentially mean a 10cent on the dollar less in recovery (i.e. 10% less). Enron averaged recovery rate was 9cent on $. Lehman could be a lot more. DO NOT TAKE NO FOR ANSWER. If sufficient number of you make enough fuss, It will make a difference. 10% is still a lot of money to the averaged Mr & Mrs Tan.
2) You MUST find out what the “collateral” is for the relevant series. I couldn’t emphasis this enough. As an Note investor, you have a right to know. This laterally dictates the viability of the entire structure of that series. I suspect that each series is “ring fenced” from each other from a structural robustness point of view. Why this is important ? Some of these Minicraps in HK were collateralized (secured) by a Lehman Holding issued bonds (huge conflict of interest here !). If the trustee had not acted in time in substituting suitable collateral, this would mean that series has no suitable “AA” rated security to front the swaps (both CDS and currency US$/S$ swaps). The swap counterparties are Minicraps v Lehman. PwC who is running Lehman right now would not necessary close out the swaps, but if they found out that Series has insufficient collateral, that series is as good as gone i.e. you are looking at Lehman eventual recovery rate. If on the other hand, you have a series that is secured by non-Lehman & suitable “AA” rated collateral , you should sit tight and hope no one will collapse you structure. Hopefully you get most of your money back at maturity.
beryl finance is another Lehman “sponsored” SPC vehicle incorporated in Cayman. This beryl was involved in a lot of CDOs and FTDs in Australia (where Mr and Mrs Smith were targeted investors) through a company called Grange Securities
I would be happy to answer questions
[Reply]
lioninvestor Reply:
September 23rd, 2008 at 12:38 am
Hi Del Boy,
Thanks for dropping in to provide your expert knowledge.
You mean to say for some of the series, the underlying are Lehman issued bonds???
Are you able to give some examples of the underlying securities for the different series?
[Reply]
Del Boy Reply:
September 23rd, 2008 at 9:34 am
“underlying securities” “collateral”…. they are same thing.
These Notes are synthetic instruments and therefore the cash collected are used to buy what we called collateral which is used to secure Minibonds’ obligations under the swaps with Lehman (amazing hah !). In case of structural liquidation (for whatever reason), the swap counterparty would have a first bite of the cherry (i.e. the collateral). But How to bite ? when Lehman is actually biting Lehman !!!
huge flaw in the intergrity of the structure in the 1st place, which is fully exposed on upon Lehman’s bankruptcy !
yes, Issuer of collateral in some of the series were Lehman Treasury B.V., a dutch entity I believe. HSBC as trustee for the Note Holders should have the most up-to-date information. Your readers should be harrassing them on a daily basis ! these guys have the keys to alot of questions
Nomura is the white night - excellent news. Your readers should be lobbying MAS to apply presure on Nomura to take over ALL the Lehman’s obligations IF they want to receive a licence and operate in Singapore. I’m sure the HK authority is doing the same now.
[Reply]
Foolish Investor Reply:
September 23rd, 2008 at 9:54 am
Del Boy
(1) An elementary question.
Underlying securities are CDO, right.
How does CDO differ from direct holding of a basket of bonds?
(2) After mid-2007, when the 2 hedge funds of BS collapsed, the media started to shed more light on CDO, and exposed that some AA-rated CDO comprises of good and bad securtites.
But during mid-2006, when MB Series 1 & 2 were launched in Singapore, there was no such publicity yet. In 2006, in the banking industry, would CDO be perceived as “safe instruments” similar to direct holdings in bonds?
[Reply]
I sympathise all of you. Say no use, all will be gone. Better act now.
[Reply]
I am willing to sign the petition too. Also we need to raise the issue of mispresentation so that our financial institutions cannot to this to innocent lay people in the future - especially our elderly.
[Reply]
Hi,
I have a few I know can add into the petition.
It was sold to all of us who were told that minibond was safe investment as all reference entities are A rated banks.
Only the good was sold, but not the bad/risk. Of course, nobody who sold then would expect any risk posed by A rated banks, and honestly, we really relied on the distributors to sell us a ’save’ investment especially when most of us are layman who are not well versed with investment products.
We expected more of distributors who we saw as professionals in their field for investment advise, but perhaps they were too caught up to just meet their targets and left the real interest and protection of retail investors behind.
We all really do have a case here. It is an oversight of distributors, agents who capitalised on people’s hard earned cash, some of which belongs to old folks and even the disabled.
Perhaps MAS should consider this genuine appeal and look to the distributors to be responsible for funding the amount which may be written-off by the credit event.
[Reply]
maybe its good news?
http://afp.google.com/article/ALeqM5jKog5twD-IJXBaK1suUWSaCoWgkQ
[Reply]
ALVIN Reply:
September 22nd, 2008 at 4:33 pm
but i thought that the bonds that we buy are directly managed by LB in the USA and not in ASIA this i think would not affect any thing !!!! cause our investment is mainly in the USA not in ASIA
[Reply]
An international TV station wish to interview investors who have invested in the structured products affected by the collapse of Lehman Brothers (i.e. the credit linked securities). They wish to know if the investor had been given the right advice by the financial adviser or bank officer who sold the product.
If you are affected and wish to be interviewed on TV, send your name, telephone number to me at kinlian@gmail.com.
taken from MR TAN KIN LIAN WEBSITE http://www.tankinlian.blogspot.com/
[Reply]
Nomura buying Lehman Asia is indeed good news because they may just become the new arrangers of the minibonds. However, that may also depend on the current value of the collatterals and on Nomura’s decision as to whether they want to continue with the minibonds or not.
But whatever it may be, the bankers who sold the product should not be allowed to go free. They did not do their duties and misrepresented the riskiness of these products and should feel the pain as us as well. At the very least, their licenses should be revoked for this offense.
HKMA already has a notice on its web site about steps they are taking to look into this issue. This is a positive start. I hope MAS also should follow up with something similar.
[Reply]
My only concern is that all these advice are given verbally. It would be our word against theirs. I am sure how we could work out a misrepresentation case. We need legal advice.
I have called MAS this morning and have asked them to record my feedback on this matter of misrepresentation.
[Reply]
I feel that there is no pint to continue to discuss over the net. We need to sign a petition and hand it to MAS or the governemnt.
The HK MAS and government are already looking into this matter. Our MAS can only tell us to look for HSBC Trustee, our government has kept quiet. What is the role of MAS, monitor, regulate, or what???
I shared all your pains as everything here are hard earned money, i believed most of us are not the rich who can earn a millions in a short period of time.
The bankers and broking houses cannot go free just like that, now they are already looking at other means to make money for themselves by selling other products.
Plse someone let me know where to sign it and let’s head down to MAS or some government office to hand it over offically.
[Reply]
Below is taken from http://tankinlian.blogspot.com
TV program on credit linked securities
An international TV station wish to interview investors who have invested in the structured products affected by the collapse of Lehman Brothers (i.e. the credit linked securities). They wish to know if the investor had been given the right advice by the financial adviser or bank officer who sold the product.
If you are affected and wish to be interviewed on TV, send your name, telephone number to kinlian@gmail.com.
[Reply]
The petition has to be worded correctly I think.
Maybe request MAS to look into the matter and find an equitable resolution.
But if we accuse ALL the distributors and EVERY SINGLE ONE of their sales staff of misrepresentation AT THE SAME TIME, ie saying that
All the banks/bank staff in Singapore are lying and conspiring to cheat my money. Such a sweeping statement, do we really think it will succeed?
[Reply]
Ivy,
the best method of lodging our complaint is through writing and not interview….. it is a serious matter and not just a topic open for discussion… it concerns how thousand people hard earned money…….we should raise our concern to the right authority MAS and make them act asap…. at least investigate the case rather than push all the responsibility to HSBC or distributor… I thought MAS should come in as they are the one who approved the product and they should offer their help to the investors if their bankers have misrepresented the product to the investors….both MAS and bankers should come together to clarify the entired situation…but it seems like both parties keep quiet and dare not offer any solution…. and let the investors running like the dogs… jumping for help.
[Reply]
I have Minibond series 1 and 3.
Before Lehman went bust:
Interest for series 1 was credited into my bank account around:
18Feb/18May/18Aug/18Nov
Interest for series 3 was credited into my bank account around:
2Mar/2Jun/2Sep/2Dec
Based on the letter which we received from Minibond, dated 15August 2008, I have no idea whether it will fall on the same date because the letter did mentioned about Interest Payment Date but it is very confusing as follow:
“…For each Series of the New Securities, the Interest Accrual Period (as defined in the terms of the New Securities) in respect of the Interest Payment Date (as defined in the terms of the New Securities) immediately following the Settlement Date (the “First Interest Payment Date”) shall begin on (and including) the Interest Payment Date immediately preceding the Settlement Date (the “Interest Commencement Date”) and ending on (but excluding) the First Interest Payment Date…”
Note that 15 August 2008 is stated as the “Settlement Date”.
Can someone translate the above to layman term ? in term of which day of the month ?
Please note that interest payment is a super small amount compared to our initial investment, what I am worried is the following statement quoted from the letter: “….the Issuer has substituted the Securities currently forming part of the Mortgaged Property of each Series of Notes ….”
Does this means that our investment was dump into mortgaged related CDO/CDS (subprime related) ?
[Reply]
lioninvestor Reply:
September 23rd, 2008 at 1:17 am
HI Checker,
The letter only serves to inform us that part of the underlying securities were swapped.
From what to what, we do not know.
The interest payment date (if there is any) should be according to your original schedule and unchanged by the substitution of underlying securities.
[Reply]
Beryl Finance Limited is a Cayman-based special-purpose vehicle of Lehman Brothers International (Europe).
[Reply]
hi sian,
i think mas hv to approve any finnanical products sold in s’pore, correct me if i’m wrong. but so far, both mas and the government is very quite, that means what ???
i think all of us want to recover as much of our hard earned $ as possible. i don’t have the $ and resources to engage a lawyer. can only hope mas and the s’pore government will do something to help us. ideally get someone (a bank, temasek, gic, glc, or whatever i don’t know) to take over the “bonds” and let it run to expiry, which by then the value should have increase and hopefully we get back the principle or close to it. never mind if no more coupon being paid while we wait it out till expiry.
It’s very difficult for small people like us to fight the big banks and broking houses. the amount involved is too big, i don’t think anyone of them will claim responsibility for compensation.
My greatest fear is mas or the government will say let this lesson be use to set future policies to prevent re-occurence….boooon, we are left to fan ourselves.
Hence, a petition is still what i think is the best route. we keep quite, mas and government also keep quite, i’m not sure what else we can do?
[Reply]
Yes, we shold lodging our complaint is through writing to MAS.
[Reply]
Allan Reply:
September 22nd, 2008 at 8:52 pm
Agreed all affected should lodge complaint direct to MAS, HSBC and Maybank. Anyone can advise how we do it so that we do not let the people who are responsible get away so easily from our bloodsweat money
[Reply]
Hi all,
I think we should start taking action to lodge a compaint to MAS on the misleading of product and promotion material by the finanical institution and failure of their advisors to highlight the underlying risks. We are all cheated by the so called “minibond” thinking we are buying into the bonds of respective RE and have not highlighted the dependency of issuer, arranger, etc.. (only heard these after this event happened). The creidt rating of LB is not even highlighted even though the credit event has dependency on it (ironically, the brochure is highlighting the Reference Entity prominently).
Mr Tan Kin Lian (www.tankinlian.blogspot.com, his email - kinlian@gmail.com) has requested we dropped him our name and contact number/email address for us to discuss next step. We should start doing so ASAP. We can use SH’s petition to prepare a letter and gather as many signature as possible (may need a platform to collect that) and has representatives to bring to MAS (also need to know who to meet, etc…).
Anyone has any other suggestions to make the petition more feasible ?
[Reply]
Allan Reply:
September 22nd, 2008 at 9:11 pm
Hi Sg
I have submitted as requested to Mr Tan Kin Lian. The rest of us so what are we waiting for. We have to help ourselves so send in now
[Reply]
shingoz Reply:
September 22nd, 2008 at 9:41 pm
i have wrote to mr tan providing the required details and a brief of my situation.
now..where is the online partition? can some kind souls share the link(if any)?
[Reply]
LET’S ACT FAST !
There many comments in this post on how we might resolve this big mess with the minibonds but I don’t see any concrete action plan, may I offer my suggestion :
Unity is strength, let’s band together as a group to :
1) Sign a petition (many thanks to SH for preparing the draft)
2) Go to MAS & HSBC Trustee offices together in a group to submit the petition.
3) Ask to talk to senior MAS officers and HSBC trustees and bring to their attention that most of us were mislead in buying Lehman’s minibonds as they were portrayed as safe investments by the banks. And also request that they explore options to keep the minibonds running by appointing another swap counterplay.
4) And in parallel, seek further advice from Mr. Tan Kin Lian. We can have a few representatives from our group talk to Mr. Tan directly. Maybe we can even talk to the lawyer that Mr. Tan had asked to help look into the matter.
We have to act fast before our minibonds are force-liquidated.
Need all of your support here people ! Like ek said “if the voice is not huge, most often than not, the cries will fall to deaf ears”.
Please get in touch with Lye at lyekf@hotmail.com asap to get this rolling !!
[Reply]
PT Reply:
September 23rd, 2008 at 11:38 am
LET ACT VERY FAST NOW
Del Boy is right, we should gather togehter to MAS office , hopping MAS to apply pressure on Nomura to take over ALL Lehman’s obligation before giving a licence to operate in singaproe
[Reply]
Beside other collective actions, we can everyone just take a small step to start writing to MAS or somebody above them.
Let the officers who approve the product to follow up to summarise our feedback and to report to the press and our PM.
MAS’s email and address are easily available in their website.
You can see how effective and efficient of our world-class civil service respond to this $500 mil’s problem caused by our world-class bankers.
Back to share your experience.
[Reply]
Folks,
Here’s what is happening in Hong Kong. I will be the first one to complain when the lines open tomorrow.
*************
The Hong Kong Monetary Authority (HKMA) this morning (Monday) convened a meeting between representatives of investors who had purchased investment products related to Lehman Brothers and representatives of banks that had sold Lehman-related products and the trustees who are holding the collateral for the investments. The aim of the meeting was to facilitate communication between affected investors, the banks, the trustees and the HKMA.
At the request of the HKMA, a number of banks have now opened public telephone enquiry lines dedicated to answering questions on Lehman-Brothers-related investment products sold by them. The details of these enquiry lines may be found at the HKMA website http://www.hkma.gov.hk. In addition, the HKMA has asked banks to write to affected customers to explain clearly the latest situation with regard to these Lehman products. Banks have also been requested to arrange briefings for customers.
The HKMA has opened a hotline to assist any individual investors who might have complaints in relation to the sale by banks of investment products related to Lehman Brothers. The number of the hotline is 8100 2314. The hotline will be open from 9 a.m. to 6 p.m. daily from Monday to Friday, with effect from tomorrow (Tuesday). A form for complaints in writing is also available on the HKMA website.
An HKMA spokesperson said that the HKMA requires banks to comply with the Code of Conduct for Persons Licensed by and Registered with the Securities and Futures Commission in selling securities and futures products. The Code requires intermediaries to explain to the clients the products and the risks involved.
“In selling structured investment products, banks are required to comply with relevant regulations and have adequate internal controls to ensure that the suitability of products for customers is properly assessed and that there is adequate disclosure of major features and risks,” the spokesperson said. “Banks are also required to assure themselves that customers understand the nature and risks of the products and have sufficient net worth to assume the risks and bear the potential losses of trading in the products,” the spokesperson added.
The HKMA has established procedures for handling complaints relating to possible breaches of the Code of Conduct. The HKMA will follow up any case where relevant requirements are found to have been breached.
For further enquiries, please contact:
Thomas Chan, Senior Manager (Press), at 2878 1480 or
Hing-fung Wong, Manager (Press), at 2878 1802
Hong Kong Monetary Authority
22 September 2008
[Reply]
ST Reply:
September 23rd, 2008 at 11:44 am
IB,
Thanks for sharing what is happening in Hong Kong.
[Reply]
If not wrong, Goh Chok Tong and Lim Hng Kiang are the current MAS chairman and vice chairman. Anyone here staying in their consituency? Bringing this matter directly to them at their meet-the-people session is also an option. We can all go together.
[Reply]
hi
watever it takes, pls count m in.
[Reply]
So far, about 10 people have responded to me. I hope there are more, especially those who have deeper knowledge of Minibond.
By tonight or tomorrow morning, I will send out a email containing email addresses of all these people.
After that, I propose we meet up for discussion. If everyone is satisfied with SH petition, I can print out a copy for everyone to sign.
And I urge everyone to send your contact to Mr Tan Kin Lian asap.
[Reply]
Chan J C Reply:
September 22nd, 2008 at 11:30 pm
Please count me in. I am also a victim of Minibond seires 3. Please let me what I should do.
[Reply]
count me.
[Reply]
My lifesaving is in jeopardy too.
I did not want to use my savings to buy stocks and shares which purposedly is risky investments. Other than getting banks’ fixed deposit rates of between 0.9% to 1.2%, I thought buying bonds is a very safe option to park my savings.
Now I understand that ‘minibonds’ are not ‘bonds’. The term ‘minibond’ is deceiving. I was deceived.
I was also deceived by the credit rating attached to these products. “AA” ratings are supposed to very very safe. Now I wonder who provided such ratings and whether the ratings were provided honestly.
To some extent, I do blame myself for being so gullible and easily deceived.
[Reply]
where can I find the SH petition draft so I can sign it as well?
[Reply]
Folks
Does anyone of you know what exactly the “underlying securities” are?
Are they securities issued by the credit-linked institutions (which is the better case) or are they issued by Lehman?
I read through the base propspectus and the pricing statement but seems it does not mention about it.
What I worry most is that those Underlying Securities are in fact issued by Lehman. I dont know if it is possible but let’s see this example.
Let’s say the 6 institutions issued corporate bonds, referred to as “A”. Lehman bought A, then issued bonds (”Lehman Bonds”) to Minibond Ltd. Minibond Ltd issue the minibonds, using the Lehman Bonds as Underlying Securities.
Ok, so A is basically held by Lehman, not Minibond, not HSBC. Minibond only holds Lehman Bonds. So now Lehman is bankrupt, and Lehman is default under Lehman Bonds. The worst case would be Lehman bonds is unsecured - meaning “A” was not used as collateral to issue Lehman Bonds. In that case, Minibond Ltd will have no recourse and get nothing, will then be bankrupt, and investors got nothing from minibonds as well.
So…what’s important is to know what the “Underlying Securities” are. Who issued them??? Anybody knows?
[Reply]
So what is the latest expected redemption amount to the dollar?
[Reply]
新聞]野村證實買雷曼亞洲業務
(明報)9月22日 星期一 22:20
日本 野村證券周一證實，已達成協議，購入雷曼兄弟證券公司在亞洲的部門。(法新社)
[Reply]
I have sent out an email to all those who have given me their contacts. If I left out anyone, please resend to me.
[Reply]
Tank Reply:
September 23rd, 2008 at 8:23 am
Pls send to me.
[Reply]
JC Reply:
September 23rd, 2008 at 10:09 am
Hi,
I bought S$10,000 of Minibond series 3.
Agreed it is a complete mis-representation since it is not mention the risk of Lehman anywhere in the product prospectus. The sales rep at Maybank just kept emphasizing how safe the Minibond is by referring to the reference entities!
Ps include me in the petition to MAS!
[Reply]
Ang Reply:
September 23rd, 2008 at 11:05 am
Hi Lye,
I bought Minibond Series 3 from OCBC Securities. How do I send you my contact directly?
[Reply]
Chan Pui Fun Reply:
September 23rd, 2008 at 4:07 pm
Hi Lye,
I have just sent you an email. Kindly include me in the petition signing and meet up. Thanks.
[Reply]
Kenneth Reply:
September 24th, 2008 at 12:47 pm
Hi Lye,
My email is trogon@pacific.net.sg
Unfortunately can’t attend tonight meeting but can signed petition on other day if available. Had already signed the one setup by TKLian.
Thanks for the initiative
Kenneth
[Reply]
Hey guys, I’ve created a dedicated forum for people burned by Lehman Brothers, including myself.
http://sgbusinessforum.com/forumdisplay.php?fid=18
[Reply]
there is already an article from reuters
Banks gave poor advice
http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20080922-89289.html
[Reply]
Hi Guys,
It is important to let the public know about this situation in Singapore as well so that there is pressure for the government to look at this case.
In HK, several sufferers went to a member of the legislative council for help on Friday on 19th, Sat a brief meeting carried out, Sun a rally under very short notice, and Mon 22nd, there was the meeting with the MA. A lot of journalists were involved as well so the public is aware of the case now.
Regarding lodging complaints, if the MAS is not aware of the severity of this case, they will not care too much about your complaints. Here in HK, after the meeting on Monday with the authorities, we lodged 3 copies of complaints, one to our bank, one to the MA, and one to head of Financial Services and the Treasury Bureau.
From what I have learnt in the meeting, it would also helpful if you may obtain some voice recordings of conversations between u and ur banker-act as evidence for misleading ur investment.
[Reply]
Count me in too! We should really follow the hongkongers’ example in taking necessary actions FAST. In my view, MAS will simply let the matter pass if on one pursues this matter hard enough. Asking Minibond investors to seek queries from the trustee and banks that sold it? That’s just like taking off one’s pants to fart. DUH!?!?
[Reply]
Tried to call up the financial advisor who sold me the Minibond series 5 on behalf of Maybank. Mr Chris Zheng Yuanhui picked up his mobile phone and agreed to call me back in 30 minutes time as he is out buying breakfast. He also revealed that he is no longer working with Maybank and currently works with OCBC. After a long wait, I tried calling him again and there was no response from him. What I can say is that he is trying to avoid the whole issue.
By lodging a complaint with the banks, will it helps to solve the issue on misrepresentation made by those financial advisors? I really hope that banks will not adopt Mr Chris Zheng behaviour.
[Reply]
Simon Reply:
September 23rd, 2008 at 11:59 am
Mr Chris Zheng just called up after 4 hours of waiting. Spoke to him and advised me to talk to Maybank.
[Reply]
I’m also a victim. The broker I bought from keep saying it is save and they keep telling me it is buying into investment grade bonds.
Since the interest is lower than those high risk instrument, I assumed it is quite a safe investments.
I want to join in the petition. how could I do that ?
[Reply]
WTF i make a call to the FI i brought the minibond at to complain and the person who sold me the bond call me back and say that she did mention lehman brothers is the arranger and so on, i can confirm she did not even mention the word ” LEHMAN BROTHERS is the arranger in the whole deal”"” damn pissed off now
[Reply]
no use complaining to the bank one la i call my bank and they listened to my complain, and afterwards they ask the person who sold me this minibond 9 to call me back and say rubbish !!!! i think complain to MAS is the best way out !!
[Reply]
I emailed to the one who sold me LB series 2 at Maybank. I received no reply.
When such things happened, we have nobody to turn to for help and advice.
Maybe it is better to put my money under my pillow than anywhere else.
It is really sad and cold-hearted to see such a bleak situation.
[Reply]
any one going down to MAS ?
pls sms me 92746311.
[Reply]
Mr Tan KL has sent a message to some lawyers to seek some help/advice for us.
http://tankinlian.blogspot.com/2008/09/affidavit-for-investors-of-credit.html
[Reply]
mini-bomb Reply:
September 24th, 2008 at 12:56 am
think hardly get a leading firm to act for retail investors, as those local leading firms are all on the panel list of either banks a,b,c,d or e,f,g,h. they have no choice but stand with their bank clients, otherwise there will be a conflict of interests.
[Reply]
ST papers announced today series 5 & 6 have defaulted. Notes likely to be liquidated.
[Reply]
sianz Reply:
September 23rd, 2008 at 11:40 am
how about series 3?
[Reply]
Jasmin Reply:
September 23rd, 2008 at 11:55 am
Is there a list to show all the LB minibond series sold and defaulted?
Thanks.
[Reply]
lioninvestor Reply:
September 23rd, 2008 at 12:14 pm
Lye,
Where did you read about that?
I can’t seem to find it.
[Reply]
lye Reply:
September 23rd, 2008 at 12:39 pm
In ST Main section, one whole page.
HSBC is giving Minibond 15 days grace period, after which action will be taken
[Reply]
lioninvestor Reply:
September 23rd, 2008 at 12:50 pm
Yes. Finally saw that. Missed it out earlier.
On page 19.
I think the page by HSBC Trust explains what’s going to happen for all note holders.
[Reply]
sianz Reply:
September 23rd, 2008 at 1:17 pm
sorry, can tell me wats pg 19 says?
[Reply]
chris Reply:
September 23rd, 2008 at 2:22 pm
It is like HSBC passing a death sentence to 5 & 6 holders and unless you do something abt it (although nothing much you can do and being entrusted, it is just out of courtesy and formality that they inform you), the execution will be set 15 days later.
Next, it will be series 1 to 4 and 7 to 9 turn. Act fast before the unwinding begins!
[Reply]
Please count me in for the update on LB series progress.
So far i can’t recall the bank ever mention anything on ’swap’ or ‘underlying security’. They mentioned that if anything will affected will be default from any of the ‘reference entities’. The ‘ reference entities’ are those who need the money and LB help them to collect and distribute to their need. The Bank are paid for 3% upfront from the minibond sold. (3% are from LB). Our MAS & FI are not mature to handle such problems. Wonder how they can have their dream to become FINANCIAL HUB in Asia. eg. When things happen, keep silent. (this is not the 1st time, last time, the clob issue. what have they learn & protect the investor??).
HK is more proactive in this industries.
[Reply]
Has anyone been calling MAS? What did they have for updates regarding the banks? Specifically actions they have already taken and the results. The banks don’t seem to have made any progress.
I just called MAS and the lines are all busy.
[Reply]
Hi all,
I will be meeting up with a group of Minibond victims at Bugis National Library at 7pm, to discuss what action we need to take. All are welcome.
I think calling MAS or HSBC is not effective. We have to go down personally.
[Reply]
sianz Reply:
September 23rd, 2008 at 12:47 pm
pls sms me 92746311 if u guys are going.
[Reply]
GF Reply:
September 23rd, 2008 at 1:52 pm
Hi Lye,
pls count me in for the signing of the petition. thanks.
[Reply]
goondo Reply:
September 23rd, 2008 at 10:46 pm
hi lye,
am a victim too, pls email me if you need added strength, collin_tn@yahoo.com
[Reply]
Here’s the HSBC notice. Published on 23 Sep 2008 The Straits Times.
The page is big, I split the notice into two.
http://i150.photobucket.com/albums/s112/zalesboard/otherforums/20080923-minibond-hsbc-notice_s.jpg
http://i150.photobucket.com/albums/s112/zalesboard/otherforums/20080923-minibond-hsbc-notice2-s.jpg
[Reply]
Choon Reply:
September 23rd, 2008 at 8:20 pm
Hi Parka,
Thanks.
[Reply]
i went to their wbe, can’t find the hsbc news. can someone post the link or copy the news and paste it on this blog plse.
[Reply]
I’m one of the minibond victims as well. Sank in more than $100K investing in minibonds. Regret terribly that i did not diversify, thinking that the product is very safe and i have already “diversified” as reference entities for all series are different. Have even persuaded my dad (who’s a retiree) to invest in the latest series 9.
For me, the ignorance stems from my trust in my Financial Adviser, who has a friend since school days. I trusted her words that it was a safe investment, suitable for non-risk takers like myself and at the same time, who is willing to wait for a longer term horizon for the payout.
When LB’s bankruptcy was first announced, I had received a call from my Financial Adviser who assured me that even though MB needs to be unwound, my principal would not be affected…so, i think she herself fails to understand the intricacies of the product, let alone non-professionals like us.
Just called HSBC trustee. Was given a “no comment” reply for almost all the questions i asked. The rest of the replies are all scripted…like they will consider what is in the interest of the notes holders blah blah blah…
[Reply]
Hi,
I would join if you guys are going to MAS. Let me know the date/time.
[Reply]
Hi all,
I thought I would print out the petition letter and leave it at HSBC Collyer Quay Br for 2 day so that everyone can go and sign it. I don’t mind collecting all the signatures myself but my office is quite far from town and incovenient for most. Guess what? I made the request to HSBC this morning to leave it at their counter and they turned me down!! They can’t even do this simple act to help us. Guess we have to help ourselves. My suggestion then is - is anyone’s office in town and don’t mind helping to collect the signatures?
Lye - you have been very proactive. What do you think?
[Reply]
PT Reply:
September 23rd, 2008 at 3:41 pm
Hi ST,
Lye has organise a meeting tomorrow 7pm at National Library.
Do you think we can sign on the petition letter at the same time.
I seriously think time is running out for series 5&6.
[Reply]
PT Reply:
September 23rd, 2008 at 3:47 pm
Hi SH,
Lye has organise a meeting tomorrow at National Library 7pm. Do you think we can sign on the petition at the same time. Myself and family members all also kana series 5 and 6 badly. PLS ACT FAST!
[Reply]
we must act fast before all the other series kana liquated it is just a matter of time before HSBC publish news of other series just like series 5 and 6 in today newspaper
[Reply]
OK, i would like to participate the petition.
the agent GYC showed me a very lovely picture of the minibond and siad the risk was very very low.
[Reply]
1. Why not just meet at two specific time just to sign the petition once and for all. The second timing for those who miss out on the first. Like that tomorrow afternoon can hand deliver it to MAS.
2. Or people just print out the petition and get those living nearby to sign. Consolidate at a time tomorrow before hand delivering to MAS.
I can volunteer to collect the signatures at 3-4pm City Hall Starbucks. But someone has to pass it to MAS because I’m working afterwards.
Tuesday (23rd) night or Wednesday morning can have another person collect signatures before passing to me at 3pm.
So tonight can get the signing go ahead already.
What do you guys say? Can get some volunteers?
—-
People meeting lye can sign also.
[Reply]
PT Reply:
September 23rd, 2008 at 3:50 pm
I am staying in the west. Can i help?
[Reply]
GF Reply:
September 23rd, 2008 at 4:14 pm
are u meeting lye tonight? if yes, can I meet u tomorrow 12 noon at Jurong East MRT to sign the petition? thanks.
[Reply]
PT Reply:
September 23rd, 2008 at 4:38 pm
am meeting lye tomorrow 7pm at National library.
[Reply]
Looks to me that most of the victims here are not holding series 5 & 6. I wondering is it due to these 2 series lesser victims or majorites of these holders are uncles and unties who don’t even know how to surf net and also don’t know how to lodge a compliant? By the way, the petition is for all the series or just a particular one?
[Reply]
i suggest we go seek help from opposition party aso. they will definitely take the case up n hopefully force MAS and/or relevant authorities to take action.
[Reply]
FMB Reply:
September 23rd, 2008 at 3:57 pm
Good ideal.. I support it.. Any one have contact to follow up on it??
[Reply]
i am staying in the north can i help in anyway ????? TIME is running out
[Reply]
Is the meeting tonight at 7pm confirm? Where exactly?
[Reply]
PT Reply:
September 23rd, 2008 at 8:01 pm
The meeting is tomorrow 24/9/08 at Bugis National Library 7pm. Pls try to participate.
[Reply]
Hi All,
I am posting this message on behalf of Lye for those of you who are not on our email list.
We will be meeting in a group tomorrow night to discuss the action plan related to the minibond issue.
Date/Time : Wed., 24/9/08 at 7pm
Venue : Central Public Library, 100 Victoria Street
SH – can you please print and bring along a few copies of the petition for us to sign (a petition will be submitted to each of the authorities).
Thanks and we hope all of you will support the group by turning up.
p/s. please send your name and email address to Lye at lyekf@hotmail.com if you wish to be included in our email list.
How to get to Central Public Library :
Nearest MRT: Bugis MRT Station or City Hall MRT Station
Bus stop (North Bridge Road ): SBS 145, 197, 32, 51, 63, 7, 80 175 and SMRT 851, 61
Bus stop (Victoria St -Allson Hotel) : SBS 2, 7, 12, 32, 33, 51, 63, 80, 175 and SMRT 61
Bus stop (Victoria St -Bras Basah Complex) : SBS 2, 12, 33, 130, 133, SMRT 960, NR7
Bus stop (Victoria St -St. Joseph’s Church): SBS 130, 133, 145, 197, C3, SMRT 851, 960, NR7
Bus stop (Middle Rd - Nam Peng Building) : SBS 56, SMRT 980
[Reply]
mewdeedi Reply:
September 23rd, 2008 at 4:22 pm
Hi
I m areadi in the list. I tink is better to include yr HP number as well.
cheers
[Reply]
SH Reply:
September 23rd, 2008 at 5:26 pm
WS,
I will email the petition to Lye tomorrow morning (I can’t make it tomorrow night). I can station myself at the library on Sun afternoon to collect more signatures and I can hand to MAS on Mon. I think Mon is still ok. Just an update. I have just spoken to MAS about our petition and told her the gist of it. I relayed that we are all very worried about our money and ask them to take a more pro-active approach to help the investors. Also asked her to relay to HSBC not to resort to forced liquidation hastily (esp for notes 5 & 6 series). I mentioned that HK MAS is taking action. She will get back to me and I will update when I have more info.
[Reply]
WS Reply:
September 23rd, 2008 at 6:26 pm
Thanks SH for your inititative ! I will join you if you are going to MAS.
[Reply]
Choon Reply:
September 23rd, 2008 at 7:50 pm
Thanks SH,
Let me know What time on Sunday afternoon. If I can’t make it on tomorrow, I will go on Sunday.
[Reply]
Chan Pui Fun Reply:
September 23rd, 2008 at 4:24 pm
any specific room or location in the library?
[Reply]
WS Reply:
September 23rd, 2008 at 5:24 pm
Hi
We will meet at the entrance of the library at 7pm first (for all to arrive). If we don’t find space/room in the library, we will probably adjoin to the coffee shop opposite.
[Reply]
tan Reply:
September 23rd, 2008 at 5:55 pm
why don we meet at HANS Cafe. At the library itself.
[Reply]
http://tankinlian.blogspot.com/2008/09/investors-of-credit-linked-securities.html
Mr Tan Kin Lian is organising a collective action for Investors of Credit Linked Securities.
You can send your particulars to him at kinlian@gmail.com.
He will look for some lawyers to help us.
[Reply]
WS Reply:
September 23rd, 2008 at 5:40 pm
Hi,
I suggest we meet up asap first as we cannot afford to delay further, once the minibonds are liquated, that is the end of it. When Mr. Tan has organised the collective meeting, we can meet again.
Why are we so slow to respond to this ? Look at Hong Kong, their group of investors is smaller but they are so resourceful and fast.
p/s. Mr. Tan is asking if there are lawyers out there who can help but there is no guarantee he can find one as those whom he has approached before were not willingly to get involved due to their relationship with the banks.
[Reply]
This is more or less of what I suspected – Lehman was recycling a lot of their products around the region. This Zircon Finance is again a Lehman’s SPC whose purpose was to issue similar structured credit linked notes and CDOs to Australians retail and institutional investors. I remember vaguely that Zircon deals were managed by a Singaporean firm called Lion Capital Management.
Holders of Series 5 + 6. Don’t panic. I have read the HSBC notice you posted here. It is bad but is not as bad as it sounds. There is still hope you may recover most of your money . The key word here is “potential” event of default, which is due to missing interest payment on the due date (Lehman as swap counterparty stopped paying because of its bankruptcy). The good news is HSBC as trustee seems to be doing their job. Looks like they are buying time here so that an acceptable solution can be found other than doing a forced close out right now, where Zircon collateral is sold for x cent on the dollar. How much is this Zircon deal is worth right now ? This is an investment grade synthetic CDOs, my best guess would be around 50-60cent, but it depends IN TURN what the “underlying securities” are in the Zircon deal.
Acceptable solution ? I think only MAS can help you by applying a lot of pressure on Nomura (they have alot of money and want this business).
[Reply]
lioninvestor Reply:
September 23rd, 2008 at 5:21 pm
Del Boy,
Thanks for the update.
What about Beryl Finance Limited and Wachovia Corporation? Are they also Lehman’s SPC?
Do you know the difference between synthetic portfolio notes and floating rate notes?
[Reply]
Del Boy Reply:
September 23rd, 2008 at 5:40 pm
Wachovia is a proper commercial bank (they called it money centre bank in the US). If you have “underlying securities” directly issued by Wachovia to back up your credit link note, you should be fine. Stock price down, but they are still in good shape.
Beryl, Zircon are all the same Lehman’s con artist vehicles
Floating rate is opposed to fixed rate, description of interest calculation and payment characteristics of a note or bond
[Reply]
lioninvestor Reply:
September 23rd, 2008 at 5:50 pm
I understand that the underlying securities of the Minibond 9 and 10 series are floating rate notes issued by Wachovia Corporation.
[Reply]
lioninvestor Reply:
September 24th, 2008 at 2:50 am
Del Boy,
I have an important question to ask. If the underlying securities are notes issued by Lehman’s SPC Zircon etc, do they even have value now?
As in - Are they still alive to buy back the notes?
[Reply]
Del Boy,
thanks a lot for taking the time to share your expert advice.
Do keep us updated with the latest info.
——–
I will compile a new mailing list and send out tonight.
[Reply]
PH Reply:
September 23rd, 2008 at 6:17 pm
I am a victim of minibond series 7 and 9. Please include me in your mailing list and keep me updated. I am also willing to sign the petition. Let me know when and where to sign the petition.
Thanks
PH
[Reply]
Found this info regarding the underlying security of the minibond series 5 that I own:
Zircon Finance Limited Series 2007-12:
http://www.fitchratings.com/corporate/ratings/issuer_content.cfm?issr_id=85702673&grp_typ_id=7&mm_id=§or_flag=5&marketsector=2&detail=2&body_content=issr_list
can anybody explain what’s the meaning of “3 Month LIBOR + 80bps” Coupon Rate?
And how risky is B- rating?
Thanks
[Reply]
lioninvestor Reply:
September 23rd, 2008 at 6:53 pm
WJ,
The coupon rate is the interest that the particular note pays out.
LIBOR is the London Interbank Offered Rate.
http://en.wikipedia.org/wiki/LIBOR
80 basis points means 0.8%.
[Reply]
Can you imagine with a A you are considered as lousy what to say B-? It’s junk!
[Reply]
When the parent company (US) I worked for filed for chap 11 in Oct 2005, I found out if the supplier to us is not a US entity, our parent company can pay them first for all the money we owe them, but not for the US suppliers, or foreign company that has an asset in US. Does HSBC Trustee has any asset in US?
My parent company still running per normal until today, we still have not emerge.
I bought the Minibond Series 7 from HLF, I remembered the FPM told me the Minobond is safer than putting money in HLF.
Can we sign the petition at Hong Lim Park? Lunch time? or 7pm to 8pm?
[Reply]
Hi just wanna confirm, which part or level of Central Library to meet at? Thanks.
[Reply]
mewdeedi Reply:
September 23rd, 2008 at 6:52 pm
at entrance of library.
[Reply]
Please note :
We will meet inside HANS Café (#01-01) at the Central Public Library tomorrow at 7pm.
Thanks to tan for his suggestion.
[Reply]
Chan Pui Fun Reply:
September 23rd, 2008 at 7:06 pm
sorry, guess we will be meeting outside hans? cos the area inside is very small. thanks.
[Reply]
WS Reply:
September 23rd, 2008 at 7:24 pm
We will meet inside HANS Cafe, I will arrive before 7pm to get a table.
[Reply]
WS Reply:
September 23rd, 2008 at 11:26 pm
We will meet OUTSIDE HANS Cafe instead.
My apologies for the confusion as I did not know that the space inside HANS Cafe is really small, and that there are tables available outside the cafe that we can use.
[Reply]
Please make an effort to come. It’s alot of $$$ at stake. The more the bigger the voice. Please come and thanks for arranging this!
[Reply]
PT Reply:
September 23rd, 2008 at 9:00 pm
The Hong Kong people is so fast, their noise is already known by the world. How can their authority just kept quite. I sincerely urge everybody to make it for this precious meeting. Let our sorrow be known!
[Reply]
WS Reply:
September 23rd, 2008 at 10:30 pm
Hong Kong investors may sue sellers of Lehman-backed bonds
Date : 23 September 2008 1644 hrs
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/377848/1/.html
HONG KONG : Hong Kong investors who bought complex financial products backed by collapsed US investment bank Lehman Brothers were considering suing the institutions who sold them, a lawmaker said Tuesday.
Investors argued that the banks who sold the instruments guaranteed by the failed Wall Street titan did not fully explain the high risks associated with the products.
“The investors are considering mounting legal action against the banks for misrepresentation,” Albert Ho, chairman of the Democratic Party and a lawyer, told AFP.
Many of the investors, who paid a total of 12.7 billion Hong Kong dollars (1.63 billion US), had been sold mini-bonds which are based on derivatives linked to major firms’ stocks but are worthless if the guarantor goes bankrupt.
“These products used to be sold by only investment banks to clients who had at least 1 million US dollars,” said Ho.
“But a few years ago, commercial banks wanted to snatch a piece of the pie and started to convince their elderly customers to buy the mini-bonds without explaining to them the risks involved,” he said.
Ho said investors will meet the city’s Consumer Council on Thursday to see if they can get legal and financial assistance to try and recoup their losses.
Ho said many of the bond holders were retired and had put all their savings into the investment because they trusted their banks.
A meeting held Monday night with investors was attended by 800 people, Ho said. Some of them held a protest on Sunday to urge the government to provide assistance.
The Hong Kong Monetary Authority said it would investigate if 21 sellers of the mini-bonds had mis-sold them, according to a report in the South China Morning Post.
The Consumer Council said it had received a handful of enquiries from the investors and would consider their application for its legal assistance fund if it thinks they have a case, a spokeswoman for the council said.
Lehman Brothers collapsed last week under the strain of the US subprime, or high-risk, mortgage crisis, sparking turmoil on financial markets across the world.
[Reply]
Hi All,
Mr Tan Kin Lian blog has created an online petition for all
credit link securities investors(Minibond, DBS High Note, etc).
Please sign at
http://www.petitiononline.com/CLSINVES/petition.html
[Reply]
Choon Reply:
September 23rd, 2008 at 9:02 pm
Hi Lye,
Thanks, I had just sign it.
[Reply]
Retiree Louis Tan Reply:
September 23rd, 2008 at 10:38 pm
Thanks,Lye. I had just sign the petition. hopefully somethings will happen and be helpful, otherwise my 100K retirement saving will…
[Reply]
Hi all,
I just signed the Tan Kin Lian’s blog petition. Till now there are only 31 signatures, i don’t think there are so few of us. The voice is not loud enough. Plse i urged more people to sign, it’s our blood-sweat money.
I cannot join you guy tomorrow 7pm as i will be in malaysia for work purpose. But if i’m needed to sign another hardcopy petition for mas or so, i can do it on this saturday or sunday. My email is changhkh@gmail.com
[Reply]
mewdeedi Reply:
September 23rd, 2008 at 10:13 pm
just signed.
muz make our voice loud n clear!
[Reply]
In case anyone would like to meet our MPs, here’s the site with place, time and dates for your easy reference.
http://www.pap.org.sg/contact.shtml
Please meet tomorrow at 7pm and sign on Tan Kin Lian’s blog.
[Reply]
i just signed it, till now about 110 signatory……seem not loud enough…
[Reply]
lye Reply:
September 23rd, 2008 at 11:23 pm
only CDP has the full list of investors. Unless they are willing to release it…
[Reply]
andrew Reply:
September 24th, 2008 at 12:31 am
From what my distributor told me , not all series all complusory to be held by cdp. mainly only series 1 - the rest can be held by the bank.
[Reply]
lye Reply:
September 24th, 2008 at 12:38 am
I am holding series 2 and it appears in my cdp statement. Can other holders of different series confirm their minibond appear in their cdp statement also?
[Reply]
AHKONG Reply:
September 24th, 2008 at 9:50 am
Series 5 is in CDP statement
[Reply]
There are two emails of SPH’s reportors who report on Minibond on today ST’s pg A10.
reportor can press for infor and comment from authority and drew more public attention to the issue.
[Reply]
Folks,
Just checked and realised that quarterly interest for MB 3 was paid out on 2-Sep-08. LB filed for bankruptcy on 15-Sep-08, so this dividend was paid out just before the bankruptcy action started. So I guess MB3 is still in play.
Will have to wait till 2-Dec-08 to see if another quarterly dividend is paid out. If dividends continue to be paid out every quarter for the next 1 yr or so, then I believe we may have ridden the storm. I hope my analysis is correct.
[Reply]
sianz Reply:
September 24th, 2008 at 11:06 am
seriously i hope u r rite… if not my mum 50k cpf will be gone.. now i gonna call up the agent who sold my mum this mini-bomb
[Reply]
crying babies will always have more milks to drink. hongkees have set up a good sample for us. dont think MAHK would act so fast without hongkees prior loud voices. let’s get together, we shall have our own loud voice to wake MAS up as well.
MAS, dont pretent to be a sleepy beauty, we are not princes but a group of poor victims being cheated by those blood-sucking foreign financial institions ok? do act like our own anthority on behalf our SGP people. dont force us going to the Speaker’s Corner. otherwise, you will be really not beautiful:(
[Reply]
mine is also listed in my cdp statement.
[Reply]
E.K.YAP Reply:
September 24th, 2008 at 8:12 am
My wife’s series 7 is not in CDP statement, may be it is purchased under a joint account with my son.
[Reply]
BACK DATED, UNSIGNED LETTER FROM MINIBOND LIMITED
Hi everybody,
I believe all holders of Minibond Series 1,2 and 3 have received a ‘vague’ letter dated 15 Aug 2008, informing them …’the Issuer has substituted…EXISTING Securities with NEW Securities…’
(Note: 15 Aug 2008 is 1 month before Lehman Brothers filing for Chapter 11.)
One paragraph of the letter says:
” As of the date of this notice, the NEW Securities shall become the Securities forming part of the Mortgaged Property of the relevant Series of Notes and be subject to the security created in favour of the Trustee by the relevant Trust Deed. Based on the representations and warranties of the Issuer to the Trustee relating to the substitution of the New Securities for the EXISTING Securities, the Trustee is satisfied that such substitution is not materially prejudicial to the interests of the relevant Noteholders and has agreed to such substitution. The Derivatives Counterparty has given its written consent to such substitution. ”
Any legally-trained persons can provide an interpretation to the contents of this letter? Thanks
[Reply]
Del Boy Reply:
September 24th, 2008 at 10:56 am
I’m trying to do a short answer here, otherwise it could go on and on. This mean that the original underlying securities are no longer good enough to serve as collateral to back the minibonds. Why ? because they were downgraded by the rating agencies. This is consistent with the recent systematic downgrade of structured securities – AAA to BBB, AA to BB, A to B (just a general example). Substitution has to take place to ensure the integrity of the deal is maintained. Lets take the examples of series 5+6. They have Zirocn Finance 2007 -12 and 2007 – 13 as underlying securities. I believe these are single tranche investment grade corporate synthetic CDOs. I don’t know for sure because I don’t have the Pricing Supplement, but looking at the price on the issuance date of US$Libor +80bp (i.e. approx. 2.8% + 0.8%), it would appear to me that it WAS rated “A” or at best “AA-” . Fitch has since downgraded these things to “B-”, something like 5 notches below investment grade. Therefore, substitution should have taken place. But HSBC seems to suggest that it had not. The quality of substituted underlying securities is obviously important (I think the the deals require at least “A” rating). If you ask HSBC to give you the “Pricing Supplement” then you will know what the underlying securities are for each Series. This will in turn determine how much you will get back. Don’t read too much into “Mortgaged Property”, it’s just mean collateral.
[Reply]
As I can’t attend the meeting at 7pm Central Library, I have signed the online petition http://www.petitiononline.com/CLSINVES/petition.html
(total 151 signatures at 7am 24 Sep2008)
Thanks.
[Reply]
I’ve also invested $100K in Minibond Series 2. Thanks for all the updates posted here as the distributor bank is not communicating very much to be of help. Have also contacted HSBC Ins Trust but it appears it would only step in as a last resort. Will try to attend the petition meeting. Have also signed up in PetitonOnline (Tan Kin Lian’s blog). I’m disappointed that MAS isn’t acting proactively in our interest.
[Reply]
WS, Lye,
I sent a email to Lye yesterday. There’s no reply. Did u receive? Pls respond to me. I have been calling MAS. They have referred to HSBC and the CEO of HSBC has agreed to meet with me. Who would like to come (date/time can be arranged)?
WS- pls give me your email also.
[Reply]
Ahthong Reply:
September 24th, 2008 at 9:45 am
Hi SH or anyone
Being a trustee, what is HSBC’s role in this Lehman mess and how could it be of any help to us, the Minibond victims? I would think that MAS is accountable for permitting this sort of complex and extremely high risk product mask itself as a low risk one to be put in the market. And also distributing banks/brokerages for profiting from it.
[Reply]
VSL Reply:
September 24th, 2008 at 10:25 am
IMHO of all the parties who are trying to help us invetors, HSBC Trustee is our best bet. They have some clout and will try their best. MAS will just push us from pillar to post.
SH - I can join you to meet HSBC’s CEO if you need the numbers. My HP 98592860. Eml: vslingam@singnet.com.sg
[Reply]
sadma Reply:
September 24th, 2008 at 12:44 pm
SH - I also can join you to meet HSBC’s CEO . This is my email : valton8@hotmail.com .
[Reply]
i’ve signed the online petition too.
btw yesterday a Today’s reporter called me after she visited Mr Tan’s blog….she was informed of today’s meeting and our discussion over here.
lets see how it develops from here…..
[Reply]
sianz Reply:
September 24th, 2008 at 10:01 am
i saw the article on today’s, good job patrick.. i hope we can get something out of it
[Reply]
Choon Reply:
September 24th, 2008 at 10:14 am
Hi patrick,
What article, you have the link?
[Reply]
lioninvestor Reply:
September 24th, 2008 at 10:42 am
There you go:
http://www.todayonline.com/articles/277651.asp
[Reply]
VSL
Thanks. Meeting with CEO HSBC is tonight at 6pm at Collyer Quay (nearest MRT is Raffles Place). Meet at the entrance.
Lye / WS - can you come and then you can brief the rest at 7pm.
I’ve emailed the petition to MAS to Lye. Pls print out and let people sign tonight. This petition is in addition to the online one at tan kin lian’s blogspot.
Up to 5 can go for tonight’s meeting. Anyone else who wants to attend, pls call me at 6483 5629 or reply to this forum. Those who have a lot at stake, pls - this is your chance to hear from the horses’ mouth on your best chances. Do take some pro-active action to recover your money. Lion Investor who has some expert knowledge on financial products is welcome to attend too.
Thanks.
[Reply]
KC Reply:
September 24th, 2008 at 11:10 am
Hi SH,
This’s KC, I can go tonite also, me and my wife has invested our life saving into minibond, try to call you @ 6483-5629 just now, I guess the number is incorrect.
I can be reach by kcmui@hotmail.com
Rdgs
kc
[Reply]
Foolish Investor Reply:
September 24th, 2008 at 1:26 pm
SH
I’m sure many minibond holders would be interested to know what the underlying securities are in each & every series.
Instead of having so many people separately requesting for such info from HSBC, can HSBC just publish the info in their website?
Doesn’t matter about the valuation, I believe most of us know by now that it will take time to work out.
[Reply]
SH Reply:
September 24th, 2008 at 2:20 pm
Foolish Investor,
Thanks. Will certainly HSBC to publish this info and to give us an estimated timeframe for the issues to be resolved.
[Reply]
I posted this in ST Forum:
I think posters who talk about greed and so on should note the difference between investors (and I use this term advisedly) who put funds into a 5-year product like HN5 (and Minibond), and betting on shares in the stock exchange. Whilst the latter can also be a form of investment, I would challenge anyone to argue that HN5 and such products are meant to be anything other than as low-risk investments (given the relatively modest returns and long timeframes). The fact that they did not turn out to be low in risks must surely indicate that they have been misrepresented (never mind whether investors understood all the convoluted legalese).
[Reply]
Hi All,
Only 259 signatures at 1059hrs 24 Sep2008.
[Reply]
ENGEL Reply:
September 24th, 2008 at 11:54 am
Where to sign ?
[Reply]
lioninvestor Reply:
September 24th, 2008 at 12:09 pm
http://www.petitiononline.com/mod_perl/signed.cgi?CLSINVES
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I have not received any letters from anyone regarding Minibond Series 3. I understand I should be getting the letter dated 15 August 2008 at least. I got my minibond from OCBC Securities and the Minibond is reflected in my CDP. Many thanks to Lioninvestor and others here that provided us with so much info and support. Any others not receiving your letters?
[Reply]
PT Reply:
September 24th, 2008 at 11:26 am
I have Series 2, 3 and 5, but never recived any such letter. Nothing of the bond appears on my CDP account.
[Reply]
goondu Reply:
September 24th, 2008 at 1:51 pm
No letter received from anybody regarding my minibond series 5.
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It looks like many Singaporeans bought the minibond series. Just two months ago I bought the minibond 9 after being told that it was a very safe investment. Sad to think of it my hard earned money will soon go ‘kaput”.
We need to get ourselves together and make noise so that it could be heard loud and clear. “WE WANT OUR MONEY BACK’
[Reply]
Lion Investor,
To answer your question.
Zircon should worth something in today’s market conditions, but no way near par. For all intents and purposes, Zircon is similar in structure as Minibonds. The valuations depends on the following factors :
1) maturity -2012 is worth more than 2015, 2017 etc.
2) how many financial names are in the portfolio. The more it has the less valuable the deal is. This is my best guess – 100 RFs in the Zircon portfolio, there may be 10 to 15 names that are financial institutions. AIG is almost certainly in there.
3) Whether the tranche was rated A or AA on the issuance date. In simple terms, the higher the rating, the less it will be affected by the present worsening conditions of the portfolio
4) Most important of all, the underlying securities that back the Zircon deal. If Lehman dumped toxic waste like US sub prime mortgaged back securities in these deals, the value will of course be affected tremendously.
Without all the relevant information, my best guess is 50cents. Valuation is one thing, whether there are any biders out there who would buy them right now from PwC is entirely differnt proposition altogether.
[Reply]
lioninvestor Reply:
September 24th, 2008 at 12:02 pm
Del Boy,
Thanks for your explanation.
In the case where the notes from Zircon are held to maturity, does it mean they have the obligation to buy back the notes?
What happens if Zircon go bankrupt?
[Reply]
Del Boy Reply:
September 24th, 2008 at 1:00 pm
these things are probaly the most complex financial instruments ever created. One cannot explain it sufficiently on 2 sides of an A4 sheet, let a alone a couple of paragraphs. My fear is that Zircon is suffering from the same fate as Minibond right now 1) no cash flow, swap counterparty gone bust; 2) huge question mark on underlying securities
Zircon is a brass plate company in Cayman with no employee. Its only asset is the underlying securities. Bankruptcy is only a techincality (eventual result of unwinding all the trades) and I would say it is not necessary some thing you should worry about.
The big question is what does it hold as underlying securities. If it holds Wachovia Corp (A-) issued bonds (just an example), there is a good chance it will last until maturity (espically when Nomura steps in as swap counterparty). If it holds craps created by Lehman, then it could be part of the US$700 billion problem that US congress is debating right now.
[Reply]
Foolish Investor Reply:
September 24th, 2008 at 1:13 pm
Del Boy
Now, we all know that CDO are complex instruments and are risky.
But back in mid-2006 when Minibond was first launched, was it reasonable for the Issuer/ Distributor to assess that AA-rated CDO were safe?
[Reply]
Article update from Bloomberg –>
Asian Regulators Pledge Action After Lehman Protests
http://www.bloomberg.com/apps/news?pid=20601080&sid=a.bIQfrwxlDE&refer=asia
…..
Singapore Pledge
The Monetary Authority of Singapore pledged to punish financial institutions found to have misled investors in structured products. “Where we have clear evidence in the current matter that a financial institution has breached our laws or regulations, we will hold the financial institution to account,” the authority said, without saying whether it has found examples of malpractice.
The Singapore authority also said it will enhance education schemes so that investors better comprehend risk and returns and don’t buy products they don’t understand.
Tan Kin Lian, former chief executive at NTUC Income, a Singapore insurer supported by trade unions, said on his blog that he is seeking help to draft a legal statement that investors in credit-linked securities can use to settle claims with financial institutions.
……
[Reply]
Not able to attend the meeting this evening, as know of it ony last minute. Please update the details. Really appreciate all for the help !
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The problem is the adviser who was selling me the Minibond series 3 doesn’t even know what she was selling! The following is my question to her back then (cut and paste from email):
1) I understand the bond value is subject to the “credit event” of the reference entity, i.e. the banks listed in the prospectus. Does it mean that if any of the banks default on the payment of the bond then it will affect the value of the bond?
Her reply:
Quote
(1) Yes, as in all investments, there are investment risks even in bonds, as presented in the Pricing Statement.
unquote
The fact as we all know now, this got nothing to do with bond!!!
[Reply]
Foolish Investor Reply:
September 24th, 2008 at 1:21 pm
JC
Most of us were misled by the name (Mini-bond), the brochure or/ and the distributor, and thought that the monies would be invested in a basket of bonds issued by the RE. But, unlike your case, we can’t produce any written evidence.
You are fortunate to have something in black & white as evidence.
[Reply]
sg Reply:
September 24th, 2008 at 1:39 pm
I checked the my investment analysis form done by the FA and in the recomendation, it is written that ‘Client is aware that the principle amount invested is not protected or guaranteed and he/she may suffer loss of the principal in the event of a credit event (as defined in the prospectus) by any one of the 7 reference entities.’ The issue here is that the arranger/issuer/swap counterparty was not mentioned at all (which is LB). I only got to know about LB’s role in these after the event.
If I know the credit default could lie with arrange/issuer/swap counterparty (which is all under same company - isn’t this conflict of interest), would I buy more than one series ?
I have been careful checking with each series entity and ensure there is no overlap of same company as RE (diversify) and who know all seriers have the same issuer/arranger/swap counterparty which definitely increase the risk of buying so many series from LB.
Will this warrant a mislead / misrepresentation of information ?
NOTE:
- I checked with another distributor’s FA form and quite consistently mentioned on the RE and no mentioning of issuer/arranger/swap counterparty dependency. The prospectus as thick as a yellow page with the wording is definitely not meant for layman like us, not to mention those elderly who bought them.
[Reply]
Jasmin Reply:
September 25th, 2008 at 8:20 am
I have this statement “Client is aware that the principle amount invested is not protected or guaranteed and he/she may suffer loss of the principal …” on my factsheet analysis too.
Has anybody file a complaint to Maybank?
Thanks.
[Reply]
have already signed on the online petition by TanKL
up to now there is 310 signatures and i seriously hoped that people do not repeat their signatures again and again becaused this may cause some problems if authorithy look into this and signatures are repeated thanks alot.
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Repition of signatures - I believe petition creator (tan kin lian) should be able to de-dup the list - take out the duplicates. I’m surprised there are not more signatures
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Alvin,
That’s exactly my same questions when I called the adviser from GYC, non of the entity is mentioned as LB. I also did inform her that the monies are partially from my mum’s savings and we preferred low risks products when she asked me to invest in unit trusts ….. but see what happened now ?
[Reply]
Foolishinvestor
Hindsight is such a beautiful thing ! had we knew, we would have dump all our money in the property market back in 2006 !
Allow me to answer your question this way. You are not foolish at all ! Here is why – I’m afraid it is a very sad irony though.
Had you given the choice of either buying Minibond or a bond issued by an Indonesian bank, you would pick Minibond every time without blinking an eyelid. But had you bought the debt issued by the Indonesian bank, right now, you would still get pay (good) interest and good chance of getting all your money back upon maturity.
Don’t ever ever let anyone tell you that you are greedy or foolish ! These stuffs did not have a good return (300bps ?) and should not cost you all your savings.
MAS should not had allowed these stuffs to be sold in the retail network in the first place. Period.
[Reply]
Foolish Investor Reply:
September 24th, 2008 at 2:50 pm
Del Boy
Actually the reason I asked the question is:
In mid-2006, if the banking industry had already perceived CDO as
risky, then they should have highlighted this in the marketing brochure,
as this info may affect one’s decision on whether or not to invest.
Last week, when I read Prospectus and Pricing stt, I have to agree that the two doc do cover all the possible situations of early termination, and do reveal that the underlying securities can only be determined after the notes are issued.
But in mid-2006, I did not read the two doc because the marketing brochure only alerted us to credit event and the reference entities as risks. Nothing in the brochure has alerted me that
(a) there are many other situations whereby the Notes can be
terminated early, apart from Credit Event
(b) the underlying securities may not contain the bonds of the RE
These are “material info? that I feel should have been highlighted in the brochure to alert potential investors. They cannot expect the investors to seek expert opinion when the min. investment amount is S$10k.
Had the marketing brochure clearly indicated both (a) and (b), and I still invested, I would have no sour feeling today.
[Reply]
Del Boy Reply:
September 24th, 2008 at 4:32 pm
You are right. Good point. You would not necessary had all the relevant documents at the time of making the relevant investment decision. Some of these documents were not made available to the distributors, or simply not yet finished by the lawyers. Another point is underlying securities are not usually selected and purchased until 2 weeks into the transaction. Lehman was the one who decide what to buy, as long as they satisfy the broad criteria set out by the terms of the Note & rating agency (hence, some people would call it “black box” structure). CDOs have been precived by the MAS as risky products for many years, At least since 2001. UOB and OUB were the early investors then.
[Reply]
I have been selling Structured Products for 8 years - mostly to finananical institutions.
I have been wondering how on earth could packaged CDS be sold in small denominations of SGD 5,000 to man on the street.
Even less complex equity linked structures, when sold to Private banks require the end investors to be sophisticated/accredited investors - supposedly to mean people who are more investment savvy or have financial advisors to help them out.
Then it brings me to the point: Why are simpler, straight forward plain vanilla bonds sold in SGD 250,000 min denomination? Man on the street are not able to purchase these bonds (with higher coupons) as they require a big upfront amt. So what other avenues do these retail investors turn to to get higher yielding products? They turn to retail notes. The greed for higher yields = need for banks to structure products with higher risks = Packaged CDS.
How were the sales force selling these products? Are they trained or even licensed to sell them? Maybe MAS can consider introducing specific licensing for structured product sales going forward.
[Reply]
lioninvestor Reply:
September 24th, 2008 at 2:33 pm
Yin,
Thank you for sharing.
IMO, the retail market for structured products will be more or less dead for the next few years at least.
[Reply]
burntoast Reply:
September 24th, 2008 at 2:49 pm
Which is small consolation to the ones who are toast!
In their collective effort to get redress, investors need to make sure the various banks involved (DBS, Maybank, UOB, etc) will get the message that their reputation will be seriously affected if they mishandle this issue and mistreat their customers by fobbing them off with platitudes (which is what people are experiencing now).
[Reply]
It was mentioned in Tan KL blog that we have to write to CEO of the financial institution to register our complaint that we are not duly informed that our money is at risk if the issuer (LB) default or now go bankrupt. Did anyone of you out there done that?
Have signed online petition and encourage to see that we have gather a force now (more than 310 signatures right now).
[Reply]
yin = Why are simpler, straight forward plain vanilla bonds sold in SGD 250,000 min denomination? Man on the street are not able to purchase these bonds (with higher coupons) as they require a big upfront amt.
This is an excellent question to ask! Which reinforces the notion that these Minibond and HN5 products are safe and of a low risk.
yin = So what other avenues do these retail investors turn to to get higher yielding products? They turn to retail notes. The greed for higher yields = need for banks to structure products with higher risks = Packaged CDS.
Greed? No, people who bought the products merely wish to be prudent and get a return that will keep pace with inflation. Greed would be to risk money on, say shorting stocks on the exchange. The irony is that if you did the latter, at least you still end up with something! That’s why banks did not adequately protect their customers, and MAS did not do its duty to investors.
Even now, MAS will only direct all queries to FIs and advised the posting of FAQs by FIs. Come on, MAS, are you being serious and credible?
[Reply]
Just received a letter from HSBC Trustee (undated), mentioned that Minibond Series 5&6 interest due on 22 Sep has not been paid . Such failure to pay on this date will constitute an event of default under the respective terms of those notes in the event that the payment default continues for a period of 15 days oer more. Although they indicated that it does not itself lead to an event of default under any other note, looks like all will be ended with the same date.
[Reply]
just got a call from a officer in HLF, the place where i brough my bond from regarding the complain i make to them yesterday, she called then tell me that if there is updates on the bond they will call me etc…. and she say that her staff who sold me the bond did tell me the lehman brothers is the arranger, swap gurantor and so on i tell her no she say yes, no point in complaining to the FI , complain to MAS better!!!
[Reply]
burntoast Reply:
September 24th, 2008 at 3:11 pm
Alvin
I don’t we should be surprised by this. All of them will just want to protect their rear ends, and this will degenerate into a you said-I said kind of exchange. In the end, they will say, you signed this black and white document.
Maybe MAS is “forcing” us to go through the procedure - complain to FI first, and then go to them. So, given respective experiences with various banks, we should now be able to escalate the complaint to MAS.
I don’t think the banks will listen to individual voices, no matter how loud.
[Reply]
Foolish Investor Reply:
September 24th, 2008 at 3:15 pm
In my opinion, the issue is not just whether we know LB is the arranger, swap guarantor.etc…BUT that there are so “many situations” which may lead to early termination, and these are not highlighted in the brochure!
The brochure has been drafted in such a way to mislead readers to think that there are only two ways of early termination:
(1) Credit Event to any one of the RE
(2) Early termination chosen by Issuer
Only after LB collapsed, then many realize that all series of Minibonds are affected, even though LB is not a RE…but just because it is Swap Guarantor/ Counterparty!
To make things worst, up to now, we still do not know what the “underlying securities” in each series are!!
[Reply]
Alvin, think there is no point contacting the FI as they will shed away their responsiblities. Guess we have to help ourselves. Just hope that something will happen after a petition is formed. To All, any latest update pls let us know here. Thanks !
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if i have a sound recording of what is said during the deal i make sure they eat back their words !!!!!
[Reply]
Message for those of you attending the meeting at 7pm today :
Lye and I may be late for the meeting due to some urgent matters that just came up. Mr Lingam has kindly agreed to be the contact person in our absence.
If you can’t find the group at the library (just outside HANS Cafe), you can contact Mr. Lingam at mobile # to ask for directions.
Thanks and looking forward to meeting all of you this evening !
[Reply]
sg Reply:
September 24th, 2008 at 3:48 pm
Hi Lye and Jan,
have to make sure Mr. Lingnam has the hardcopy of the petition ready for collection of signature to night.
[Reply]
VSL Reply:
September 24th, 2008 at 4:13 pm
Folks,
I have received the Attendance List template from Jan and have printed several copies for tonight’s signup. This just collects name, email ids, tel nbrs etc. It does NOT collect signatures !!!! This is NOT the petition letter.
If someone can send the Petition Letter template to me soon, I can have several copies printed and bring them also for signatures tonight.
My email is vslingam@singnet.com.sg. HP is 98592860.
[Reply]
can some one here explain what is underlying securities and the importance of it ??
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i think it is no point writing letter to CEO one they also protect the interest of their company
[Reply]
I thought all conversations are supposed to be automatically recorded by banks/stockbroking houses?
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I had the Financial Planner Asalysis and recommendations form with me. Look through again and only mentioned credit linked noted to7 companies named. No lehman’B at all.
It sign by Maybank financail planner.
[Reply]
I had the Financial Planner Asalysis and recommendations form with me. Look through and only mentioned credit linked noted to7 companies named.
Maybank financial planner sign on it. This show that they do not know what they selling.
[Reply]
Useful Info Relating to Note Series Issued by Beryl Finance Limited
Dear Layman Brothers
I found something on Fitch Ratings which may be useful for us to understand a bit of those note ratings.
Searched for Beryl Finance Limited Series and got following results:
Beryl Finance Limited Series 2005-10 HONG KONG
Beryl Finance Limited Series 2005-11 HONG KONG
Beryl Finance Limited Series 2005-12 HONG KONG
Beryl Finance Limited Series 2005-14 HONG KONG
Beryl Finance Limited Series 2005-15 HONG KONG
Beryl Finance Limited Series 2006-10 HONG KONG
Beryl Finance Limited Series 2006-11 HONG KONG
Beryl Finance Limited Series 2006-12 HONG KONG
Beryl Finance Limited Series 2007-1 JAPAN
Beryl Finance Limited Series 2008-11 HONG KONG
Beryl Finance Limited Series 2008-12 HONG KONG
Beryl Finance Limited Series 2008-13 HONG KONG
Beryl Finance Limited Series 2008-16 HONG KONG
For those Hong Kong victims, click on the related series, you can see the rating of your series. it seems that most of them are rated B to CCC. Don’t know why there is no list of SGP series. Suspect that most likely are rated as the same garbage as our HK brothers’ notes, if not worse.
There are also 2 articles on the same webpage which our Layman Brothers may be interested in:
Fitch: Implications of Lehman Bankruptcy on Global Synthetic CDOs
Fitch Downgrades Beryl Finance Ltd’s Series 2005-10, 2005-11, 2005-12 and 2005-15 Notes
but I cannot access to the articles as I am not a subscriber.
The page link is here:
http://www.fitchratings.com/corporate/search/results.cfm
hope experts such as del boy and lionivestor may enlighten us further.
many thanks.
[Reply]
Del Boy Reply:
September 24th, 2008 at 5:03 pm
I’ve access to this site. if you want the artices, I’ll email them to lion investor for him to post here. Hk and Japan could simply mean the relevant fitch office that rated the relevant deal.
[Reply]
mini-bomb Reply:
September 24th, 2008 at 6:51 pm
thanks a lot for your kind clarification. would apreciate it if you could e-mail the articles to lioninvestor to share the info with all guys here.
[Reply]
I think all these “junk” notes are designed by the Lehman Brothers to con unsuspicios investors, they have all the corners coverd that there is nothing we can do about them, the best thing is to go back to LMB and pull out all those excutives, they have all been fatten by these scams and just declared bankcrupt and leave all the “shits” to us. They should be responsible since they are the masterminds….
[Reply]
Foolish Investor Reply:
September 24th, 2008 at 4:41 pm
http://www.cnbc.com/id/26861095
I’m not sure whether the above link will work. But in short the US authorities are investigating. Hope that they are serious and really pull out the culprits.
From what I gather so far, the entire minibond structure is like a time-bomb, which will be exploded once the reckless credit bubble bust.
Personally, and with hindsight, I feel like a fool (hence, Foolish Investor) to have purchased a product which taken over such risks from these financial geniuses and salesmen, who reaped great bonus during good times, and leave behind a big mess for the innocent retail investors, esp. retirees.
[Reply]
Foolish Investor Reply:
September 24th, 2008 at 5:27 pm
Evening more frustrating to read this:
http://www.asiaone.com/Business/News/Story/A1Story20080923-89537.html
[Reply]
burntoast Reply:
September 24th, 2008 at 5:33 pm
Similarly, one of things we should press for in the petition is for MAS to institute investigations on the packaging and selling of Minibonds and High Notes. Trouble is, how is MAS itself implicated in this debacle?
[Reply]
This is an excellent question to ask! Which reinforces the notion that these Minibond and HN5 products are safe and of a low risk.
=> Sorry it does not reinforce that those retails products are safer or of lower risk. It is a different issue and something an aspiring world class financial hub needs to reassess.
Greed? No, people who bought the products merely wish to be prudent and get a return that will keep pace with inflation. Greed would be to risk money on, say shorting stocks on the exchange. The irony is that if you did the latter, at least you still end up with something!
=> Yeah greed might sound too strong in this context, but certainly, people were looking for higher yields and the distributing banks are looking for chunky fees as well, which led to need for riskier products with higher potential returns
That’s why banks did not adequately protect their customers, and MAS did not do its duty to investors. Even now, MAS will only direct all queries to FIs and advised the posting of FAQs by FIs. Come on, MAS, are you being serious and credible?
=> It is obvious we need tighter product scrutiny, better regulations and definitely more education on financial instruments and investments.
[Reply]
burntoast Reply:
September 24th, 2008 at 5:30 pm
“This is an excellent question to ask! Which reinforces the notion that these Minibond and HN5 products are safe and of a low risk.
=> Sorry it does not reinforce that those retails products are safer or of lower risk. It is a different issue and something an aspiring world class financial hub needs to reassess.”
My apologies, Yin. I did not state that too well. My point is that if “ordinary” (and safer) bonds with lower risks are only offered to institutional investors (as per what you posted earlier), those other products offered (and represented as bond-type products) to retail investors should be of equal or lower risk profile. The fact that they are not means IMO that they have been grossly misrepresented.
[Reply]
HSBC published some FAQ relating to Minibonds
http://www.hsbc.com.sg/1/2/miscellaneous/minibond-notes-frequently-asked-questions
[Reply]
Folks,
I have still NOT got the Petition Letter format, so I will NOT be bringing it to tonight’s mtg. I will, however, bring the Attendance List register.
FYI, a reporter from Today (Cheow Xin Yi) just called me enquiring about tonight’s mtg. She wrote an article in today’s Today paper. She plans to cover the mtg.
[Reply]
Real reasons why investment banks package “Mini-Bonds & High Note 5″ as a very safe investment to the naive public.
CDS’s (credit default swaps ), CDOs (collateralized Debt obligation) and all the other credit derivatives that populate the global financial markets present a new and uncertain risk for investors. Let’s dig a little deeper…
(Collateralized debt obligations are an unregulated type of asset-backed security and structured credit product. CDOs are constructed from a portfolio of fixed-income assets. These assets are divided by the rating firms that assess their value into different tranches: senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated). Losses are applied in reverse order of seniority and so junior tranches offer higher yields coupons (interest rates) to compensate for the added default risk.)
CDOs are new-fangled credit derivatives - i.e. they are bond-like instruments that are derived from pools of loans, usually mortgages. Through the wizardry of modern financial engineering, a pool of sub-prime mortgages, for example, can become an array of CDOs, some rated as high as AAA, others rated much lower. Industry insiders sometimes refer to the lower-rated CDOs as “toxic waste.”…
Institutional investors have been gobbling up these high-yielding - but very risky - CDOs because they are able to buy default insurance - otherwise known as a credit default swap (CDS).
For example, the buyer of a particular CDO could simultaneously buy a CDS to protect against a default. The investor would, effectively, pay an insurance premium to another investment institution like AIG for underwriting the risk of the underlying home-loans defaulting. Apart from a bit of legal drafting, that’s all there is to a Credit Default Swap. In return for a cash payment, you swap the risk of default.
These insurance premiums, paid to the underwriter of the CDS, appear to the receiver as income - just like the insurance premiums that any insurance company (AIG) would receive. You are being paid for accepting risk, not for lending money.
So you see, the investment bankers like Lehman Brothers have been very clever. They have said there are two components in a bond-interest payment: a fee for the use of your money, and a fee for the risk of default. The CDS simply separates out the [fee] for the risk of default.
The investment bank can have still more fun with this. Just like the boring mortgage streams that we started with, these CDS streams can be aggregated into a pool…then divided into tranches with different risk profiles…producing the magic of higher credit ratings for lower-risk tranches…plus concentrated risk in new toxic waste.
If you can get a credit rating agency to assess the tranches you have created, then you have something that looks like a CDO - and smells like a CDO - but which is not now based on cash flows deriving from borrowed money. Instead, it is based on cash flows deriving exclusively from insurance premiums that are paid to cover the risk of mortgage default.
That’s how CDSs get packaged into what is known as a “synthetic CDO,” and the investment banks (Lehman Brothers) can sell them through our local Singapore Banks (whom re-sell it as “Mini-Bonds or High Notes Five” to the naive Singaporean) for what appears to be fantastic yields. It’s a really neat deal…for the investment banks, which are selling to the highest bidder the right to receive their mortgage default insurance premiums in exchange for assuming the risks of default - so the buyer is just another “investment landfill”. He ends up with what’s called a “contingent liability.”
Why would any investment fund manager possibly fall for this scheme? The modern fund manager has a powerful short-term incentive to get a strong performance out of their clients invested savings. If he gets 2% more than the next guy he is a genius, and he will get more money under his management and much larger performance fees. As long as defaults occur rarely, synthetic CDOs can provide a pretty neat deal for the investors. They earn a steady income stream, simply by promising to stump up if there’s a default.
So you can see now how through the use of synthetic CDOs, fund managers can underwrite credit default risk and increase their income accordingly, without outlaying any fund capital. Importantly, however, they are also placing their fund capital at risk. Your investment banker/fund manager is a genius if everything goes well. But if it goes wrong (bankruptcy of Lehman Brothers), funds like “Mini-Bonds & High Notes Five” gets hammered.
The investors of Mini-Bonds and High Notes Five do well to remember that any investment bankers including DBS, ABN, OCBC…etc is forever and always about money. It is about making as much money as humanly possible, in as many different ways as legally defensible. Investment bankers is not about charity or altruism or the “greater good.” It is also about survival of the fittest - the “fittest” being those who maneuver themselves into obscenely overcompensated positions.
Investment Bankers/fund managers make most of their money by speculating with capital that does not belong to them, or by levying fees and commissions on capital that their clients/investors put at risk in the financial markets. In other words, clients/investors who invest in their financial instrument bear most of the risks. Yet whenever any form of success arrives, investment bankers/fund managers always garner an outsized share of the rewards. That’s asymmetry. And in this case, asymmetry might just be another word for “greed.”
Nobody who is hired help and who plays with other people’s money ‘deserves’ to earn huge compensation. That’s certainly true in a moral sense. But it is also true economically…Let’s start with the fundamental asymmetry of risk in the investment business.
“If you were putting your own money at risk, there’s the possibility of making lots more, but there’s also the possibility you could lose it all. The same, however, can’t be said if you are an investment banker, a hedge fund manager or a trader in credit default swaps. In that case, if you do well, you get a percentage of the winnings or the value of the deal. But if you do poorly and your clients/investors lose money, the worst that happens is that your bonus is zero. You never have to give back anything from the bonus you earned last year. And you still get a base salary comfortable enough to keep up payments on your Posche and Penthouse Condo.
Therefore, dear investors, greed and capital preservation just don’t seem to mix very well, especially when the greed belongs to someone else (banker/fund manager) and the capital belongs to you (naive investors).
But however the CDO story does not end here…
It was not long before the investment banking industry had a “Eureka” moment…They started insuring against the default of securities they didn’t even own! It’s like noticing your friend is looking a bit ragged and taking out insurance on his life for your benefit, without him having anything to do with it. And as long as there is demand for “easy income,” there’s no limit to how many of [CDS, the investment banks may create.]
When Delphi Corporation, a large motor parts spin-off from General Motors, got into serious trouble last year, its bonds fell into default. Incredibly, more than 10 times the nominal value of its bonds were then claimed from investment institution underwriters, by bankers who had insured against the default of bonds they didn’t own by issuing Delphi CDSs.
This isolated incident suggests that the mushrooming growth of credit-derivative issuance imparts an unknown and untested threat to the global financial system….
Long Term Capital Management failed in 1998. It was the last truly serious financial collapse which threatened the U.S. financial system. When LTCM went under, the bail-out fund required was US$3.65 billion. The [LTCM] fund itself was leveraged to about $125 billion of assets…
Back in 1998 LTCM was plowing a lonely furrow. Its investment view was something to do with Russian bonds and the Japanese Yen. It was off the main investment spectrum, and there were few copy-cats putting the same market view into action in the same way.
That is where things are very different this time…Many banks and funds are involved…This makes the size of the problem potentially much larger, and of much greater risk to the whole financial system.
How large?…Depending upon who’s counting, the world’s investors now hold somewhere around US$2 trillion worth of credit derivatives, at market value. But since the notional value of these arcane financial instruments exceeds US$40 trillion, no one really knows how large the potential losses could become during a panic.
Now you can see the difference in scale between LTCM and the subprime bust. This may be 20 times worse than LTCM. And it’s getting worse - daily.
At a time like this, we should not underestimate the skill of people like Ben Bernanke at the US Federal Reserve in underpinning the financial system. They have been remarkably effective at organizing the lifeboats over many years and many crises….[But] we think the Bernankes of this world will one day fail.
The result will be a credit squeeze. Bond issues will be pulled, bank loans recalled, and business activity will sharply decline for lack of funding. The first two of these have certainly started - with a rash of failed issues at the end of June. Will these risks be contained? We don’t know…
Clearly I am biased against excessive leverage, and against too much financial ingenuity, too. That’s why I am investing in physical gold/silver bullion. We believe that real physical gold/silver is a sensible insurance against today’s increasingly weird financial system. It has been astonishingly reliable in that role in the past.
But this time, who knows?
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lioninvestor Reply:
September 24th, 2008 at 11:42 pm
The original article was written by Paul Tustain more than 1 year ago. The complete article can be found here:
http://www.moneyweek.com/investment-advice/how-to-invest/subprime-mortgage-collapse-why-bear-stearns-is-just-the-start.aspx
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At this point, would anyone be interested to take over Lehman Brother’s role as the arranger, swap counterparty and swap guarantor?
Would a lawsuit scare off anyone who might be interested?
MAS already said it has no power to force distributors to compensate the investors, but only to fine them.
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CB Reply:
September 24th, 2008 at 6:46 pm
How can MAS ask the FI to compensate us which MAS itself approve the product, I supposed. We need a strong leader to tie up all the victims around the world and sue these LMB excutives, anyway, they are being paid billion of bucks even the bank collapsed, how ridiculous….
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yes i agree wth del and burntoast.
mas certainly cannot keep pushing us to look for hsbc, the banks/broking houses, fa, etc. there will be a time when enough is enough. correct me if i’m wrong, without mas approval, who can sell them in an island famous for very strict law. and the best part is the marketing materials, did any financial expert in mas read through and questioned whether those “bombs” are really “sound investment”……linked to the bonds of reputable banks and corporations as claimed in the marketing brochures? can they be sold to retail investors or for the rich only?
how mas handle this problem will determine its credibility and image like both of you said. not just s’poreans’ confidence alone on the government institution, hk and the international community will be looking as well. is this really a caring one who deserves world class salary? bottomline, i think everyone wants to have their money back or reduce their loss to a bare minimum. it’s not possible for working class people like us to take on the banks/broking houses, whether collectively or individually. if we/you lose the case, not just the investment is gone, we/you can go bankrupt if they counter-sue. my 50k…..very sian and sad.
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hello del boy,
if mas already know cdo are risky investment for many years, why they still approve it to be sold to retail investors like us? was there an overishgt? someone need to answer for this!
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foolish investor, why get frustrated over the asiaone article. the banks are working on new “bombs” in a very different packaging to sell to the next batch of foolish investors once this issue die down. hopefully not us again. black heart right but it’s reality, never trust a banker…the banks will help only if there is $ for them to earn and/or get a fat bonus. this issue really tarnish the image of the banks. we can only go to the government or mas for help now. i think mas image is also at stake, i don’t know will affect the next ge or not. $ and commoners’ life saving is a very emotional issue. i hope our pm can look into this.
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mini-bomb Reply:
September 24th, 2008 at 11:43 pm
VerySian
agree with you that $ and commoners’ life saving is a very emotional issue. although the loss may still be affordable to many of us here, mas must act immediately before some uncle/anty sinking his/her substantial life saving ends his/her life by hearig such a news!
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Hi all,
Pls login here to sign your petition:
http://www.petitiononline.com/CLSINVES/petition.html
in tan kin lian website
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[B]The case is clear[B/]
Assume most investors were given these:
1) It was sold as low-yield and almost fail-safe investment. Look at the Investment Assessment that says your Risk Profile. It said clearly about you.
2) Investors were told by FI only any of the 6 entities “Bankrupt”, “Fail to Pay” and “Restructure” will constitute closure of the fund. No other parties (like LB) was mentioned as critiria.
3) Closure of fund was not explained as what we are going to experience now. Investors thought they just get back the principle, that is.
4) No adverse risk situation were warned to investors.
5) FI encourages full trust on the fund. Large life savings, including CPF funds, were encouraged.
Parties Liable (I think):
1) MAS - They failed to scrutinise and realsie the high risk OR knowing but failed to enforce warning of such high risk investment when passing them down to market. Already minibond series 9 and no sign of warning. Clearly a BIG LAPSE in governing role.
2) FI - They are responsible for the above “promises”. They have no excuse to bear part of the losses. At least 30% of the fund in my view.
3) Trustee HSBC - They did not warn this risky product till now. They are highly responsible as a major role player in the fund.
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Great meeting that went on this evening. So what are the next steps?
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Hi Del Boy,
could you help to access this report also:
http://reports.fitchratings.com/coms2/summary_0266-90358_ITM
Title: Fitch Downgrades Zircon Finance Series 2007-12; Removes RWN
Publication Date: 25-JUL-08
Which is the Underlying security of Minibond Series 5.
I just don’t understand what causes an AA rated security to be downgraded to B- within 1 year.
According to the pricing statement of my Minibond Series 5, Lehman Brother had an obligation to use only AA rated security to back up the notes at the point of purchase (jul 2007), meaning, those zircon notes should have AA rating on Jul 2007.
If somehow we found otherwise (the notes was not AA rated at the time of purchase - Jul 2007), then I believe we should be able to do something about it.
Thanks.
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Del Boy Reply:
September 24th, 2008 at 11:22 pm
sorry, I’ve forgotten to mention that these are copyright protected materials. I cannot cut and paste here. But the Australian deals, Ziron finance Series 2007-1,3,9 have just been downgraded to “C”. Fitch cites “The downgrades are the result of non-payment by the CDS counterparty under the CDS agreements.” (of course, CDS Counterparty being Lehman went to Chapter 11). The others Series 2007, 12 + 13 will probably soon be downgraded to “C” from “B-”. All these Ziron deals are all technically in default now. It is a bit academic to find out why it went from “AA” to “B-”.
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how is the meeting this evening what is the outcome????
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since all our minister in singapore has a public email, does it help if we submit our petition to all the relevant ministry including prime minister office to outline why in first place mas allowed such products etc..etc..
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lioninvestor Reply:
September 25th, 2008 at 11:40 am
It might help put additional pressure on MAS to do more.
Mr Goh Chok Tong (Chairman)
Senior Minister
Mr Lim Hng Kiang (Deputy Chairman)
Minister for Trade & Industry
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Just received from HSBC on the series 5,6. Wonder what is there any different between 3 and 5,6. can anyone explain.
Thanks
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Hi, did you guys contact your FI to state your grievances as advised by MAS? I’ve not done so as I find it quite pointless.
Ok, so when I call them, I said you did not tell me this and that. What am I expected to hear? Yes, I’m so sorry I didn’t, please sue me on that. Or I told you everything necessary, don’t blame me now that you lost money!
Anyone know if it is indeed necessary to do so before we take further actions.
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VSL Reply:
September 25th, 2008 at 12:32 am
I believe it is better as there is a record of your grievance with the bank. If you bought yours from Maybank, send an email to cem@maybank.com.sg. I plan to do this myself. MAS has a procedure for such grievance reporting, and it starts with the bank that sold you the MB.
You are right - it may be pointless. But this way, MAS cannot find fault with us for not doing our part.
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headwind Reply:
September 25th, 2008 at 8:52 am
I’ve also registered my girevance with Amex (now Standard Chartered) as what MAS would want us to do.
Today’s Straits Times published the meeting and online petition. Hopefully, more people will come forward. I wonder if it is necessary for MAS to know the quantum of potential losses, not just the number of investors affected. The numbers may be small but the damage is huge, I believe.
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does anyone know if iwant to sent to heong leong finance what is the email address??? thanks alot
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hi All,
Here is Today article http://www.todayonline.com/articles/277862.asp with headline “MAS fast tracks complaints” .
I have simply no confidence on any investment product from now. Because, last night I heard from my 65 years old mother-in-law that UOB Bank called her and advise her to redeem her United Capital Protected Funds - Series 3. I am puzzled what this product got to do with lehman brothers ????? She did so and lost about 20% of her capital sum invested. SAD!!!! VERY SAD!!!
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whyagainman Reply:
September 25th, 2008 at 8:59 am
Hi Goondu
Sorry to hear of your in-law’s hard luck…
“capital protected” is very mis-leading… I would expect 100% return of my initial investment, why less 20%?… or perhaps because of premature termination?
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lioninvestor Reply:
September 25th, 2008 at 9:17 am
Goondu,
I’m not sure how the UOB Capital Protected funds are setup, but I do know that the SG series 3 and the US series 3 had a 11.8% and 29.8% exposure to Lehman Brothers respectively.
That would probably be the contributing factor to the 20% loss.
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goondu Reply:
September 25th, 2008 at 9:30 am
hi whyagainman,
Sorry for the off topic here, YES she terminated the United Capital Protected Funds - Series 3 as ADVISED by the UOB bank.
I am here because, I am also invested in Minibond series 5. I just wanted to find out more about how to recover my money invested.
Lastly, sorry for the off topic again.
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whyagainman Reply:
September 25th, 2008 at 1:20 pm
Not at all, Goondu. In fact thank you for sharing your in-law’s experience. It looks like investors with Lehman Bros linked products should brace themselves for a rude shock. This saga is not only confined to Minibonds/High Notes yet.
Got to look over my other investments again and am keeping my fingers crossed.
Would LIONINVESTOR care to comment? Perhaps I am mistaken.
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lioninvestor Reply:
September 25th, 2008 at 2:23 pm
Yes,
There are a few other credit linked products that might have risks you didn’t know of. If you have been sold some guaranteed or close to guaranteed products, please review them carefully.
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I wrote to Maybank and the officer called me even have the cheek to tell me that MB is “very similar to bond”! She remained silent after i told her off that this is not a bond and got nothing to do with bond. This shows how ignorant the bank staff are even till today.
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After seeing the reply from MAS in Today newspaper, I am prepared for the worst as I take the loss as a fee to pay for learning a lesson, but I am hopeful for the best though. However, in future, if any bankers trying to sell me any products when I step into the banks, I will ask them to go fly kite! NO MORE BUYING OF FINANICAL PRODUCTS FROM THE BANKS!
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that is amazing, even till date the FIs are all trying to save their rear. why bother asking us to call them when all they want is to push the blame away?
anyhow i saw the Today article, 90 signatures, wow that’s quite a lot.
another article from CNA :
Online petition for investors who bought Lehman-linked structured products
http://www.channelnewsasia.com/stories/singaporelocalnews/view/378145/1/.html
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Anyone has update of yesterday’s evening meeting ? Kindly share wit us. Thanks !
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lioninvestor Reply:
September 25th, 2008 at 9:19 am
Engel,
I will be writing on this and posting some links later on.
http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_282341.html
http://www.todayonline.com/articles/277860.asp
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j_asmine Reply:
September 25th, 2008 at 9:55 am
Thank you so much lioninvestor!
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So does that mean that we will have to file our case with FIDREC to pursue the case?
The first entity to view that the product is deemed to be suitable to be sold to the retail investors is MAS, isn’t it? The distributors of course play a part in the failure of not highlighting the risks to their financial advisers that this structured product entails and therefore sold to us as relatively safer instruments.
Demand and supply. If there isn’t a demand for high yielding instruments, there will not be a supply of them.
However, how can any financial institutions market their products that are structured and not letting their investors know the underlying securities?
I blame myself for not being more prudent. As a fresh finance graduate, I should have known that high returns equates to high risks. Seriously, after hearing from the banker last mid year, I really thought that I was buying into the bonds for the 6 REs! The credit swaps and whatever not is for the issuer/arranger to hedge themselves from the risk and thus making the investment safer. And I even told my dad that these Minibonds are much safer as compared to unit trusts and structured deposits!
My kind parents told me that they do not wish to implicate the banker we bought it from. Is there any other way I can go about getting our money back?
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Has anyone had any knowledge or can estimate how much Singaporeans put their money in the Mini-bonds? The amount may be very huge and this figure might get MAS to be concerned about it.
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Patrick Reply:
September 25th, 2008 at 10:03 am
i think it was reported $500mil invested in sg and slightly over $1bil in hk. not too sure of the currency though.
btw i have just wrote to both my FI (maybank and fidrec).
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whyagainman Reply:
September 25th, 2008 at 12:21 pm
hi Patrick
need help here, could you share with us and let us have a sample of your letter here to your FI/FIDREC so that we could also follow to some extent… I’m sure other forumer would appreciate.
For confidentiallity, you could blank out vital details like name, address, amount invested, name of FI etc.
Also, can anyone post the petition letter to MAS on this site for the interest of other affected forumers.
Not to worry too much, take care of your health and let’s hope for the best!
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lioninvestor Reply:
September 25th, 2008 at 12:40 pm
whyagainman,
I have already done so here:
http://www.lioninvestor.com/minibond-victims-turn-to-mas/
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Thanks alot lioninvestor.
J_asmine - no point in blaming yourself like I did last week. I’m also a graduate in Finance …. even drag my mum’s life savings in ! All the FIs when they market the products simply tell us it is a low risk products with steady stream of income….. even they persuaded me to invest in Unit Trusts, I told them I’m risk adverse, somemore my mum needs something more secured. Now all these happened and I still did not dare to break the news to her, looks like I have to compensate her out of pocket even my life savings are gone now. I’m not sure who has the legal knowledge here is kind enough to help us ……..just pray that MIRACLE will happen soon ! I just spend my days like zoomy ever since this event started, lucky enough we have this web to share our woes.
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j_asmine Reply:
September 25th, 2008 at 9:53 am
I’m so fed up! Initially I didn’t dare to let my parents know as well as it is a HUGE sum of money dumped in this pdt. But I have to break the news to them to get them mentally prepared.
I only got my updates through this blog. Called my banker only on last Monday to ask for more information but he couldn’t provide more but to ask me to wait! I don’t blame him, really! Unlike other bankers, he took time to explain to me the situation and assuring me that he will provide latest updates to me if there is any.
We also have Pinnacle Notes! Praying hard that nothing is going to happen.
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Thanks alot lioninvestor.
J_asmine - no point in blaming yourself like I did last week. I’m also a graduate in Finance …. even drag my mum’s life savings in ! All the FIs when they market the products simply tell us it is a low risk products with steady stream of income….. even they persuaded me to invest in Unit Trusts, I told them I’m risk adverse, somemore my mum needs something more secured. Now all these happened and I still did not dare to break the news to her, looks like I have to compensate her out of pocket even my life savings are gone now. I’m not sure who has the legal knowledge here is kind enough to help us ……..just pray that MIRACLE will happen soon ! I just spend my days like zoombie ever since this event started, lucky enough we have this web to share our woes.
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Ang Reply:
September 25th, 2008 at 9:52 am
When I bought this, I was in middle of year 3 undergrad in engineering. I’m not sure if our supposedly better finance knowledge prevent us from having a case against the FI since we entered with our eyes wide open (supposedly, again). My mum gave me a sum to “invest”. I dared not use the money on stocks as I thought she needed something safe. If I had poured into blue chips like Singtel, I would probably lost only ~10% and with a good yield too! Similarly, I had decided to “absorb” the loss myself.
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j_asmine Reply:
September 25th, 2008 at 10:03 am
I can also return the monies back to my parents out of my own pocket. I did some calculation and based on my current pay and on top of what I used to give them, I can fully pay up by 9 years time!!! 9 years!?!!!!
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all this is a case of the FI mis-leading us, if any of the reference entity really collapsed,it would affect our investment, we jolly well accept it because we understand that this is the risk involved because we were told, but now is out of sudden, the arranger collapsed, HOPE THAT MAS CAN DO SOMETHING TO HELP THOSE UNCLES AND AUNTIES HERE AS THEY MIGHT NOT BE FAMILAIR TO THOSE DETAILS AND THE THOUSANDS OF PEOPLE WHO ARE BEING MIS-lead into buying this products
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I would like to propose several courses of action for consideration:
1. a) Please, you MUST write (not fill up a feedback form on the bank’s website!!) to your bank. MAS has already asked investors to do this and as what VSL said above, at least they cannot say this avenue was not explored.
b) Please copy the letter to MAS as well so that they will know the numbers involved.
c) I would advise REGISTERING the letters to demonstrate seriousness.
2. For Singaporean investors, you should write to your respective MPs (email addresses are in Parliament website). I know of at least 1 MP that has been sent some of the info here and elsewhere. It’s time they help their constituents. The elderly, retirees, retirement funds, banks like DBS are all powerful hot-button issues in Singapore.
3. We need to combine both the Minibond and DBS High Notes investors. Nothing speaks louder than sheer numbers. And as someone said last night, we must also make sure the older investors are informed - the non-English newspapers need to be informed.
4. Convene a forum on Sunday 28th. Quite a number of people may not be aware of yesterday’s meeting, and most importantly Tan Kin Lian is away until Sat 27th. He will be a great point-man for this. In this fight, we will need a credible, media and finance-savvy champion. So far, he’s been great.
5. I would suggest this forum be held at MAS. The very least they could do is help to provide facilities. For investors, it would show a serious intent for the forum.
6. This is F1 race weekend. The international press is in town. Wouldn’t it be great if one or two of them can cover this growing issue. I am sure MAS and banks will really get the message then - reputations and MAS ambitions will be put under the microscope.
Reading the press statements from banks and MAS, and also individual investor’s experience seeking answers/redress, it is quite clear that all these parties just want to shelf away the difficult questions and avoid blame. Investors need to apply pressure to make sure that they don’t succeed. Only then will they act. I am not happy with MAS’ latest statement - are you?
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The amt should be close to SGD 800 mio - 1 bio, from good estimation. HSBC trustee or CDP should be able to provide the accurate figure.
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I have everything … Jubilee, Pinnalces n series of Minibonds. No complaint as one of the entity for Jubilee Notes is LB. That time when I wanted to place some funds on Pinnacle S3, that GYC Senior Associate convinced me to take up Minibonds S3, as she think is safer n furthermore comes with quarterly interest. Though now Pinnacle is not affected, I really do not have high hope as yest news US parliament not willing to accept BUSH plan to pump in more $$ to the US Financial markets. Look like Pinnalce is a time bomb and better get ourselves mentally prepared.
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sg Reply:
September 25th, 2008 at 10:55 am
ENGEL,
I also got my minibond thu GYC. I still remembered asking her if that is a “bond” product and she said it is multiple “bonds” together under the different REs. No even a single word of issuer/arranger/swap … being mentioned and emphasis is on RE. I knew I am taking the risks of RE and hence looking for series that don’t overlap on the RE. Now that all the series are all under LB, we have a so called single point of default on the same series under LB.
I ageed with Kenneth, I have mentally written off them. These are hard-earned money and I think this is a wake up call to MAS and FIs when they release product of high complexity and risks, should they release them to retails in the first place and the initial outlay is quite substantial (in the order of SGD 10K each).
We just hope for the best and sleep well.
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What can MAS do? The most fine 9 FIs but they must first overcome FIs lawyers who have started putting up their defense. Class suit? RTC $28,000 fee, member felt checked and sued. I think they took back $3,000 after 2 years. If there is going to be one, I don’t mind joining but these are things that may come along in the near future.
While those not involved in this saga may say it was the risk investors took but the unhappiness here is misrepresentation that causes hugh lost of hard earn savings. I blame on the lousy FIs and FAs who know nuts about what they are selling but just wanted $ and quota.
So did the FIs know the danger that this product has high risk due to property bubble?
If no, then the FAs & FIs are incompetent and I guess same applies to their other products.
If yes, then it is a coverup.
Conclusion, be smarter and don’t trust FIs’ FAs anymore as they are all just doing sales talk. CNBC Suze Orman says you are your best FAs….
I lost big in Minibond 3 and my wife says cool it off, life goes on.
She prefers a happy husband then a moody one that makes home a moody place to rest in the evening.
For me, I write off my lost as investment lost. I challenge myself to return the same amount back in 5 years.
Mind you, I have not been sleeping good since the saga but this is my way to overcome the self-blame and find opportunity in the market. If CNBC Suze Orman can owe US$250,000 debt in credit debt and now financially independent, then we are not that bad after all.
Be positive. This site is definitely better than my FI customer service support and HSBC institutional Trustee Service.
Maybe we can form a internet club with the objective to recoup our loses by working as a team and reinvest in a down market in Sgp or USA. More heads is better than one and risk should be lower since there is a layman level discussion
We have to learn from the above and find back our strength. Money lost can be earn back. Negative thoughts, self blame can only affect health, concentration on work. Always easier said then done, but we have to move forward. Hope of getting something from MAS, FIs, class suit, recoup are small hope which always hurts when did not materialized. Write if off first and anything good comes along, it is a bonus. Things you cannot control don’t bother.
I am hoping for the best and already prepared for the worst i.e. write off the lost. You will find it easier when you say it loud that it was a mistake and move on. Tomorrow will be better. In due time, people forget but for me, I have a 5 years challenge while and lost my faith in FIs and FAs…..
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burntoast Reply:
September 25th, 2008 at 11:00 am
Good post, Kenneth.
There’s nothing to stop people from doing both:
- adopt a positive attitude and take concrete actions to do other investments, and
- attempt to recover/minimise loss from Minibond/HN5
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goondu Reply:
September 25th, 2008 at 11:11 am
Dear Kenneth,
I like your postitive attitude towards this crisis.
I am a layman who known nuts about the technical financial terms used in these products. I would be interested to join the internet club if any.
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sufferer of minibomb Reply:
September 25th, 2008 at 11:32 am
kenneth thumbs up for your well written thoughts, mentally i have write off my 200k in series 1. like u - i strive to make it back in futures. but life go on. my wife also realised i been moody - money should bring happiness but by owning this 200k and invest it - it bring misery. BIG BIG MISERY…
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from Parliament’s Hansard (Sept 2007):
5. Mdm Ho Geok Choo asked the Minister for National Development (a) what impact will the current crisis in the US sub-prime market have on the property market in Singapore; and (b) what steps will the Ministry take to mitigate any negative effects on the property market, especially on public housing.
The Minister for National Development (Mr Mah Bow Tan): Mr Speaker, Sir, the impact of the sub-prime crisis on the domestic property market remains to be seen, as new developments are still unfolding everyday.
According to MAS, banks in Singapore have limited or insignificant exposure to the sub-prime market crisis in the USA. Local banks have issued statements to affirm this. MAS has also clarified that banks in Singapore do not issue sub-prime loans to local home-buyers. Moreover, MAS has reminded local banks to conduct proper credit assessments when granting loans.
The property market is driven by economic fundamentals and confidence. So far, there is no sign of a negative impact from the US sub-prime crisis. Our economic growth is still healthy. The key downside risk would be from a slowdown in the US economy, should their consumer spending and business investment be affected by tighter financing conditions. At this stage, the impact on Singapore’s economic activities does not appear to be widespread or large. MTI is of the view that Singapore’s fundamentals remain robust and, as the Minister of State for Trade and Industry told the House earlier, the growth forecast of 7%-8% remains unchanged.
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SH,
Your Petition Letter was well writen and it jolted MAS. Can you pls cut-and-paste the entire contents in this blog. I, and many others, would like to use it as a template to write our own letters to our banks. Alternatively, pls call me at 98592860 or email me at vslingam@singnet.com.sg to help in this regard.
As a followup of burntoast’s idea, if a mass rally can be organised at Speaker’s Corner this Sunday morning with Mr Tan Kin Lian as speaker, it would be super. Tks.
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burntoast Reply:
September 25th, 2008 at 10:56 am
hi lingam, I suggested MAS building not Speaker’s Corner. Some folks may be frightened off (although I will be there if that’s the decision) and the venue is not so conducive to speaking/discussing and also need to prepare for wet weather. But it is a great choice publicity-wise!!
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From the estimate it is between S$800m and S$1 b being invested by Singaporeans in the Minibonds series.
This is a hug amount and I believe many Singaporeans are actually relying on this investments for their retirement.
If this investment gone ‘kaput’ many of us would have a hard time ahead. As world wide economy is shrinking many economic woes will follow. How to survive……
MAS please play a more active role to help these affected Singaporeans.
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I think the immediate task is to make sure series 5/6 do not get force-liquidated after 15 days. I am afraid by going through the channel suggested by MAS, it will be too late, unless MAS has the power to stop HSBC from liquidating.
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from Tan Kin Lian’s blog:
Experience in lodging a complaint with the bank
Hi Mr. Tan,
I had a tele conference with two “product experts” of DBS. This conference, arranged by my RM, was to address any concerns I might have about my investment in high notes 2.
We discussed about the several issues and told them that I strongly felt that the product was mispresented to me. I also cited a clause in the pricing statement saying that “the product was not suitable for inexperienced investor” and told them that it was unethical of the bank to have sold many of this risky high notes products to gullible old uncles and aunties.
That noted my complaints and promised that the taped conversation will be passed to an “independent team” within the bank to investigate, the results of which would be forwarded to MAS.
Do you think this is what the MAS wanted the bank to do and is this sufficient? My concerns are not every investor has a RM to ask for a tele conference and how about those who cannot converse in English?
You may want to post this email in your blog (within revealing my email address) so as to encourage as many investors as possible to voice their complaints through such tele conference.
C.S.Tan
REPLY
I do not agree with the approach taken by MAS. I hope that MAS realise that it is very difficult for the public to go through this complicated process. They are likely to get an unsatisfactory outcome from the financial institution.
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burntoast Reply:
September 25th, 2008 at 11:11 am
My question is how INDEPENDENT are these teams, and also the independent party MAS asked banks to appoint to appraise compensation? They are, after all paid by the banks themselves. MAS has issued another useless suggestion. Instead of sitting by the sidelines, apparently wringing their hands, they should take some concrete investigative action!
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I’m totally disappointed with MAS, they keep saying they can only fine the FIs, cannot force them to compensate investors. Isn’t MAS should be the one to get fine first? Can someone tell us who has the authorities to fine MAS?
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sufferer of minibomb Reply:
September 25th, 2008 at 11:34 am
MINISTRY OF FINANCE …
[Reply]
goondu Reply:
September 25th, 2008 at 11:44 am
Certainly MOF cannot escape from this crisis.
They need to address the issue of allowing a the sale of “very safe product” (actually very risky) to an investor who mark on the survey form as CONSERVATIVE.
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I just spoken to a closed friend who work in a law firm and ask if any lawyer is kind enough to help us proceed legal actions FOC against the FIs, as many aunties n uncles are involved. Perhaps many are not aware of the situation now till no interest goes to them. She has helped me to sent out emails to other law firms and see how it goes. Individual effort is not enough, hope those signed on the petition and affected people voice up ! I have already written to GYC n MAS for an explanations on how such risjy products are not being highlighted to us ? Guess it may not help but at least something is being done. Do you think all of us go to the press will help also ? I guess pressure is needed for MAS to do something !
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lioninvestor Reply:
September 25th, 2008 at 11:35 am
From Tan Kin Lian’s website:
It is more important that each investor should write to lodge your complaint with the financial institution that sold the product to you. You can send a registered letter to make sure that there is a record of its despatch.
Read this blog:
http://tankinlian.blogspot.com/2008/09/lodge-complaint-with-financial.html
Some investors told me that they have difficulty in writing the complaint letter. My friend Adrian Tan has agreed to help. You can send your facts to him in by e-mail. He will try to write it for you. Adrian Tan
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GF Reply:
September 25th, 2008 at 12:36 pm
Does it mean that apart from the petitions that we have signed, all of us still need to write to lodge our complaint individually?
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lioninvestor Reply:
September 25th, 2008 at 12:42 pm
GF,
Yes, you are correct.
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VSL - thnks. Have emailed lioninvestor the petition for him to put it up.
Update on our talk with CEO HSBC Insitutional Trust last evening. This was a dead end. They said their role as trustee is very well defined. They don’t have the power to negotiate with other interested parties to take over the mini-bonds. They cannot comment on the misrepresentation by FIs. They have no part to play in the investing or marketing process, blah, blah blah. They only come in when there’s a default. They don’t even want to publish the list of securities held by each series or to comment what they will do when the 15 days’ grace period is up for series 5 and 6. I was pointed to this dead end by MAS who should be very well aware of what the trustee’s role is and therefore know that I will not get any answers from them and yet they cleverly fenced me off by arranging a meeting for me with HSBC. This convinces me that MAS is just pushing off all the responsibility to the trustee bank and the FIs.
All the FIs use the same marketing material published by Lehman, which was vetted and approved by MAS. Why is MAS just blaming the banks? If you go to FIDREc, you have to produce solid documentary proof. Unless you have an email or letter from the bank to confirm that this product is very low risk, has no exposure to CDOs, etc. it’s our word against the banker’s words. For most of us, it’s an over the counter sale. Going to FIDREc is another dead end given by MAS just to keep us going in circles.
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j_asmine Reply:
September 25th, 2008 at 11:46 am
SH,
I totally agree with you that MAS is trying to wash their hands off this whole matter by pushing the blame to the distributors!
Unless we have very stong concrete evidences (eg emails, recording of the conversations) i doubt we can win the case of mis-selling of the pdts!
Like what SH mentioned, all distributors used the SAME marketing material which has been approved by MAS. May I ask if anyone from MAS actually reads the prospectus or understand more of the pdts before releasing to the mass market!?
[Reply]
burntoast Reply:
September 25th, 2008 at 11:52 am
You know what, SH, given what you just wrote plus the treatment by banks about complaints, I think it’s time to rally the respective uncles and aunties to complain at the respective MP Meet-the-People sessions. Only when the pressure is felt will there be some action taken by the likes of MAS. Can we gather some of these people with compelling stories to tell and arrange for the Chinese papers to interview them?
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Foolish Investor Reply:
September 25th, 2008 at 12:05 pm
This is a good idea. Ideal interviewees will be retirees, do not read English, and invest a substantial portion of their savings.
Serve two purposes:
(a) highlight the helpless position we are in now
(b) prevent others from falling into same trap
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andrew Reply:
September 26th, 2008 at 11:36 pm
so in short - we just have to write off the minibond….
for those in 20’s, 30’s,40’s - our youth is our wealth…but how about those poor 70’s eldery ….
is this a so called gracious society that we are striving for…
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I think many of us are afraid to go through the legal way because we don’t have the resources to fight against banks or financial institutions. We don’t have any legal knowledge. What happens if in the end, we can’t get back some from the principal we have put into these products and then incurred a debt on the legal fees to bear?
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burntoast Reply:
September 25th, 2008 at 12:17 pm
Very true. That’s why we need collective action.
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Go to todayonline.com page 28 titled “PLEASE, MAS, TELL US MORE” written by Chua Soo Kiat. We are not the first to ask MAS for help and it will not be the last. I hope not be in any future discussion on MAS support either as it only means my debt has ballooned from the current Minibond 3 sega.
One question I need to ask, if the US successfully pushed through the $700b rescue plan, will Lehman Brothers come out of bankrupcy and resume the Minibond? Again this will be another miracle.
Let’s hope our good man, Mr Tan Kian Lian can make a breakthrough. Another ray of hope is the MAS of HongKong and Japan. If they are able to recover a significant capital back, then this will probably teach Sgp MAS a thing or two. If not, then, hard luck minibond investors. I just frame up my Minibond 3 receipt and motivate myself to work harder on my financial intelligence…..
[Reply]
Jasmin Reply:
September 25th, 2008 at 12:46 pm
Hi Kenneth,
That US 700b rescue plan is to save mainly AIG and not Lehman Brothers.
Even if there is a white knight to save Lehman Brothers, do you think it will not press real hard to get a good deal which means we could only recover mininal?
We have to be prepared to suffer loss of our principal and take it that this investment has turned soured. What we are doing now or intend to do, is to cut this loss as much as possible.
[Reply]
burntoast Reply:
September 25th, 2008 at 1:51 pm
YES, this is a good letter - right tone and hit all the good spots. I paste it here in case it becomes inaccessible later. I don’t TODAY will mind this educational piece being made available here:
AS I read about investors losing money in the DBS High Notes, I cannot help but continue to feel disappointed in the Monetary
Authority of Singapore’s (MAS) regulatory approach towards financial institutions. About two years ago, in “Light in financial
dark” (Dec 12, 2006), I urged MAS to take the lead in protecting retail investors.
As a quick recap, examples listed then include selling of structured deposits like a fixed deposit and non-disclosure of a few variable board rates for housing loans.
In one of my recommendations, I urged MAS to disclose more information on their investigation of financial institutions to allow retail investors to make more informed decisions. MAS did not agree with me that more disclosure of this sort would help.
In “Make time for a cuppa, MAS” (March 22 last year), I again suggested that MAS may have relied too heavily on their official stance of “non-disclosure of dealings with financial institutions” and
urged greater disclosure. MAS did not reply to this letter.
Fast forward 18 months and again, we are witnessing the same complaints, this time about DBS High Notes. Having read the replies from MAS in the newspapers, it appears very clear to
me that nothing much has changed significantly over the last 18 months. MAS continues to divert complainants to Financial
Industry Disputes Resolution Centre (FIDReC) and the general public to the website MoneySENSE for self-education.
It is puzzling why MAS does not want to address the issue head on. The public is frustrated. Those who had lost money in DBS High Notes, not only want they their money/capital back, they also want to know how and why inadequate disclosure or misrepresentation of clauses and terms have happened and are continuing to happen.
In short, they want accountability and errant bankers and sales persons, together with management punished accordingly,
whether via fines or suspensions of trading or other means. And punishments can only be meted by MAS and not FIDReC.
I have no doubt that over the years, MAS has followed up on these public complaints and have conducted their own investigation. What I really cannot understand is why punishments are not
made public.
Currently, MAS discloses on their website (under “enforcement actions”) the penalties, fines levied on individuals in relation to insider dealings, licensing breaches etc. However, on this website,
there are no reports of errant bankers/sales persons being taken to task for employing misleading or unfair sale tactics which lead me to believe that MAS must have concluded that the sales tactics employed are above board and have not contravened any of the relevant regulations such as the Securities and Futures Act and
Financial Advisors Act.
This “conclusion” does not seem to gel with the numerous complaints sprouting over the past years from all walks of life
claiming they have been “misled”. When urged to disclose the reasons for their rationale, MAS will fall back on their official stance of “non-disclosure of dealings with financial institutions”
and the public will have no where else to turn to and no choice but to swallow their grievances.
Once again, I urge MAS for greater disclosure of their investigation of financial institutions to ensure greater accountability. Simply directing complainants to FIDReC and the public to MoneySENSE
will only stoke public frustration further.
If left unchecked, I believe some may even want to follow in the footsteps of our Hong Kong counterparts who are planning to sue the HK financial regulator over the Lehman products debacle and turning the issue of “misleading tactics employed by financial institutions” into “misregulation of financial institutions ”.
More importantly, if such frustration intensifies, the general public might lose faith in our financial institutions and Singapore will never be a world class financial hub no matter how many big
foreign names set up offices here.
[Reply]
burntoast Reply:
September 25th, 2008 at 2:11 pm
The news article from TODAY was a better write-up than ST’s - truer to reality - maybe ST editor took out all the good stuff:
TWO years ago, at the age of 76, she sunk her life-savings of $200,000 in mini-bond notes. When her fixed deposit matured after two years, the bank officer advised her and her daughter to put the money into a new product that was “safe” yet promised “higher returns”.
Then, just days ago, the bank manager called with an ominous warning: Don’t expect much in return.
Yesterday evening, the daughter, a 44-year-old homemaker, was among 95 angry and bewildered investors who signed a petition outside the National Library, calling for more to be done for local investors caught in the turmoil that spiralled out of control when Lehman Brothers filed for bankruptcy
protection last week.
From about 7pm until after 9pm, the investors — who were mostly middle-aged or older, and ranged from office workers to retirees — gathered in small groups at the foyer to swop stories of angst and disbelief, as well as find out more about the fiasco from more savvy investors among them.
Ms Koh, as she wanted to be known, had herself sunk $30,000 in the mini-bonds. She told Today: “We are conservative investors, not risk-takers. It is my mother’s hard-earned cash, and she is 78, why would she want to place her money in risky investments?” She added: “If a robber comes to rob your house, the police will pursue and try to recover your stuff.” Surely the same idea should apply in this scenario, she said.
The petitioners hoped to convince the Monetary Authority of Singapore (MAS) to help them recover as much of their capital as possible and to find out if there had been misrepresentation by the financial institutions in marketing the products.
The original plan was to submit the petition on Monday, after collecting more signatures. But, when they heard from a reporter present about a media briefing MAS was holding at the same time, they decided to hand over the document immediately after the meeting.
“We didn’t want to waste time,” said financial adviser Martin Lee, the creator of the portal on which the petition was arranged. With emotions running high among investors, they were eager to share their woes, frequently interrupting each other’s tales with their own gripes about how these mini-bonds were marketed to them.
One, who had invested $110,000, said: “We were told this is safe and low-risk, but to our horror, we found out that our money is used by many other banks that we were unaware of.”
Investors were not told that Lehman Brothers was the issuer, added the investor. “How can MAS allow such risky investments to be marketed to retail investors?” The mini-bond series, which was touted as a low-risk investment, promised investors a 5-per-cent rate of return, higher than the 2 per cent for fixed deposits. “They were just selling rotten apples to us,” said another irate investor. “We’re all conned.”
One investors recounted how his friends, a couple from India, had put $1.8 million into mini-bonds here instead of another product back in India that promised a higher return of 8.5 per cent. “They thought Singapore was safer,” he said.
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bombed Reply:
September 25th, 2008 at 4:34 pm
I was not told that LB was the issuer! I was given the impression that the money will be invested in some bonds.
Also, I was told that as long as there wasnt any credit event relating to the RE, all will be ok. How come the bankruptcy of LB affect the mini bonds since LB is merely as arranger?
Can someone please answer?
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Today’s business time indicated Lehman Brothers has JV and may be some other assets in Singapore. Can govt freeze those assets in case of any fault of the whole thing, those assets can be put on sales to recover somebody to compensate the investors?
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I meant ……to recover some money to compensate the investors?
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Thanks Lioninvestor. I’ve been searching all the comments. Thought somebody has posted some template on the complaint letter previously but I could not find it now. Is there one? It will help everybody if we can all send these letters out ASAP, every day counts. thanks.
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lioninvestor,
I have sent an email complaint to the FI (GYC) and c.c MAS, as I was told this is are safe products with lower risks . Is that good enough ? I do not expect a reply from GYC anyway.
[Reply]
Perils for the Retail Investor
http://mrwangsaysso.blogspot.com/2008/09/perils-for-retail-investor.html
LATEST on DBS High Notes: And things start to move……
http://singaporemind.blogspot.com/2008/09/latest-on-dbs-high-notes-and-things.html
[Reply]
Hey everyone,
as the number of comments on this post has become quite numerous, may I suggest that everyone continues their discussion over at another post if you are not replying to any specific comments here?
This will make the page loading faster and easier for everyone to follow new comments:
http://www.lioninvestor.com/minibond-victims-turn-to-mas/#comments
[Reply]
burntoast Reply:
September 25th, 2008 at 2:33 pm
lion,
in order to encourage grouping of minibond and hn5 investors, is it better to have a common thread? in any case, quite a few people have both products.
[Reply]
lioninvestor Reply:
September 26th, 2008 at 3:19 am
burntoast,
Any suggestions?
I’ll put it up if it is feasible.
[Reply]
Hi All,
Can anyone know the link of the Petition Letter ?
[Reply]
lioninvestor Reply:
September 26th, 2008 at 3:20 am
Choon,
http://www.lioninvestor.com/code/uploads/minibond-petition.pdf
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Hi SP and all those disappointed with MAS’ aciton,
Bring it to PM Lee if u wish to, but I’m not sure if he will reponse. I think only he can fine MAS. I’m disappointed with the MAS and the government !All those high up don’t seems to understand the difference of $10K to them and to the commoners and retirees….just NATO and set guidelines for the future. Who don’t know how to do this? History will repeat itself some years down the road. May be we should consider migrate to China, dare to commit to return 100% for those proven cheated.
[Reply]
VerySian
I think you asked me about oversight. In my humble opinion the oversight was as bad if not worst than letting certain high profile terrorist limping away through a small toilet window in a supposedly highly secured prison. Utter embarrassment!
Temasek just earned US$1.5 billion from the sell of its recently purchased Merrill Lynch’s stocks to Bank of America. Benefited from the same crisis that you lost money in. Can the government not use this money and work out a rescue plan for these unfortunate investors without losing actually face? Perfectly reasonable proposition. All it takes is some clever financial engineering (pardon the punt!).
The real question is what world are we living in now ? It is a mistake to play into the their hands by debating about misrepresentation or mis-selling. Paulson and Bernanke said we are witnessing history being made here. These sorts of financial crisis only happen once in a century. The US recognizes the need to set up a US$700bn rescue package leaving aside the misgiving and misconduct of its financial institutions and individuals. Why the government here is interpreting everything by the letter of the law ?
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Foolish Investor Reply:
September 26th, 2008 at 9:04 am
I do not expect MAS to bail us out, or to order the distributors to bail us out.
But I do expect MAS to work closely with HKMA, and the Trustees, to see if there are any ways to avoid liquidating the underlying securities in a haste, to minimize losses to those investors of Notes whereby Credit Event has not been triggered.
I think this is a reasonable expectation in view of the large no. of investors and monies involved.
[Reply]
j_asmine Reply:
September 26th, 2008 at 9:23 am
I totally agree with Foolish Investor! We don’t expect to get back our principal amount! However how can we minimise loss for now without force liquidating the minibonds.
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VSL Reply:
September 26th, 2008 at 9:24 am
In the USA, the FBI has started crimininal investigations into possible wrongdoings in LB for causing such a big fiasco. Shouldn’t CID be investigating our FIs?
Say MAS fines the local banks for millions of $$$. What will MAS do with the fines collected? It should be channelled to all investors on a pro-rata basis. At least this will be some consolation for the investors, and bring a closure to this unfortunate incident.
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burntoast quoted that:
According to MAS, banks in Singapore have limited or insignificant exposure to the sub-prime market crisis in the USA.
Now, It would seems that it is the retail investors that is having substantial exposure to US sub-prime market. Besides the known exposure of High Notes, minibond, jubilee notes, other structured products like Pinnicle notes etc are equally exposed to the sub-prime woes in a matter of time.
Until now, MAS has not mentioned the total $ exposure of these products for retail investors. To the banks, the sub-prime investment may not be material, but to us, the retail investors, it represents our 10 years, 20 years and sometimes life-long saving and easily 10%, 20% and 50% of our individual wealth.
And for some of us, we may never able to have enough time to accumulate the saving again in this lifetime.
My expectation is for MAS is to take the lead in organizing the leading financial institutions in Singapore, including Temasek, GIC and the banks that sold the products, in looking at options to take over the role of Lehman Bros. This proactive action would help to minimize the losses to Singaporeans. We are now looking to leadership from our “world-class” institutions and we hope “million-dollars” ministers will rise to the ocassions as leaders.
This is an great opportunity for our leaders to deepen the bonding and trust with its citizen to achieve a win-win outcome for us themselves. Taking the right and decisive actions will enhanced Singapore reputation as the leading financial center in ASIA. It will help our leaders to showcase to the world how Singapore as a world class financial center tackle a messy fiasco created by US in proactively fence for its citizen in time of financial turbulence.
We have a dream, Make it real!
This opportunity unfortunately, is closing fast. The investors’ perception now is that HK MAS is doing a better job than our MAS in reaching out to the investor in find solutions.
I hope this will change in the next 2 days.
[Reply]
The latest reporting of minibond by Bloomberg Asia.
Asian Regulators Pledge Action After Lehman Protests (Correct)
By Patricia Kuo
(Correct currency conversion, typographical error in sixth paragraph.)
Sept. 23 (Bloomberg) — Hong Kong and Singapore regulators pledged to support individuals who claim they suffered losses on investments in credit-linked securities in the wake of Lehman Brothers Holdings Inc.’s collapse.
Hong Kong’s Securities and Futures Commission said it may take “steps to protect” individual investors who complained structured notes arranged by Lehman were mis-sold. The Monetary Authority of Singapore said it would punish institutions found to have misled investors, without mentioning the Wall Street firm which filed for bankruptcy on Sept. 15.
“Many of these investors are old people relying on these investments to support their retirement,” said Albert Ho, chairman of Hong Kong’s Democratic Party. “We need intervention from the government and financial experts.”
Asian investors were roiled last week after Lehman filed the biggest bankruptcy in history, Merrill Lynch & Co. and Bank of America Corp. agreed to a merger and regulators pumped $85 billion into American International Group Inc. to bail out the world’s biggest insurer. Customers thronged the offices of AIG’s Singapore unit to terminate polices as the fallout from the collapse of the U.S. subprime mortgage market spread.
Minibond Investors
The scale of problems for Hong Kong investors “is no doubt immense,” said Ho, who led investors to meet officials at the Hong Kong Monetary Authority, the city’s de facto central bank.
More than 10,000 Lehman Minibond investors in the city are affected, most with losses ranging from HK$500,000 ($64,400) to HK$3 million, Ho said by phone today. One bondholder lost as much as HK$10 million, Ho said, declining to name the person.
Hong Kong’s securities commission and the HKMA met yesterday with representatives of investors and banks that sold Lehman Minibonds, the regulators said in statements posted on their Web sites.
“Complaints related to alleged mis-selling by banks are being referred to the HKMA for further action,” the SFC said in its statement, without being more specific
Investors in Hong Kong are considering taking legal action against Lehman, and may seek help from the Consumer Council, which has a fund that can support such lawsuits, Ho said.
“We still hope there are other ways, because lawsuits are very time-consuming and costly,” the lawmaker said.
Susan Byrnes, a spokeswoman in Hong Kong for law firm Linklaters, Lehman’s legal adviser for the Minibonds, declined to comment.
Singapore Pledge
The Monetary Authority of Singapore pledged to punish financial institutions found to have misled investors in structured products. “Where we have clear evidence in the current matter that a financial institution has breached our laws or regulations, we will hold the financial institution to account,” the authority said, without saying whether it has found examples of malpractice.
The Singapore authority also said it will enhance education schemes so that investors better comprehend risk and returns and don’t buy products they don’t understand.
Tan Kin Lian, former chief executive at NTUC Income, a Singapore insurer supported by trade unions, said on his blog that he is seeking help to draft a legal statement that investors in credit-linked securities can use to settle claims with financial institutions.
Lehman-Created Notes
New York-based Lehman created about $30.5 billion of structured notes for clients, transactions in which a borrower issues debt tied to the movements of currencies, interest rates or securities, according to London-based data provider mtn-i. The deals typically involved swaps designed to protect issuers against currency and interest rate risks.
About 99 companies and multilateral agencies sold structured notes arranged by Lehman, mtn-i said on Sept. 18 after the securities company filed for bankruptcy. They must buy new hedges from other banks or else meet any obligations under the transactions themselves, mtn-i said.
The SFC and HKMA have set up enquiry hotlines for Lehman Minibond investors, according to their statements. The SFC said it has handled more than 780 enquires and more than 130 complaints about Lehman’s Minibonds, which are credit-linked notes issued by Pacific International Finance Ltd. and arranged by Lehman.
Pacific International Finance, the Cayman Islands- incorporated issuer, sold at least $1.1 billion of structured notes from January 2003, data compiled by Bloomberg show. The bonds were distributed by Asian banks and brokerages and linked to the debt of companies including DBS Group Holdings Ltd., Hutchison Whampoa Ltd., Swire Pacific Ltd., Sun Hung Kai Properties Ltd., Goldman Sachs Group Inc. and Morgan Stanley, according to sale documents posted on the SFC’s Web Site.
The most recent Pacific International-issued Minibond registered with Hong Kong’s securities regulator, Minibond Series 36, offered investors a 5.5 percent coupon for U.S. dollar notes and 5 percent for Hong Kong-dollar notes maturing in May 2011, the sale documents show.
To contact the reporter for this story: Patricia Kuo in Hong Kong at pkuo2@bloomberg.net.
I have send the link to this website to the reporter. Hopefully, with more exposure to international media, MAS would take decisive action and not hand-off action!
[Reply]
See action in HK
http://www.youtube.com/watch?v=x0kI8xKDC0Q
[Reply]
Dear Folks, I have sent an email to MM Lee, who is our Tanjong Pagar GRC member, c.c to MAS. Guessed what ? less than 30 minutes MAS called me and give the the FIs details to lodge the complaint and they will follow up. Hope this will more or less help us.
[Reply]
Jasmin Reply:
September 26th, 2008 at 3:10 pm
Hi Engel,
You have a good start.
Please keep us updated on your case.
Thanks a lot.
[Reply]
Ang Reply:
September 26th, 2008 at 3:30 pm
Hi Engel,
Can you share the info given to you so that we can lodge our own complaint? Thanks plenty.
[Reply]
Kenneth Reply:
September 26th, 2008 at 4:35 pm
See what I mean. Engel email to MM & within 30 mins got a call from MAS to follow procedure i.e. talk to FI first.
From my view, the FIs taking over the complain will give MAS more time review, assess, understand, compare, strategize MAS next approach which I believe the Minister of $ will speak.
This is concerning half a billion of lost fund with a outcry of misrepresentation both in HK and Sgp. Politically, HK wins the people heart and mind at the moment. Sgp Minister of Finance must react as Lehman Brothers is not part of the RE on some of the notes but something else which investers don’t understand and FA don’t bother to explain. Not fair to expect old folks to read prospectus especially I don’t even understand.
After all things have been done i.e. petitions, television, HK protest, old folks lost retirement fund, handing over petition to MAS, newpaper coverage and still no Minister of Finance coming out to say something, then I would say the new cabinet lost their feel of the ground… then it is a sad day for me.
Anyway, there is nothing I can do but wait till 02 Dec 08 and check my bank account.
Regards,
[Reply]
Hi Steven & Burntoast,
I agreed with you. There are a lot of things that the government can do to help but they just won’t do it because of Law-By-Law systems, sorry lah no exceptions. Then MAS utttered and release uselss a press statement, claiming that some investors said that they were very satisfied with MAS action. There’s no commitment or sincerity to help from what we see. MAS need to be take responsibility in this matter; without “APPROVAL” nobody can dump those garbage to cheat the naive citizens.
And instead of keep boosting how much money Temasek and GIC make every now and then, have they ever consider using those profits to help the poor investors like someone suggested? Or even take over the “bonds” and try to sell it at a better price (buy low sell high is what Temasek always boost about right?) or run to maturity, to help us to minimise the losses? There are many ways to help if they want to, with the top brains that reside the government, MAS, temasek, GIC, etc.
And instead of keep pursuding the public that their million $ salary is still low compared to so and so and therefore they must increase their pay, each time the global economy boom. The reason of course is we need GOOD people in the governent. Peolpe serve because of passion and devotion to their country, not MONEY. If money is the prime motivator, who can guarantee one will not corrupt since money is so important?
With eomotions running so high and so much publicity in the press, I am still waiting to make my own final assessement about the meaning behind the super scale salaries, time will tell.
I’m unconvince with that S’pore is a caring society, if you compare with HK and China, especially the compassion of the Chinese leaders Like Mr Wen and Mr Hu, in dealing with crisis. I heard they will even bail out 100% those who had been cheated or if it was a government oversight. The head responsible will also have to resign and may be face prosecution, just like in the private sectors. And in those 2 countries, their authorities and leaders moved real fast without hesitation
Many of us know that there’s a lot of frustration dealing with government institutions, especially for difficult situations. Now I understand why some middle class friends chose to migrate even during boom time or work overseas with the intent of not coming back. I quote a chinese saying, that Only in a criss, we can assess a person or the government, not when the economy is booming, period. we are not stupid.
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I have also written to MM Lee, to appeal for his advise and assess whether Temasek or GIC can step in to re-package the whole thing, be it minibond, jubilee, pinnacle or high notes, to run to maturity and help us to recover our principle or minimise our losses. I think all of us have both fear and respect to approach MM. But I can’t think of a better way now, with MAS response at such. If I don’t do it now, it may be too late to help, since Minibond 5 & 6 are almost gone, Jubilee 3 is likely to face the same fate. I think billions of dollars will be lost and thousands of fellow s’poreans will suffer. Why let this part of our national resources go into the drain? Good luck.
[Reply]
Foolish Investor Reply:
September 26th, 2008 at 4:19 pm
Henry
Agree totally.
If the US govt can consider RTC, why can’t the Asian counterparts, esp. HK and S’pore explore as well.
Let the underlying securities run to maturity may be the most practical & fairest way to minimize losses…of course the Notes holders must also understand that if a Credit Event occurs later, the Notes will still be terminated early & losses may even be higher than now. But at least it’s a Credit Event, a risk which we have been told when we purchased the Notes.
It’ll be ironical if the US and HK govt both successfully adopted the RTC way and bought time for the crisis, whilst our MAS could not do so, and the Notes in Singapore are the only ones being terminated early due to the insolvency of swap counterparty.
[Reply]
Jasmin Reply:
September 26th, 2008 at 4:35 pm
I admit I don’t have the guts to write to MM Lee because he is so high up.
Please keep the rest informed on the outcome.
The idea of letting the underlying securities to run till maturity sounds good to prevent force-selling at a great discount. As we start to learn more about these complicated products, more and more things begin to surface up.
Whatr exactly are the underlying securities in these products? Are they another heap of rubbish?
It seems that the reference entities (big international banks and financial institutions) are just for show to entice people.
[Reply]
whyagainman Reply:
September 26th, 2008 at 8:33 pm
yeah, i guess many of us were sold on the impressive reference entities (America Express, BoA, DBS, HSBC,JP Morgan Chase, Singtel & Stanchart - Series 2) thinking that they are solid companies. No reference were made at all to the underlying securities from the RM.
[Reply]
I read many articles condemning unscrupuluous distributors selling Lehman Linked products to consumers.
I too bought the minibonds series 3
However, I must praise the Hong Leong Finance Officer that sold me the product. She told me that the notes are not guaranteed because if the banks were to collapse, there may be a chance that the money will be lost.
At that time,( early 2006) who would believe any banks would collapse now. I took it that the notes was safe and bought it.
Now I only curse those idiots that run the banks, draw huge salaries and bonuses, and just walk away scot free when the banks collapse
[Reply]
anyone has any idea why isn’t minobond 1-3 included as potential credit event in the letter sent by HSBC Trust a few days ago? does it mean it is still safe?
[Reply]
whyagainman Reply:
September 26th, 2008 at 8:20 pm
i think because the interest payment is not due yet, my Series 2 next interest payment is due in Nov 2008
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Just to share my thought :-
FI and MAS are pushing the ball between themselves and actually, both of them are to be blame:-
- MAS should take responsibility for allowing such a complicated product to be market to retail investor
- FI should take responsibility for allowing their FA, who has minimum knowledge of all the risk in Minibonds, to market this product out to the public
Neither FI nor MAS wants to bear all the responsibility and compensate all investors because this will cause them a mini bomb.
My suggestion is that HSBC trustee can proceed to force sell all the underlying securities/CDO/CDS whatever, however, FI and MAS must bear the remaining loss of investment equally.
In this scenario, FI and MAS definitely will fight for us to ensure that HSBC sell at the best price, else they will suffer a bigger loss. Now that each party doesn’t need to bear 100% of investor loss, it will be easier for this decision to be approved by their board.
or
HSBC holds all Minibonds till maturity and investor get full redemption.
This is what I call - looking into the interest of all investors. I believe only someone high up in the government can push the above suggestion thru.
[Reply]
Parka Reply:
September 26th, 2008 at 8:45 pm
I’ve lost faith in MAS already. Let’s say they don’t want to do anything and ignore us. What can we do? Nothing essentially.
It’s a natural law that in order to receive something, we must sacrifice something in equal value. Nothing in the world escapes this law. MAS stands to gain nothing from this, so I don’t think they’ll sacrifice anything — manpower.
They should start releasing press releases with concrete examples of what has been done. Something that people can physically see for themselves.
[Reply]
I’m already at a very desperate end and looking at the slow progress as compared to HK, its better that we escalate even further up. It its better to write to someone who is of influence and prominent rather than talk to those ikan bilis. I informed MM Lee what that had been happened and many aunties and uncles who are illiterate may even commit suicide if they come to know that their life savings are gone ! (which apply to my mother as well) Of course I do not think he is free to vet my long-winded email, but simply want to pressure MAS to be aware we are at dead end if there is still no action ! Vincent from MAS called me and informed that I write to the contact persons from the respective FIs and MAS will follow up from there. These are:
MayBank - Priscilla Loke, ploke@maybank.com.sg
GYC - yangchye@gyc.com.sg
I would urge all of you to act fast, there is no time to wait for miracle to happen. Till the time Mr Tan arrange to meet us, at least something is already done ….. AWARENESS !
‘
[Reply]
Kenneth Reply:
September 27th, 2008 at 12:08 am
My minibond series 3 due on 02 Dec 08. My FI is Phillip Securities. They said they will get back to me in 14 days.
for Phillip Securities - jeffreygoh@phillip.com.sg [62121873]
(Phillip Securities Director, Corporate Business Development)
[Reply]
ET Reply:
September 27th, 2008 at 11:12 am
Anyone knows what is the MAS email ID to send my complaint to ?
Thanks,
a fellow sufferer of MB 3
[Reply]
lioninvestor Reply:
September 27th, 2008 at 11:32 am
http://www.lioninvestor.com/how-to-file-a-dispute-for-structured-product-victims/
[Reply]
I am still hopeful that the authourities, MAS/ Ministry of Finace and some white knights will come in and rescue these poor bond holders. These are all mainly retirees or those plannning to retire thinking of putting their life saving and retirement fund and hoping to get some sort of regular income or return to counter the high inflation rate. They put their money in the mini bond thinking it is save as compared to stock which is consider much more risky. However the situation now is the reverse as their money in the minibond can be almost wiped out as compared to if it put in some blue chip stocks where the chance of recovery is still hopeful when the stock market recover in the long term. Can the authorities please understand the heartache of these poor category of investors who are just trying to get a recent return for their retirement. They are not gamblers or speculators.
[Reply]
[page has been removed]
Please refer to here:
http://www.lioninvestor.com/how-to-file-a-dispute-for-structured-product-victims/
Sample letter to CEO/MD of your respective FI
[Reply]
checker Reply:
September 28th, 2008 at 11:52 am
Hi Ang,
The template states that we are approached by the FI and convinced by them to purchase the Minibond.
However, I believe some of us got to know about this product via flyer/brochure/newspaper, then we decided to approach the bank for further information. Subsequently, we were convinced by them that the risk is low as they only emphasize on the 6 RE and not a single words of underlying securities (100+) were mentioned during that time.
As, we came to know about this product thru flyer/brochure/newspaper and approached the bank, do we have a case here ?
[Reply]
Ang Reply:
September 28th, 2008 at 12:13 pm
HI, I approached the FI after receiving their letter which asked me to order through my trade representative. I went down to the office to ask for more information. A product manager handled my case and just assured me the product is as good as what the brochure states. The rates are better than fixed deposit but you have to wait about 6 years to get your money back. Whatever additional risks was only communicated to me via the brochure and the manager merely repeated what’s on the brochure, briefly.
I’m wondering if such toxic products can be bought Over-the-Counter without an experienced Relationship manager/financial adviser/whatever you call them. It’s like drugs, if it’s going to cause you great harm without proper advice, pharmacy can’t sell you them!
You and I, and some others have approached them willingly because of their advertisements, brochures, letters, etc. I don’t see why they can run away from responsibilities. Aren’t they obligated to tell us of the relevant risks??
[Reply]
Kenneth Reply:
September 28th, 2008 at 1:35 pm
Reasons why they didn’t tell you the risk is either they don’t understand the product or they are under took much pressure to sell due to quota target & commission.
My FA is a personal friend but as a professional, the scenario of what happen if any of the 6 entities default was not presented. It sells on the fact that highly rated RE and low risk. I thought it was a bond and a significant principle will be coming back but in actual fact, it is not but something very complex.
Had she told me then, I would not have invested.
I cannot be expected to ask all the questions else what is FA for? They must assess my suitability and lay out the risks instead of going full steam on sales talk.
Regards,
[Reply]
Foolish Investor Reply:
September 28th, 2008 at 12:14 pm
I’m in the same situation.
My advice: state the facts, be fair to the FI as well
I’m drafting my letter to FI and MAS, requesting them to ask the Independent Committee to look into the adequacy of disclosure at the advertisement & marketing brochure.
I feel that if the underlying securities are not bonds in RE, this fact should have been explicitly highlighted in the brochure as well. Failure of doing so have led my investors into assuming so, and thus did not ask any questions about ‘underlying securities”.
Ironically, even as at today, nobody is able to tell what these “underlying securities” are…basic transparency is lacking!!!
[Reply]
Parka Reply:
September 28th, 2008 at 12:57 pm
Precisely. Until today, I still thought I was lending money to the 6 RE, hence the term ‘bonds’.
I didn’t know I was in fact lending money to Lehman Brothers, which seems to be the case here because I can no longer get my investment back as they are bankrupt.
The 6 RE doesn’t have my money so they can’t really return them to me. Right?
This, in my opinion, is a fundamental breach of contract.
[Reply]
Hi, anyone can gave me an advice for minibond 3…..am currently
at a loss of words at the moment….
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Hi all
I really don’t know if all these letters to CEO or whosoever is going to do any good. Do y’all think it would be a good idea if we followed the Hongkongers in mass-gathering at MAS to do have some meetings or things like that? If the police come disperse us, all the better.
[Reply]
jen Reply:
September 27th, 2008 at 3:43 pm
Hi Ahthong,
we cannot have mass gathering at MAS. it is illegal. can be jailed.
The only place for the mass gathering in singapore is at hong lim.
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Wachovia Slips Amid Speculation Citigroup, Wells Fargo May Bid
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1wZ5AXuzIpE&refer=home
Seems to be good news for those with products related to Wachovia.
In any case, we have to act fast on our existing avenues. I am now drafting the letter and will send out on registered mail, as recommended by Mr Tan Kin Lian, on Monday.
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There is a article by a lawyer in today’s ST forum. I think it helps to strengthen our case.
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Who’s going to help those poor uncles and aunties, who are illeterate? I suspect not all everyone of them know the bad news yet, let alone write a petition or conplaint letter.
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Hope for investors in Lehman minibonds
http://finance.thestandard.com.hk/en/business_news_view.asp?aid=72231
[Reply]
Kenneth Reply:
September 28th, 2008 at 4:35 pm
http://business.asiaone.com/Business/News/Story
Investors hit by Lehman Con Job had their 2nd protest in Hong Kong. See the link on asiaone.
Regards,
[Reply]
sianz Reply:
September 29th, 2008 at 4:21 pm
hi kenneth,
appreciate if u can post the story here, thanks
[Reply]
Kenneth Reply:
September 29th, 2008 at 4:38 pm
Will do later. Only can assess after 6 pm.
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lioninvestor Reply:
September 29th, 2008 at 9:26 pm
http://www.todayonline.com/articles/278589.asp
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Assuming US taxpayer do the bailout of the FI’s (which is still a debate) the question will arise, why US FI’s should spend tax payer dollars to investors in foreign countries.
Already top U.S. economists are opposing the bailout in a group called ‘Economists against Paulson Plan’ :
http://www.informationclearinghouse.info/article20873.htm
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Petition on Credit Linked Securities, Singapore
The Petition to the Singapore Government is now ready for signing at:
http://www.petitiononline.com/PSGCLS01/petition.html
Investors in the credit linked securities can now sign the Petition which will be delivered to the Singapore Government, tentatively by early October.
[Reply]
2nd protest in HK
http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=72256&sid=20779304&con_type=1
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This is the reply i’ve gotten from Maybank after writing a complaint to them, Fidrec and MAS. Can someone advice me what should i do?
(quote)
Thank you for your email addressed to our Bank on 25 September as well as to MAS on 26 September 2008 on this matter.
We understand your anxiety and concern on your investment in the Minibond.
Meanwhile, we will look into the sales process by our staff and will also update you when we hear from the Trustees on your investment.
(unquote)
[Reply]
lioninvestor Reply:
September 30th, 2008 at 11:26 am
Looks like they have sidestepped the main issues of your complaints.
[Reply]
Help-Minibond Reply:
September 30th, 2008 at 8:34 pm
Get them to commit a date when they will complete investigation and give you a reply. If too long, push for a next date of update. If needed, send a complaint to the next level.
Get a commitment what will be investigated and commit dates.
The Japanese do these to their suppliers all the time when there is an issue. It is good way to drive things forward.
Don’t settle for a general reply like what they gave you.
[Reply]
Latest update from Bloomberg
Lehman’s `100% Principal Protection’ Means Pennies for Notes
Sept. 29 (Bloomberg) — A brochure pitching $1.84 million of notes sold by Lehman Brothers Holdings Inc. in August, a month before the firm filed for bankruptcy, promised “100 percent principal protection.”
Buyers had “uncapped appreciation potential” pegged to gains in the Standard %26 Poor’s 500 Index, the brochure said. In the worst case, they would get back their $1,000-per-note investment in three years. Only the last in a list of 15 risk factors mentioned the biggest danger: “An investment in the notes will be subject to the credit risk of Lehman Brothers.”
Lehman’s Sept. 15 bankruptcy leaves holders of the notes waiting in line with other unsecured creditors for what’s left of their money. The collapse has rattled Wall Street’s $114 billion structured-notes business, which Lehman, Merrill Lynch %26 Co., Morgan Stanley and Goldman Sachs Group Inc., all based in New York, used to raise cheaper funding as the credit crisis drove bond yields higher. About three-fifths of the $68.1 billion sold this year were bought by individual investors, according to data compiled by mtn-i, a London-based firm that tracks the market.
“Investors are going to be a lot more concerned about the credit of the issuers of these notes,” said James Angel, an associate professor of finance at Georgetown University in Washington. Until recently, “the buyers may have been mesmerized by the bells and the whistles,” he said.
The market for structured notes — constructed by Wall Street firms from a combination of bonds, stocks, commodities, currencies and derivatives — has mostly avoided fallout from the slump in sales of mortgage-backed collateralized debt obligations and auction-market preferred securities.
Hong Kong Outcry
The $330 billion auction-rate market seized up in February, when securities firms stopped supporting the auctions. The U.S. Securities and Exchange Commission, along with state regulators in New York and Massachusetts, has since forced companies, including Citigroup Inc., Merrill and Morgan Stanley, to buy back more than $50 billion of the securities from aggrieved customers. Regulators cited claims that the investments were improperly touted as safe, cash-like investments.
A similar outcry broke out in Asia last week in the structured-notes market following Lehman’s bankruptcy, the largest in history. Hong Kong’s Securities and Futures Commission issued a statement saying it received 960 inquiries and 170 complaints from holders of about HK$15.6 billion ($2 billion) of structured notes arranged by or linked to Lehman.
“Many of these investors are old people relying on these investments to support their retirement,” Albert Ho, chairman of Hong Kong’s Democratic Party, said in a Sept. 23 interview.
Lehman Bankruptcy
Lehman, once the fourth-largest investment bank in the U.S., had to file for bankruptcy after its shares plummeted on concern that the firm couldn’t raise enough capital to compensate for mortgage losses. Lehman had estimated debts of $613 billion as of May 31. Holders of unsecured Lehman debt may get less than 50 cents on the dollar, CreditSights Inc. analyst David Hendler said in a Sept. 23 report.
Lehman spokesman Mark Lane declined to comment. SEC spokesman Kevin Callahan said he couldn’t comment on whether the agency had received complaints from investors or whether it is looking into how the securities were marketed.
“The banks and brokerage firms invent a product, and they push it until it breaks,” said Roger Robson, founding principal of CapTrust Financial Advisors, a consulting firm in Tampa, Florida. “Then the regulators step in and fix it. This could easily be the next product they’ve got to step in and fix.”
Structured notes were first sold in the U.S. in the 1980s, according to the Web site StructuredInvestments.com, maintained by Chicago-based securities firm Incapital LLC. They’re sometimes marketed as “structured equities” or “hybrid financial instruments” because they combine features of debt and equity.
Mitts, Sequins
They have names like Mitts (Merrill’s Market Index Target- Term Securities), Propels (Morgan Stanley’s Protected Performance Equity Linked Securities) and Sequins (Citigroup’s Select Equity Indexed Notes), according to StructuredInvestments.com. Lehman’s offerings included Suns (Stock Upside Note Securities) and Prudents (Prudential Research Universe Diversified Equity Notes).
Total issuance of structured notes in the U.S. climbed fourfold over the past four years from $28 billion in 2003, according to mtn-i.
Structured notes are “no longer Wall Street’s best-kept secret,” Keith Styrcula, chairman of the Structured Products Association, said in a Sept. 10 presentation at an industry conference hosted by the law firm Morrison %26 Foerster LLP in New York. The New York-based association has more than 2,000 members, including Citigroup, JPMorgan Chase %26 Co., Merrill, Morgan Stanley and Goldman, as well as European banks BNP Paribas, Barclays Plc and Deutsche Bank AG, according to its Web site.
Principal Protection
About a third of the structured notes sold last year promised full or partial principal protection, according to StructuredInvestments.com.
Corporate treasurers at Wall Street firms sold the notes in part to avoid paying bond yields that surged over the past year, said Brad Hintz, an analyst at Sanford Bernstein %26 Co. in New York, For example, Merrill’s senior unsecured notes due in August 2017 trade at 88 cents on the dollar. That means the notes, sold a year ago with a 6.4 percent coupon, now yield 8.4 percent.
Hintz, who said he doesn’t buy structured notes because of their “opaque” pricing, called the sales a “perfectly reasonable thing for a corporate treasury to do.”
“The reason they’re cheaper for the firms is because the average person can’t take them apart,” Hintz said.
Anna Pinedo, a partner in New York for Morrison %26 Foerster who represents sellers of the notes, said disclosures about the risks of structured notes are ample. “People go into it with their eyes wide open,” she said.
Fine Print
The Lehman brochure, e-mailed to clients in July, carried a blue banner headline — “Equity Structured Solutions.” The securities being offered were called “100 Percent Principal Protection Notes Linked to the S%26P 500 Index,” and the minimum investment was $10,000. After a table of formulas provided to compute theoretical returns was a footnote stating that Lehman had an A credit rating from S%26P and an A+ from Fitch Ratings.
A list of “selected risk factors” started on the fourth page. The brochure said there would be “no interest or dividend payments” and warned that the notes “may not appreciate.” There were “built-in costs” to cover Lehman’s own hedging expenses plus a profit, along with $20 per $1,000 principal amount of “dealer incentives.” Lehman’s “economic interests” were “potentially adverse” to those of investors, and “you must rely on your own evaluation in the merits of an investment.”
Bullet Point
The last bullet point read: “An investment in the notes will be subject to the credit risk of Lehman Brothers Holdings Inc. and the actual and perceived creditworthiness of Lehman Brothers Holdings Inc. may affect the market value of the notes.”
Georgetown’s Angel says the issue is to what extent Wall Street firms emphasized the risks that they could go bankrupt and urged investors to read the fine print. A month before the Lehman brochure was sent out, the firm announced a first-quarter loss of $2.7 billion. Over the summer, as conditions worsened, Lehman Chief Executive Officer Richard Fuld, 62, was busy trying to sell a stake in the firm to shore up its capital base. Fuld was paid $34 million for running Lehman last year.
“Until recently nobody had too many concerns about our major investment banks,” Angel said. “We thought these were rock-solid institutions that had been there since the dawn of time and would be there forever. Recent events have pointed out that that’s not true.”
Lehman Bankruptcy
When Lehman filed for bankruptcy on Sept. 15, its structured notes were declared in default, according to data compiled by Bloomberg. Regulatory filings from Lehman listed $36.6 billion of “hybrid financial instruments, primarily structured notes,” on the firm’s balance sheet at the end of May.
Some of Lehman’s structured notes traded last week in the secondary market, mtn-i said in a Sept. 23 report. “Dealers quoted a trading range between 10 cents and 55 cents on the dollar” for the notes, according to the report. SecondMarket, a New York-based company that provides a marketplace for illiquid securities — those in which there is no active market — said in a Sept. 25 statement that it will begin trading Lehman structured notes, as well as bankruptcy claims.
Merrill’s deteriorating credit, which contributed to a 36 percent plunge in its stock price during the week of Sept. 8, forced Chief Executive Officer John Thain to sell the third- biggest U.S. securities firm to Bank of America Corp. It had $86.3 billion of senior structured notes outstanding at the end of June, according to regulatory filings. That’s an 85 percent increase from June 2007, and the percentage of total liabilities represented by the notes climbed to 29 percent from 19 percent.
Goldman, Morgan
Mark Herr, a spokesman for Merrill, declined to comment.
Morgan Stanley, the second-biggest investment bank after Goldman, had $42 billion of index-linked notes outstanding at the end of November, double the amount a year earlier, according to regulatory filings. The New York-based firm hasn’t provided updated figures.
On a Sept. 16 conference call, Morgan Stanley Chief Financial Officer Colm Kelleher said that while the firm didn’t sell bonds in the public markets during the last fiscal quarter, “we did issue incremental non-public structured notes at attractive pricing levels.”
Morgan Stanley could do without the structured market because it already has met funding needs through the second quarter of next year, spokeswoman Jennifer Sala said. The firm was converted into a bank holding company last week, a status that will provide “ongoing access” to funds from the Federal Reserve, Morgan Stanley said in a Sept. 21 statement.
`Very Comfortable’
Goldman, which also converted to a bank, had $22.8 billion of unsecured long-term borrowings, which the New York-based firm said “primarily includes hybrid financial instruments and prepaid physical commodity transactions,” according to regulatory filings. A year ago the figure stood at $13.5 billion.
“Structured notes are not a core part of Goldman Sachs’s funding,” spokesman Michael Duvally said. “We are very comfortable with our liquidity and funding profiles.” Goldman raised $10 billion of capital on Sept. 24, including a sale of $5 billion of preferred stock to Warren Buffett’s Berkshire Hathaway Inc. in Omaha, Nebraska.
Until this decade, the involvement of U.S. investment banks in structured notes was limited to underwriting the securities and collecting fees for structuring the derivatives attached to them, said Steve Kohlhagen, who worked as a trader at Lehman in the 1980s and retired in 2002 as head of fixed-income, derivatives and risk management at Charlotte, North Carolina- based Wachovia Corp.
`Popular’ Offerings
Then, the notes were mostly issued by large banks with AA or AAA credit ratings. The offerings became popular because “customers think it’s a good deal,” Kohlhagen said.
“They think, `wow, I’d like to get one of those things, because I can get benefits if the stock market goes up, and I don’t lose if the stock market goes down,”’ he said by telephone from his home in Colorado. “Anybody who is sophisticated knows that what they’re buying is a call option on the stock market, but it’s attached to a note, so it looks less risky.”
Investment banks started issuing structured notes backed by their own credit because “it’s just a simpler way of doing it,” said Robert Benson, a former head of the structured-products group at London-based HSBC Holdings Plc, the biggest European bank by market value.
Credit-Default Swaps
“At the moment, it’s a big advantage to get the funding,” said Benson, who left HSBC in 2001 to start his own firm, Arete Consulting Ltd., in London. “In the past maybe that wasn’t such a big part of the rationale.”
The riskiness of owning securities-firm debt has surged, based on prices in the credit-default swap market, which is used by traders to bet on the likelihood of a default.
Merrill’s credit-default swap prices have climbed to 411, more than seven times the price a year ago, according to Bloomberg data. Lehman credit-default swap prices were trading in the low 300s earlier this month, before the bankruptcy filing. Morgan Stanley credit-default swaps were at 500 on Sept. 26, in addition to an upfront payment equivalent to 17.5 percent of the face value of the debt. Goldman’s are at 449. Bank of America, Merrill’s acquirer, has credit-default swaps trading at 161.
Morrison %26 Foerster’s Pinedo said she doesn’t expect “a real downward trend” in the market, although she says “I’m sure there will be some effect.”
“It depends on what view you take on the future of these financial holding companies,” she said.
She said more firms may sell structured notes in the form of certificates of deposits — a banking product that’s guaranteed by the U.S. Federal Deposit Insurance Corp.
To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net .
[Reply]
Looking at the current situation, I feel that nothing much will be done or can be achieved. The parties involved are likely to delay ie drag by citing various reasons.
[Reply]
Dear Folks,
Fyi, I met up with GYC MD and he informed that they are not the FI but he is willing to “talk” to me because I am their client. I told him MAS asked me to write to him, and all the “bonds” are sold by his ex-Senior Assoc, of course GYC has to be responsible. Throughout the meeting he just trying to cover his back as I requested for compensation in my mail to him. He recorded my conversation with his team, I believe he needs to report to MAS my case of complaint. Meanwhile, he said the correct FI, OCBC Sec will appoint an independant party to look into my complaint … till now no news. Wait and wait …. for more bombs to explode !
[Reply]
sg Reply:
September 30th, 2008 at 2:25 pm
Hi anyone has the OCBC security email address which we can send the letter ? Thanks.
[Reply]
Parka Reply:
September 30th, 2008 at 2:27 pm
toonlengtan @ ocbcsec . com
without the spaces
[Reply]
lioninvestor Reply:
September 30th, 2008 at 3:20 pm
sg. I suggest sending a hardcopy rather than email.
[Reply]
I don’t understand what was SM Goh talking about, “No high Returns with High Risks”. The payout is only 4.88%, not 48%, the difference is only a miserable 0.88% if he compares to CPF. At that time, FD pays about 3% + (promotion rate for OCBC and HL Finance). Is the payout from Minibond consider high? I don’t think so. I think what most of us were seeking is a slightly higher payout as a regular income stream in what we considered a rather safe investment. Most of us thought we had invested in bonds actually.
From what I read so far, I think most of us were using Cash to invest, why did he talked about putting the money in CPF? Can we put our cash into CPF and get a 4% retrun? Can anyone care to comment on what was he talking about?
The reply I got from UOB Kay Hian, “All information with regards to the risks of this investment product have been included in the Prospectus and Pricing Statement which were distributed upon note subscription. We would like to assure you that we have adopted the necessary regulatory procedures to address Investors’ unease. ” ……
Clearly, Kay Hian side stepped my big question : WHY “the money did not go into buying those blue chip bonds and notes as stated in the Reference Entities. They went into buying some CDOs instead!” Does this not constitute Mis-representation? Can the risk statement relinquish all parties who make money by selling it from all responsibilities? Can anyone with legal knowledge comment.
I’m losing hope not just about our money, but also in this country, and the way things are handled, in comparison with the compassion of the Chinese, Taiwanese and HK government and banks. Some actions are taking place almost every other day up north but not here. Like what someone mentioned here, the highup seems to have lost touch with the feelings of the ground. May be MAS or the government is waiting for HK or Taiwan or China to show them how to solve this mess, I’m not sure?
Noticed the comments seems to be declining, is this an indication that most of us have given up hope?
[Reply]
Foolish Investor Reply:
October 1st, 2008 at 12:44 pm
Very Sian
(1) I believe SM Goh is referring to retirees who took out their monies
from CPF after age 62 and invest in structured products.
(2) You are right that returns are not fantastic, which was why most of us
did not query much when we purchased, thinking that it’s an indir
investment in bonds.
In mid-2006, SGS 5-yr bond was giving yield of slightly above 3%.
Mini-bond series 2 at 4.88%. The incremental is lesser than 2%.
And I thought I got this incremental 2% because
(a) I sacrifice liquidity
(b) I take up some credit risk of RE
and that’s all.
Only last 2 weeks then I realized I was really foolish…
[Reply]
Help-Minibond Reply:
October 1st, 2008 at 8:46 pm
VerySian,
I think you should write in to UOB KH again to strongly state that your complaints and questions have not been addressed. State your frustration to MAS and FIDReC that UOB KH is simply sidestepping your complaint.
Distributing the documents during the subscription does not remove them from the responsibility to explain the true product nature and high risks. In fact this further show thier intent to misrepresent. Do MAS agree FI comply regulation in sale of such complex products by just providing the pricing statement and prospectus?
If you have not, you should copy to MAS, FIDRec and MP to get proper attention to investigate your case
[Reply]
Hi all,
Found from Monetary of Singapore (MAS): “Singapore Corporate debt market review 2007”.
http://www.mas.gov.sg/resource/eco_research/surveys/Debt07.pdf
From the “pie chart”,
Equity Linked Notes issuance (SGD denominated): 3.7B in 2007,
is 28% of SGD denominated structured debt.
That makes Structured Debt issuance (SGD denominated, 2007): about 13.21B.
Equity Linked Notes issuance (non-SGD denominated): 2.6B in 2007,
is 15% of non-SGD denominated structured debt.
That makes Structured Debt issuance (non-SGD denominated, 2007): about 17.33B
Other structured debts besides ELNs are:
CDO, credit linked notes, currency linked notes, callable notes, asset securitised notes, convertibles etc..
We can get examples of prospectus/pricing statement of structured product from Monetary of Singapore (MAS)’s Opera under “debentures”.
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/LeftFrame?OpenFrameset&LayerVal=D&Frame=RightPane&SRC=/opera/sdrprosp.nsf/vewPublicLatestDebuntures?OpenView
We can get a glimpse of details of the Linked Notes from these prospectus and pricing statements.
I guess investors have to take a close look on other Notes that they have bought.
Pay particular attention to: counterparty, reference entity/reference obligation, event, risk factor , issuer, guarantor, scenario etc.
(can use “search” function on the pdf files of prospectus/pricing statements)
Beware:
Is there any other potential credit event that can wipe out your investment in other Notes (besides Lehman Minibonds, DBS High Notes, Morgan Stanley Pinnacle Notes and Merill Lynch Jubilee Notes) ?
[Reply]
News article indicating HK banks willing to discuss compensation with the Minibond investors:
http://realtime.zaobao.com/2008/10/081001_25.shtml
HK and Taiwan authorities have managed to help the affected investor victims, only Spore has left the investors to fend for themselves
[Reply]
I wonder whether there is any poll online on:
1. which are the banks/FIs that their officers have misrepresented on this issue. (# of occurrences, amount, name of Notes etc.)
2. which are the banks/FIs that did the ethical way
3. which are the banks/FIs that their staffs care or not care about their customers
4. which are the banks/FIs that their staffs are or are not knowledgeable abt their products.
I wish to avoid any future transactions with those banks/FIs that are unethical, uncaring and not knowledgeable.
Anybody knows who is championing for Lehman Brother Notes’ investors in Hong Kong, Taiwan etc.. ? Maybe can learn from their experience.
[Reply]
Hi Help-Minibond
Thks. I live in marine parade grc, you can guessed who i copied my letter to? But until today, no response. I have also not heard anyone here got any response from those high up people directly. That’s why i said i’was very disppointed with this country and how things are handled. Do they care or not, i don’t know?
Do u know how much the ministers in HK and Taiwan are paid? They are so compassionate but ours like sxxx. May be i should had stayed in HK previously. Why do we have to write petition to beg for help, isn’t the government’s job to help the people when they’re in trouble or during crisis that they deserve the super high salary ? We have a very special one indeed. Looking at the situation, i think we have to treat it as an investment of no return. Be mentally prepared, all of us….
[Reply]
Help-Minibond Reply:
October 2nd, 2008 at 9:04 am
Hi VerySian,
My suggestion: If more than a week has past, send a follow up letter indicating your complaints are not addressed in their last reply, reiterate your complaints and request they start an investigation.
Include your frustrations of any delay or that they are side-stepping your complaints so that MAS, FIDRec and MP are aware your FI is not attending to your complaints, unlike what MAS promised in their press statement
[Reply]
Help-Minibond Reply:
October 2nd, 2008 at 9:19 am
VerySian,
By the way, did you receive the pricing statement and prospectus from UOB Kay Hian before or after you signed the application form?
In my case with bank, these documents were given only after I have signed - how can I have understand them if they are not provided, if these contain important details as the FI now claim, their sale process is badly flawed
[Reply]
Desperate Reply:
October 2nd, 2008 at 9:26 am
The bank probably has given you 7 days to 14 days cool down period if you want to withdraw. They are very good in protecting their AXXXXXX.
[Reply]
Choon Reply:
October 2nd, 2008 at 11:30 am
Hi
The bank did not given me 7 days cool down period and not canncellation after I signed it.
[Reply]
I got the same reply as VerySian from GYC … worst still, they pushed me away to OCBC Sec, saying that GYC only earn very little commission as they are introducer to the “Bonds”, FI should be OCBC Sec. Then why MAS ask me to write to GYC who recommended me those products. We are just like a ball being pushed from one court to another ! Btw, anyone know about today’s meeting at Toa Payoh MRT to sign petition to PM ? Who initiated this ?
[Reply]
Choon Reply:
October 2nd, 2008 at 1:12 pm
Hi Engel,
Where you got the inform for the meeting?
[Reply]
ENGEL Reply:
October 2nd, 2008 at 2:06 pm
Got a msn and call back to check but seems all are by word of mouth. Not sure who has the initiated.
[Reply]
Dear All, I have read Mr Tan’s blog advising those who felt that the have been misled or “cheated” to lodge a police report. From then, I started to realise that all that most of us have not got the prospectus but only receipts after signing. Is there a case here ?
[Reply]
Desperate, as far as I know, only purchase of insurance products have “cooling” period. Does this apply to these “bonds” as well ? I am not aware at all.
[Reply]
Hi all,
I have bought from HLF for minibond and pinnacle. Can i check whom can i send my complaint letter to ?
[Reply]
Help-Minibond Reply:
October 2nd, 2008 at 1:36 pm
sg,
You can attention your letter to CEO:
customerservice@hlf.com.sg
christina@mas.gov.sg
charislee@fidrec.com.sg
MP (do a search on line, they are listed)
If you don’t cc to MAS, FIDRec and MP, then you will get “We understand your concern …. Please be assured …” type of useless reply with no substance. Copy the authorities and you will get a prompt reply that they will start an investigation
[Reply]
lioninvestor Reply:
October 2nd, 2008 at 3:02 pm
Try to send printed letters and not email if possible. You want the letters to reach the top.
[Reply]
I posted the below at the Post “Is there hope for Minibond Victims”. Thought you may want to read. From Hong Kong The Standard. They are doing a great job for their troubled investors.
Banks in `secret’ deals to avoid Lehman suits
Bonnie Chen and Alfred Liu
Thursday, October 02, 2008
Three banks are secretly negotiating with angry investors to prevent being taken to court over the distribution of Lehman Brothers minibonds, according to sources.
They are among 21 banks and financial institutions with exposure to Lehman Brothers investment products but which are said to have only a few investors and prefer a settlement rather than a court case.
According to the source, the banks involved are Dah Sing Bank, DBS Bank (Hong Kong) and Mevas Bank, which is part of the Dah Sing Banking Group (2356).
Democratic Party vice chairman Sin Chung-kai confirmed yesterday one minibond investor had asked the party to cancel his complaint as he had accepted a settlement offered by Mevas Bank.
“The man has not given us details but said the terms were acceptable,” Sin said.
But two other Mevas customers, identified as Chu and Chan, said they had not been contacted by the bank as yet.
Dah Sing Banking Group declined to comment, saying its staff were on holiday.
The Democratic Party has received 2,300 complaints on Lehman Brothers-related investment products involving more than HK$1.1 billion.
“I believe the small and medium-sized banks have fewer cases to handle so they are prepared to reach a settlement,” the party’s newly elected legislator, Kam Nai-wai, said.
Chan Kam-lam of the Democratic Alliance for the Betterment and Progress of Hong Kong, which has received 500 complaints, said he had not heard of any bank reaching a settlement with clients.
The Hong Kong Monetary Authority, which is investigating marketing practices concerning the products, said it would welcome moves initiated by the banks. “But we will continue the investigation even if the banks have reached a settlement with clients,” an HKMA spokesman said. “So far no bank has informed us about any settlement.”
The Securities and Futures Commission said it believed Lehman Brothers had arranged HK$12.7 billion worth of structured products.
The Democratic Party has said it will help investors sue the banks while the Consumer Council has promised a thorough probe and the use of its legal fund to help those found to have been misled.
[Reply]
steve Reply:
October 2nd, 2008 at 3:47 pm
Thank for the posting Kenneth.
It just show the difference between MAS and that from HK and Taiwan.
One way to pressure MAS to take action is to forward this article to local and international media to broadcast the inaction of Singapore MAS and also make aware if MAS does not take action to protect our citizen interest, Singapore would lose credibility as a Asia Financial HUB.
Would the persons who have contacts with the local media and the person written to MM Lee take up the suggestions?
[Reply]
observers Reply:
October 3rd, 2008 at 6:11 pm
We noticed that while many interesting suggestions were posted on this forum with regards to the resolution of the Minibonds issues, we have not seen anyone going any further (other than talking). We are just wondering if there any brave and selfless people from this forum who are willingly to volunteer & lead and not just sit back and wait for others to take action on their behalf ?
[Reply]
No problem. All of us are in the same boat.
I only hope we are given a fair hearing.
It will be especially hurtful if we realize the DBS [Hong Kong] settled out of court but DBS [Sgp] refuses to do it in Sgp. Then the message will come across to be very confusing i.e. Singapore victims of Lehman ok to settle in court while Hong Kong situation better settle out of court as the business is in another person’s country.
Hope local authorities are mindful about what is happening in Hong Kong. As of now, still have nothing from MAS or the press.
[Reply]
ENGEL Reply:
October 2nd, 2008 at 4:16 pm
In doubt will get help from MAS, as in the 1st place they should not approved such products to be sold to retail customers. Till now, they are dead quiet …. or are they taking the chance that Singaporeans will not dare to act and the things will died down after a few months ?
[Reply]
Can I ask how do I send my mail to CEO of maybank?
Does anyone have an address and name?
Thanks
[Reply]
lioninvestor Reply:
October 2nd, 2008 at 4:44 pm
2 Battery Road
Maybank Tower
Singapore 049907
Country head is Pollie Sim
[Reply]
Here is what Henry Paulson, US treasury secretary said about these toxic waste.
http://drop.io/minibond
He said from email retrieved from Lehman as far back as 2 years ago, they knew that these CDO are rubbish and they need to get rid of them quickly….
The scale of devastation is worse than China milk power!
If only America hanged these criminals like what China do if they are caught.
[Reply]
Here is what Henry Paulson, US treasury secretary said about these toxic waste.
http://drop.io/minibond
He said from emails retrieved from Lehman as far back as 2 years ago, they knew that these CDO are rubbish and they need to get rid of them quickly….
The scale of devastation is worse than China milk power!
If only America hanged these criminals like what China do if they are caught.
[Reply]
to all the brothers here we must act fast if not after some time the whole matter will be lied down and we will have no more advantage already !!!!!!! what is MAS doing ???
[Reply]
Sg,
Thanks. I will lose big on Minibond 5 if it liquidates next week. I hope petition will move PM Lee to act fast.
[Reply]
I am sure by now they know the seriousness and how wide spread is the problem. This is especially embrassing when Hong Kong is reporting settlement out of court while the govt is still mute about it except for a statement from SM. Hope they will make a second statement soon.
Usually when there is a statement to be made, someone will speak, follow with a few more MPs or cabinet. Finally PM will speak. This time only SM speaks and no immediate followup.
Very disheartening to see that no MPs or Opposition is standing up for us. We just have to do it alone. Very sad indeed.
Regards,
[Reply]
Kenneth, election is still far away. I have tried writing in as suggested. I asked them why the money raised was not used to buy those good and solid corporate bonds and notes but went into CDOs. All they say is plse read the risk clause in a polite way and your signature is there. So how? Sue them over $50K?
Really very sian like my name, a “first” world country like S’pore so difficult to get justice, have to write time-wasting letters, lodge police report, lodge report with Fiderc, write to MP, write to FI, etc, etc. Is there going to be any use at all, lest we all die of exhaustion or depression from doing all these. Where’s the justice? Who cares here?
I just received a letter from Kay Hian (2 days after I filed the complaint to them and Mr Goh) that my Jubilee 3 likely to get ZERO$ back. I heard one PR lose $1M, I bet he’s going to pack up and go home to tell his fellow countrymen what kind of reality he encountered here. Very sad that my beloved country becomes like that in just a few decades, compare to the 3 countries up north. I have done everything (procedures) as suggested by Mr Tan and some of you here. May be it’s time to pack up and go like my friends. The irony is I was trying to persuade them not to migrate, just 2 years ago but they still go afterall (cowards???). I feel like slapping myself now. Sigh…
[Reply]
Kenneth Reply:
October 2nd, 2008 at 9:04 pm
Same, same here. Mentally already wrote off the lost but want to work together to hope for some good outcome. By writing off now, it will relief lots of stress. Anything from here will be bonus.
Today CNA reported that Hong Kong Govt is meeting with banks on the mis-selling Lehman bonds.
Let’s hope all the progress in Hong Kong can encourage the Sgp govt to adopt a fresh approach.
Regards,
[Reply]
Latest Merrill update on Jubliee 3 Series. 2oct 08
Q7. Can you provide more information on how the Credit Event Redemption Amount is calculated?
The Credit Event Redemption Amount is calculated in accordance with the formula described in the Pricing
Statement. See also Q3 above. The Credit Event Redemption Amount is based (among other things) on
the amount realized on the sale of certain debt obligations of Lehman. Because Lehman has filed for
bankruptcy, these Lehman obligations are trading significantly below their face value. Generally speaking,
these Lehman obligations are currently valued below 20% of their face value. This amount will be further
adjusted by (i) any loss in the liquidation of the Securities (see also Q8 below), and (ii) any termination
amounts due or payable under the swap, to arrive at the Credit Event Redemption Amount. Based on
current market conditions we expect the Credit Event Redemption Amount to be zero.