Structured Products ( incl Minibonds, High & Pinnacle Notes)

[winston]

HONG KONG ECONOMIC TIMES

-- None of the 16 banks that issued Lehman Bothers mini-bonds and met with the Securities and Futures Commission on Monday has agreed to buy back the bonds at 100 percent of the original cost, with some even unwilling to accept Bank of China's solution to compensate customers at a cost of 60 to 70 percent, according to people who attended the meeting

[kennynah]

well.... alot has to do with the gahmen stand on this... if the gahmen actively "encourages" the grieved parties to take remedial actions, then the wrongdoers will be more incline to seek settlement... but if the gahmen, no give a f**k...then, why would these bonds sellers even bother to compensate...

iirc..here in singapore, the gahmen essentially said..."you bet, you risked and it turned bad...too bad lor"...

[winston]

Singapore bars 10 firms from selling structured notes

Channel NewsAsia - Wednesday, July 8SINGAPORE: The Monetary Authority of Singapore (MAS) has, for the first time, imposed bans on the sale of structured notes by 10 financial institutions (FIs) which had distributed toxic structured notes linked to the collapsed US financial institution Lehman Brothers.

The bans took effect on July 1 and will remain in place until MAS is satisfied there are adequate measures to address the findings of its investigation into the sale of the failed structured products last year.

The 10 FIs are ABN Amro Bank, CIMB—GK Securities, DBS Bank, DMG and Partners Securities, Hong Leong Finance, Kim Eng Securities, Maybank, OCBC Securities, Philip Securities and UOB Kay Hian.

( So who is not banned ? )

MAS revealed this as it released the findings of its investigations into the sale of the failed structured products last year.

The regulator found that the 10 FIs had policies, procedures and controls in place for the sale and marketing of the structured notes, but the extent of due diligence and level of internal controls differed among them.

As a result, MAS said there were various forms of non—compliance with its notices and guidelines on the sale and marketing of these investment products.

MAS said some of the specific failings included insufficient steps taken by some FIs to ensure that all their financial advisory representatives were properly trained before marketing and selling these products.

The regulator also noted that some FIs had assigned risk ratings to the products that were inconsistent with risk warnings stated in the prospectus and pricing statement.

According to MAS, there were also weaknesses in how some FIs ensured that their sales representatives were properly equipped with accurate and complete information about the structured notes.

As a preventive measure, the regulator said FIs must rectify all weaknesses identified in the investigations, appoint an external person identified by MAS to review action plans and report on implementation, and appoint senior management staff to oversee compliance with MAS’ direction.

MAS said that until it is satisfied with the measures put in place, the FIs will not be able to distribute structured notes.

MAS also gave details about how the FIs have compensated investors who bought structured notes.

Hong Leong Finance paid S$57.6 million to 2,048 investors who bought the structured notes that it distributed. This is the highest amount of compensation paid out to retail investors. Hong Leong Finance is also barred from selling structured notes for two years.

Maybank offered S$25.3 million to 1,100 investors, while ABN Amro paid 262 investors S$14.1 million.

DBS Bank compensated 197 investors S$7.6 million.

The three banks will be banned from selling structured notes for six months.

According to MAS, the total settlements for decided cases amounted to S$105 million.

The six brokerage firms, which also sold the structured notes, paid a total of S$2.74 million to 297 investors. UOB Kay Hian and DMG & Partners will get a six—month ban, while the others will be barred from selling structured notes for a year each.

— CNA/ir

[millionairemind]

I think it is pointless lah... no body is buying them any way..... so what's the point of the ban??

Y not outright FINE and return the money to the poor auntie or uncle??

[winston]

Customers sue Singapore's DBS over investment loss

SINGAPORE, July 10 (Reuters) - More than 200 customershave sued Singapore's DBS Bank, a unit of DBS Group Holdings , in a bid to recover investment losses of around S$17 million ($11.6 million) arising from the collapse of Lehman Brothers, the Straits Times reported on Friday.

Siraj Omar, a director at Premier Law, told Reuters his firm had filed a claim in a Singapore court on behalf of 204 investors but declined to discuss the case. The investors had purchased a callable basket of credit-linked notes, called High Notes 5, from DBS.

A DBS spokeswoman confirmed receipt of the claim, saying the suit was without merit and that DBS planned to defend the lawsuit.

[winston]

Hong Kong Banks Agree to Repurchase Lehman Minibonds (Update2) By Kelvin Wong, Theresa Tang and Sophie Leung

July 22 (Bloomberg) -- BOC Hong Kong Holdings Ltd. and 15 other banks agreed to pay at least 60 cents on the dollar to investors in notes linked to failed Lehman Brothers Holdings Inc. after a 10-month dispute that stirred street protests and forced lenders to change the way they sell investment products.

The banks will repurchase the so-called Lehman minibonds in two stages, Securities and Futures Commission Chief Executive Martin Wheatley said at a press conference today. The total compensation will amount to about HK$6.3 billion ($813 million), said central bank Deputy Chief Executive Y.K. Choi.

Hong Kong, where banks sold $1.8 billion of the notes, is an example of how the financial devastation resulting from Lehman’s Sept. 15 bankruptcy rippled across the globe. As the securities plunged and allegations of mis-selling mounted, citizens who lost their savings took to the streets and lawmakers scolded the heads of the city’s central bank and securities watchdog in public.

The minibond debacle “exposes the problems with both the regulations and banks’ selling methods,” Peter Wong, head of the Hong Kong unit of HSBC Holdings Plc, said in a July 13 interview.

HSBC, the biggest bank in Hong Kong by branches, and its local subsidiary, Hang Seng Bank Ltd., didn’t sell the notes.

Note buyers will receive at least 60 percent of the principal, Wheatley said. About 29,000 minibond investors are eligible for compensation. Banks’ losses related to the refunds are “difficult to estimate,” Choi said.

‘Not Acceptable’

Beyond the 60 percent floor, refunds will depend on how much collateral banks can collect from Lehman’s liquidators. If banks recover the full collateral, minibond investors will be fully compensated. Banks will use fees earned from the note sales to fund the recovery effort.

“If the agreement is accepted, the vast majority of investors will be able to get back 70 per cent or more of their original investments,” Hong Kong Financial Secretary John Tsang said in a statement today. “The agreement will put an end to more than 10 months of distress for investors.”

The proposed compensation is “not reasonable,” Peter Chan, chairman of the Allied Victims of Lehman Products, said in a phone interview. The group, which Chan said represents about 8,000 minibond investors, will reject the proposal, he said.

“I can’t agree, and won’t accept the settlement plan as it’s not acceptable and fair to us,” Chan said. “How can the SFC let the banks get away with it so easily?”

Mentally Ill Buyers

Lehman’s bankruptcy caused the value of the notes to collapse, even though they were tied to the debt of other companies that remained viable. The minibonds were distributed by local brokerage Sun Hung Kai Financial Ltd. and sold by 19 Hong Kong banks.

The inquiry into the alleged mis-selling prompted the Hong Kong Monetary Authority to propose that banks physically separate deposit-taking and investment businesses at their branches and tape all conversations related to sales of investment products.

The notes, guaranteed by Lehman and linked to the debt of major Hong Kong companies like Hutchison Whampoa Ltd. and Sun Hung Kai Properties Ltd., were sold to more than 40,000 investors. Among buyers were elderly and poorly educated people as well as mentally ill individuals, according to an investigation by the city’s central bank made public by lawmakers on April 28.

Buyers of the Lehman minibonds were required to invest at least $5,000, compared with $100,000 for most bonds sold to institutions, making them popular among retail investors.

Yam Testifies

Sun Hung Kai Financial in February agreed to fully repay minibond buyers, putting pressure on other sellers to follow suit. Sun Hung Kai paid about HK$86 million and KGI Asia Ltd., the local unit of the Taiwan-based brokerage, spent about HK$1.5 million to repurchase the notes.

Backed by lawmakers and volunteer groups, investors have staged almost daily protests since October, demanding refunds.

At a July 1 march, about 2,000 protesters wore black T- shirts and carried placards accusing banks that distributed the products of fraud and betraying public trust. Some tried to cross a police barrier to break into the Bank of China building in the city’s Central business district.

The scandal touched some of the city’s most senior financial officials.

Joseph Yam, the outgoing head of the central bank, has testified six times in front of a special committee set up by the city’s parliament, and lawmakers accused his organization of negligence. Wheatley testified four times.

‘Give and Take’

On July 3, local newspapers including Sing Tao Daily reported that 16 Hong Kong banks had sent a formal proposal to the SFC offering investors compensation of 60 percent to 70 percent of face value.

Quizzed by lawmakers about the proposals at the time, Wheatley said partial compensation could be unfair to some investors.

“When you have a negotiation there’s bound to be posturing from both sides,” Regina Ip, an independent legislator who was involved in brokering the settlement, said in a July 16 interview. “At the end of the day if you want to get to yes, there has to be give and take.”

In Singapore, where a total of S$508 million ($352 million) of Lehman-linked products were sold to investors, the central bank in early July banned DBS Group Holdings Ltd. and nine other financial institutions from selling structured products for six months to two years.

The ban won’t be lifted until the central bank is “satisfied” that the institutions have taken steps to improve their processes for offering financial advisory services. A group of 204 investors in July sued DBS, Singapore’s largest bank, over losses on Lehman minibonds.

Monetary Authority of Singapore deputy Chairman Lim Hng Kiang said July 20 that a total of about S$107 million in settlement offers have been made to some 3,900 investors.

[millionairemind]

Wonder what kind of arm twisting was done behind the scenes??

Aug 1, 2009
GE to return $250m
Surprise move related to investment-linked products sold to 18,000
By Lorna Tan, Senior Correspondent

IN A stunning development, about 18,000 Great Eastern Life customers who bought investment products similar to the ill-fated Lehman Minibonds will get all of their money back. And they did not have to ask for it. The move by GE Life, which will cost the insurer a whopping $250 million, is purely voluntary.

The products in question are called GreatLink Choice (GLC) - a series of single-premium investment-linked insurance products sold in five tranches between 2005 and 2007, netting $594 million in investments.

Like Lehman Minibonds, GLC was linked to a class of complex financial instruments whose value has been badly hit by diving financial markets. So despite diversifying the risk and building in various loss-protection features, the values of the GLC plans have plummeted between 40 and 80 per cent.

'Great Eastern understands that these steep discounts have given rise to concerns among GLC policyholders,' group chief executive Ng Keng Hooi said in a statement on Friday.

'To address GLC policyholders' concerns in these extraordinary times, we have taken a decision to make this one-time offer, as a gesture of goodwill, to redeem these products. Our offer is voluntary, and is made without any admission of liability.'

The GLC plans, available for a minimum investment of $5,000, had aimed to provide investors with fixed annual payouts ranging from 3.5 to 4.9 per cent. They also aimed to return to investors their principal on maturity, though both the annual payouts and principal repayment on maturity were not guaranteed.

The plans came with a five- or seven-year maturity period and the first tranche would have matured in September next year. But policyholders can now opt, anytime from Monday to Aug 28, to redeem their investments and receive a sum equal to their original investment, less total payouts received to date.

The unprecedented move comes three weeks after a lengthy investigation by the Monetary Authority of Singapore (MAS) into the selling of similar structured products in the banking and securities sectors.

About 9,900 people lost most or all of their investments totalling about $520 million in structured products such as Lehman Minibonds and DBS Hi Notes 5. Ten financial institutions were penalised, and 3,900 investors received a total of $107 million as compensation.

GE's surprise offer on Friday to redeem up to $250 million is more than twice that amount, and that immediately drew high praise from consumer advocates such as the Securities Investors Association of Singapore (Sias).

[winston]

Two Bank of China Staff Arrested by Hong Kong Police, SCMP Says
March 27, 2010, 2:24 AM EDT

March 27 (Bloomberg) -- Two employees of Bank of China Ltd.’s Hong Kong unit were arrested over the lender’s sales of securities linked to failed Lehman Brothers Holdings Inc., the South China Morning Post reported, citing unidentified police.

“We don’t comment on media reports regarding the enforcement actions of the police,” Man said in a phone interview.

Banks in Hong Kong sold more than $1.8 billion of so- called Lehman minibonds before the company’s 2008 collapse triggered a slump in the value of the notes and sparked almost daily protests by buyers who said they had been misled. The Commercial Crime Bureau yesterday arrested two women on suspicion they fraudulently or recklessly induced others to invest money.

http://www.businessweek.com/news/2010-0 ... -says.html

[Chinaman]

Pui, my 20k in Jubilee note series 3 bought in 2007 from that idiot DWG broking firm (vaporized in the air) despite went to Fidrec and court hearing, LL me talk loss those professional…reason being not compensated a single cts that the judge told me I got diploma and know how to play share, so zero compensation somemore has to pay $50 to Fidrec for admin fee…..pui pui pui…knn, MAS really double standard, bully kechil.

DBS HK Compensates HK$651m to Clients Who Bought Lehman-linked Notes
Posted: 15 Jul 2010
Hong Kong authorities have come to an agreement with DBS HK on the amount of compensation to customers who bought Lehman-Link notes structured by DBS. $651 million Hong Kong dollars or about S$115 million will be paid out to some clients who bought these products.
The 2160 low risk customers who accept the resolution scheme will receive their full investment back together with interest. The rest who have a higher risk profile will have their cases reviewed on a case by case basis.

In Singapore, some DBS customers were sold a product High Notes 5 that lost all its value when Lehman Brothers went under. According to a July 2009 MAS report, a total of $103.7 million worth of HN5 were sold to 1,083 retail clients between 30 March and 30 April 2007.

These investors were not so lucky as their Hong Kong counterparts when it comes to compensation. Even though all of them had their cases reviewed individually, the amount of compensation DBS paid out to them amounts to only S$7.8 million out of their original investment of S$84.1 million.

DBS HK unit agrees to pay HK$651m to clients who bought Lehman-linked notes (Channel News Asia)

[kennynah]

Pui, my 20k in Jubilee note series 3 bought in 2007 from that idiot DWG broking firm (vaporized in the air) despite went to Fidrec and court hearing, LL me talk loss those professional…reason being not compensated a single cts that the judge told me I got diploma and know how to play share, so zero compensation somemore has to pay $50 to Fidrec for admin fee…..pui pui pui…knn, MAS really double standard, bully kechil.

bro C : mai kek sim.... 20K...you earn back easily.... long time ago diploma holder already big time liao...like today's MBA like dat...

only those really lose money jialat jialat before will become better investors... no pain, no learn mah...and then from the acquired lessons, take back from market...

have a tiger....cool down...hahahaha...