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TOC reader Observer shares his views on structured products saga.

Direct negotiation more beneficial to investors

The following is a comment by Observer (SG-HK) which was posted under the article, “Many investors have lost faith in Government and MAS: Tan Kin Lian”. We publish it without edits.

Kin Lian’s relentless effort in wanting to help affected investors is laudable without a doubt. I too have personally called him up to share with him concerns and that he may be targeted by others as acting upon personal interest (which I know is not true).

The same is not to be said to one of the Hong Kong legislative member who is also a lawyer by professional and charge a fee in helping people who are affected to lobby for support from fellow legislative members to invoke a rule that allows them to directly investigate all transactions that took place in all involved banks regarding this investment issue. It is after his cover was blow that he decided to withdraw his participation of the investigation citing a conflict of interest.

Like many others, I have nothing to do with this minibonds debacle but have been following closely the development. I contemplated whether to continue to pen comment with regard to this issue and to share what I have heard and read from the development in Hong Kong. May be these information may have already become public domain knowledge but out of concern as a fellow Singaporean for those affected, I decided to share it from my perspective.

It is true that MAS was slow in reacting (that is a fact) and that Hong Kong Legco (legislative Council) had invoked a rule that was vested in all law makers to investigate right to the details of Bank’s transaction (that some Hong Kong citizens had expressed that it may be seen as intrusion of personal data as well as intervention of Banking industry operation). Now it has been supported through voting and the litigation process is due to commence in Hong Kong soon. Many institutional experts had predicted that they expect the litigation process will go on for a prolong period (as it is believe that involved Banks are expected to mount a concerted effort to safe guard their interest) that many agree that it may affect any expedition of any out-of court settlement (if not entirely halted) between banks and affected investors. There are indeed some investors had settled out of court with some banks and do get back their investment (although the amount was not disclosed). At the end of the day, it could turn out to be a situation that there are no eventual winners.

The Hong Kong government officials (including Donald Tsang) had voiced their concerns whether this will actually hurt the investors and threaten Hong Kong’s reputation as Asia Financial Hub that will have far more severed repercussion. There is some truth to it if a nation prides itself as a strong advocate of free market economy. No one knows at moment and even legislative members who voted to support this litigation process are out in force to ensure that they will exercise extreme caution when handling this case. All eyes are now trained to see how this debacle will evolve. I believe MAS or the Singapore government is taking a leaf from Hong Kong and decided to apply the wait and see strategy.

Albeit it is quite apparent that Banks are applying the stalling tactics in an attempt to drain the energy of angry investors, I think an effort to arrange direct negotiation rather than collective class action suit may turn out to be more beneficial to affected investors (albeit, it will be hard press that investors are able to get full refund of their lost invested sum). It is indeed a very sticky situation. I think if it is a genuine case of mislead investment with proven hard facts, the authority indeed should or can make an attempt to assist to look into it on a case basis (if a similar situation like Hong Kong is to be avoided) rather than taking an entire hands off approach (when the dust settled and proven that it does no good to all parties involved). This is just my honest thought.

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