Wednesday, September 24, 2008

93.8 Live on Lehman Minibonds and DBS HN5

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93.8 Live did a short segment on the Lehman Minibonds and DBS HN5. The show included an interview with Tan Kin Lian. (click on the start button to hear).

"They are very dangerous and high risk products" - Tan Kin Lian

For those of you who still have doubts that there was misrepresention involved in the sale of these products consider this : the Lehman Minibonds were not even bonds. It was a synthetic derivative created by Lehman to insure against the default of debt of a number of reference entities. The "return" that investors receive was paid out by Lehman as an insurance premium against the default of the reference entities. It is certainly not a "safe investment" and investors unknowingly got involved in derivatives.

Their best chance now for recovery of their money is collective action. It is a waste of time going to the bank individually and have them explain why most of your money is lost. Most investors understand by now that most of the money is gone with the fall of Lehman. The main issue is misrepresentation and misselling. While the authorities in Hong Kong are directly involved in the collective action of investors, Singaporeans have to get this thing done themselves as the authorities are expected to distance themselves. Tan Kin Lian and the Lion Investor are trying to get investors organised to seek redress.


Kian Hin said...

Well done DBS!

Our uncles and aunties have become insurers, not insurees. And their lifetime savings have become collaterals against the collapse of these credit entities.

I'm really angry. I'm a finance student from SMU, and to see so many quacks and crooks around in this field.

Risk is such a magical word. It can wash away all the responsibilities and liabilities of these bank officers to their customers.

yamizi said...

But then again, if Lehman doesn't collaspe and investors reap hell lots of monie would they bother to go in depth to what they have bought?


Kian Hin said...

Hell lots of money?

Payout is only at 5%. And hence, they were represented as 'safe' investments. And if those uncles and aunties are able to know all these financial stuffs, why would they even seek financial consultation from DBS in the first place?

Anonymous said...

This is one of the worst deals I ever heard of?

Who ever heard of a safe bet being losing your entire capital if 1 out of the 8 banks folds up?

This is an extremely high risk investment plan that is touted as a 'safe' investment.

Anonymous said...

Hello Guys!

Not to sideline this very important issue, kudos to Lucky for the update.

But it seems to me the only way to motivated Singaporean to band together is to pick their pockets!

Proven: Free speech and your rights take second place to dollar and cents.

Anonymous said...

the authorities in Singapore are in cahoots with the banks themselves.
Who's sitting on the board of DBS?

Why Singapore government diam diam (silent)? Well, it's because they are also the executives of the bank, pocketing your $$$$. Simple as that.
Want to make noise? Wait long long.

Anonymous said...

Kian hin, 5% is considered very high returns as compared to your savings or FD rates of 0.03%-0.05%. It is actually 1666% times more than the base rate of 0.03% return.

So one would think there will be risks or higher than normally risks for that matter when you are getting such high returns, don't you?

Don't get me wrong, I'm not saying these people should not have any recourse, I'm actually thinking they have rights to take any actions they can to recoup their money if indeed these products were misrepresented.

Kian Hin said...

To anon 11:06am

I don't think comparing the 5% investment rate of return to your savings account and FD rate is very fair eh?

How about comparing to the average yield of >3% of risk-free rate of 10-year gov bonds, and also the 7-10% return in a diversified portfolio of stocks?

Both of them would never have resulted in a 100% loss of capital overnight, as would be highly probable in this case. (Unless you really want to pick on the theoretical technical details of what i've said in relation to stocks)

That's why I said risk is a magical word. You can just attribute whatever shit you've done to 'risk'. Low risk doesn't mean no risk wad...

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