Friday, 29 September 2023

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Seeking a fair settlement

Andrew Loh

Eleven months after US investment bank, Lehman Brothers, collapsed, some investors of failed structured financial products in Singapore are still hoping for the authorities to help them recoup their losses. Their latest attempt at doing so is to petition the Singapore Prime Minister, Mr Lee Hsien Loong.

Some 10,000 local investors were affected when Lehman Brothers went bankrupt in 2008. Some of these investors have settled their claims with the financial institutions here.  They were the lucky ones. Many others are still seeking a fair settlement.

About 350 of these investors gathered at Speakers’ Corner on Saturday to sign the petition to the Prime Minister. They hope that he will intervene to help them settle the year-long dispute with the financial institutions (FI) here. They had previously signed petitions to the Monetary Authority of Singapore (MAS) complaining of misrepresentation when they were sold the credit-linked notes. These notes include the Minibonds by Lehman Brothers, DBS Bank’s High Notes, Pinnacle Notes created by Morgan Stanley, and Jubilee Notes by Merill Lynch.

Led by the former Chief Executive of NTUC Income, Mr Tan Kin Lian, the investors were upset that the Singapore authorities were not as effective as the regulators in Hong Kong.  “Justice in Hong Kong. Wayang in Singapore”, one of the placards read. “Protect Singaporeans, not banks”, said another.

In Hong Kong, 16 banks there which sold the toxic products to thousands of investors have agreed to return more than US$800 million to affected investors.  29,000 eligible minibond investors will receive 60 per cent of their original investment and investors over 65 years of age will be repaid 70% of the principal amount.

“The Hong Kong settlement is fair,” said Mr Tan, who hopes to obtain 1,000 signatures for the petition to the PM. “It’s a matter of people realizing what is fair.” He reiterated his earlier stand that the responsibilities, however, should be shared between the institutions and the investors in Singapore’s case. Referring to Hong Kong, he said, “The Securities and Futures Commission took the lead in the settlement. They recognized their responsibilities, not only towards the financial institutions but also towards the investors.” He hopes that the Singapore authorities would do the same.

So far, however, they have been disappointed with the response from the authorities and the banks. “After spending in a lot of effort in presenting our case,” the petition to the PM says, “we were disappointed to see our request for compensation totally rejected by the financial institution[s], or to receive an unacceptably low offer, being less than 20% of the invested amount in most cases.”

In July this year, the MAS released its report on investigation into the conduct of the FIs in the sale of the failed products. It found that the FIs did not adhere to guidelines in the sale and marketing of the structured products. The MAS subsequently banned 10 FIs from selling these products for between 6 to 24 months. However, investors were upset that there was “no recommendation by the MAS to these financial institutions to make a fair amount of compensation to the investors for the loss suffered by them due to the non-compliance.”

The petition calls for a “general settlement” which “is a better approach as the investigation report from the Monetary Authority of Singapore and a similar report from the Securities and Futures Commissions of Hong Kong have suggested that there is a strong possibility of the systemic mis-selling of these credit linked notes that affected nearly all investors.”

Referring to the settlement in Hong Kong, the petition urges the Prime Minister to “ask the Monetary Authority of Singapore and/or other relevant body to request the financial institutions to make a similar offer of compensation to the investors who are still pursuing their claims for compensation.”

Some of these investors have lost their life savings as a result of the investments.

When asked by The Online Citizen how hopeful he was that the Prime Minister will intervene, Mr Tan says, “It may be hard. But I am always hopeful.”

“If offered, we will accept this compensation and will be willing to bear our share of the loss,” the petition says.


You can read the petition here.

Watch the video clip of Tan Kin Lian leading the recitation of the Pledge before the day’s event:


Pictures from the event at Speakers’ Corner:

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