Wednesday, September 24, 2008

DBS "High Note 5" Investors feel cheated.....

"Ms A, said she had informed MAS of her plight but 'they do not seem to have acted at all'. 'My question for them is, should they have even allowed the product to be sold? And what are they going to do about it now?" [LINK]


Regulator ....please regulate.

Isn't time to investigate? Thousands have lost their lifesavings and they feel cheated because the products have been possibly mis-sold to them by so called relationship managers. If that is the case, rules have been broken and it is time for the authorities to act. Are the authorities waiting to see if they can get by doing nothing? Very world class of them.....

Right now in Hong Kong, lawmakers are getting ready to sue the banks for misselling the Lehman minibonds to retirees. There seem to be a big difference how the people in Hong Kong organise to protect themselves in times of trouble. Everyone in Hong Kong is mobilised to see what can be done to help the investors who were sold these products - these include the Consumer council, HKMA, and political leaders.

"What really frustrates me is the subdued response from MAS. As the financial watchdog, I think it has been extremely reactive and it has so far distanced itself from blame"-Mr Peter Lim, a Minibonds investor

In Singapore, the govt doesn't help you - you have to help yourself. My suggestion is to file a police report if you feel that there is mis-selling and mis-representation. I don't see how the authorities can sit around with several hundred of such complaints are made.

If you're holding the Lehman minibonds, a group of investors are meeting to see what can be done. I got this from Tan Kin Lian's blog:

Message from Jan Chan: Mr. Tan, please help us to pass this message through your blog. We are a group of Lehman Minibonds investors who are organizing a meeting tomorrow to discuss collective action and to sign a petition for submission to the authorities to voice our grievances.

Interested parties are encouraged to join us. Date/Time : Wed., 24/9/08 at 7pmVenue : outside Hans Cafe (#01-01) at the Central Public Library, 100 Victoria Street.

Jan Chan How to get to Central Public Library :Nearest MRT: Bugis MRT Station or City Hall MRT StationBus stop (North Bridge Road ): SBS 145, 197, 32, 51, 63, 7, 80 175 and SMRT 851, 61Bus stop (Victoria St -Allson Hotel) : SBS 2, 7, 12, 32, 33, 51, 63, 80, 175 and SMRT 61Bus stop (Victoria St -Bras Basah Complex) : SBS 2, 12, 33, 130, 133, SMRT 960, NR7Bus stop (Victoria St -St. Joseph's Church): SBS 130, 133, 145, 197, C3, SMRT 851, 960, NR7Bus stop (Middle Rd - Nam Peng Building) : SBS 56, SMRT 980

Date/Time : Wed., 24/9/08 at 7pmVenue : outside Hans Cafe (#01-01) at the Central Public Library.

You can trying seeing your MP. See if he is willing to work for you.

Funny isn't it? Why are all these volunteers like Tan Kin Lian the ones trying to organise something? Shouldn't a minister or even an MP who needs to win your support for the next election be the one to organise the citizens to serve their best interests?...

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DBS 'High Notes 5' Investors:They pumped in life savings and now feel cheated
By Gracia Chiang
http://www.asiaone.com/Business/News/My+Money/Story/A1Story20080922-89299.html

Madam Evon Chin literally choked when she heard last Tuesday that her $75,000 investment in a DBS Bank product was in jeopardy.
The payroll executive and her husband had invested the sum in High Notes 5, which was exposed to Lehman Brothers, the United States investment bank that went bust.
'I was eating my lunch when my husband called. I started choking on my food. My face was so red, my colleague had to thump my back,' said Madam Chin, 40.
Her husband had told her their investment - from savings over the last 10 years - might now be wiped out. Worried, she took two days of urgent leave, determined to seek an explanation from the bank.
Like many other investors, she failed to understand how Lehman's collapse could wipe out their entire investment.
She had thought their risk exposure was diversified since the product had a basket of eight reference entities. 'We felt swindled. We were told this was a low-risk investment,' she said.
DBS said last Wednesday that Lehman's collapse triggered a 'credit event' that had a significant impact on High Notes 5.
The product is structured on a first-to-default basis which means that if any of the eight reference entities goes bankrupt, a credit event will be triggered and clients might not get their entire principal amount.
Said Madam Chin: 'I've never lost so much, not even when I was investing in shares. This will be a serious blow to our nest egg. Will I really have enough to see my children through their education?'
They had intended the money to be used for the education of their two sons, aged six and one. 'Now I can forget about my wish to have a third kid. This is really the saddest thing.'
The couple expect to have to tighten their belts. 'I'm going to switch my children's milk powder to a cheaper one. There will be no more eating out.'
She might also have to give up seeing a traditional Chinese doctor for her eczema. She used to pay for the sessions with the monthly interest from the investment.
Other investors like retiree Tham Wai Wah, 60, also felt 'cheated'. She had trusted the relationship manager who had explained to her last year that the High Notes 5 product was 'very safe'.
She said that with only an O-level education, she could not fully understand the prospectus. 'I told them I'm a conservative investor and that this was my CPF money.'
She put in $125,000, part of her Central Provident Fund (CPF) savings she withdrew upon retirement after working for 30 years as a clerk. Her husband is also retired.
She said: 'This is our fall-back, our cushion for old age. How can I accept that now I might have zero returns? What if I have any major illness in the next 20 years?'
She is thankful that she still has $130,000 in savings. She is prepared to sell her five-room flat in Punggol and downgrade to a smaller one if money runs out. 'I thought we could go on holidays with this money,' she said.
Senior merchandiser Carene Tan, 44, is worried that she might not have enough money for her children's university education.
She had invested $25,000, which she intended to use to send her 15-year-old son abroad for further studies. Her other son is 12.
'I was so upset. It's not going to affect my livelihood now because I still have a job, but it's like having to work half a year for free.'
Madam Chin is now more cautious: 'I'll never touch any investment instrument anymore.'

28 comments:

Anonymous said...

So Lucky, what's your take on GIC's report card, it claims real return of 4.5%! How come that figure seems so magical.

kaffein said...

Actually, I've often advised my friends and colleagues who put their savings in bonds, shares, etc.

If you are not prepared to lose it, don't even think about going into it.

It is some general rule I have followed all these years.

Anyway, it is really sad when such banks do not take up ownership and the regulators do not regulate or investigate these findings.

Often we cite that we are first class as a financial hub. That's all good when profits are soaring and economy good. It's usually when the rubber meets the road that we discover if our 'fail-proof' policies are really fail-proof.

All in all, it is very distressing for those impacted. Even more dispppointed with MAS and DBS.

Kaffein

Anonymous said...

I recall the Raffles Town club fiasco. DBS allowed itself to partner with the company to collect the joining fees. From an initial 5000 members, it ballooned to 19000, and the bank was always aware of the increase in number. Thier names were always in the promotional brochure.

The ex proprietors has indicated that with only 5000 members the club would not survive. AS such the starting premises or what they called business model was to lie to the public about the number of members.

DBS was party to this lie.

Did MAS do anything? So while the case is ongoing, if the proprietors again get away scot free, it becomes clear that lying as a business model, supported by DBS bank, is a viable business model.

Anonymous said...

Sure lah ..MAS keeping quiet...and
hope I am wrong .. M.A.S is protecting the major share holder which is the G.L.C such as DBS Bank ...Mr Dhana and Tamasek Ho Ching...DBS bank sold out their customers and there no honesty or intergrity anymore lah...That what the DBS Bank officer told me ..that their priority is to answer to the shareholder and can not take the responbilites.Reckon when the count of body bag start from MRT track..especially Old Uncle and Aunties ...lose their entire saving...DBS bank and share holder should be held responsible for these body bags. Let us watch the entire episode whether there any justice / actions from the goverment ( MP we elected) and MAS although DBS are same boat with them...

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Anonymous said...

GIC also regretted the timing of its investment in the two banks — US$9.75 billion in UBS in December and US$6.9 billion in Citigroup in January — said Chief Investment Officer Ng Kok Song.

Alex Choo said...

Like most investors, I bought DBS High Notes 5 is because the product was issued by DBS, at the moment I signed the agreement, I never doubt that DBS has degraded itself into selling junk products and the RM had convinced me that the rating for the 8 reference entities were satisfactory and the risk was low. DBS is our national bank, owned by our government, how can they betray our trust. DBS should not sell such junk product in the first place.

Anonymous said...

why is the man in the front page of today's papers showing us the fingers?

i thought this kind of pictures reserved only for the chees? lol

Anonymous said...

Don't be too hopeful that MAS or this govt will step in and do something positive for the investors. Remember the CLOB saga ?

Anyway this bloody govt is screwed big time themselves, look at their investments in GIC and Temasek. They are more worried about their own losses than to think about DBS investors.
Trust DBS because it is owned by the govt.
Trust this govt because it is run by PAP.
Trust them at our peril.

Anonymous said...

people just don't listen. only when their pockets are hit, then they say LET'S ALL do something about it.

let's rally around the leaders to save...our pockets together.

"The couple expect to have to tighten their belts. 'I'm going to switch my children's milk powder to a cheaper one. There will be no more eating out."

but they will not listen when their stomachs were full.

they saw what they wanted to see, the rosy pictures all around.

masterfully painted on canvass by a few good men.

Anonymous said...

66.6% voted for the pap govt. And this is what the pap govt is about: protect foreign investment interests, protect big businesses. It's the big picture you see, or else your wives or daughters will be maids in other countries.

Anonymous said...

Did singaporean deserves to be screwed every here and then ?

Let's illustrate a point.

One day, a female pickup a seal transparent bottle. Inside the bottom, there is a paper that has the message saying that if you open the bottle, a genie will appear granting you any wish as long as you satisfy his sexual desire.

So the female want to be rich and live materialistic life, she open up the bottle, and out of nowhere, a man suddenly appear from a wall nearby. The proclaimed genie says,"Satisfy me and I will satisfy you".
So the genie start screwing the female day and night. After the enjoyment is over, the female says "Now I want the riches and wealth",
Guess what the Genie says ?
"After more than 4 decades, I am amazed that people still believe in Genie !"

It is not hard to know who is the naive lot that illustrated by the female and who is the screwer illustrated by the genie in Singapore.

Can you blame the genie for screwing you after all you know that there is no such thing as genie but you choose to believe in that anyway ?

Do you think the genie will screw himself due to conflict of interest ?

Anonymous said...

PAP Motto:

YOU DIE, YOUR BUSINESS!

Is that new to you Singaporeans, eh?

You push them some more, they might even peddle the CPF as the infallible investment vehicle of the day!

Anonymous said...

hahaha. you die, your business.
but NTUC has this under-taker business. so it is business whether you are dead or alive. PAP chiak both ways.

Anonymous said...

You want your local politicians to help you? The sun rise from the west liao!

In Singapore, we don't like protest. We don't like ministers who actually take responsibility and fight for citizens' interest.

Every guy who fight for citizens' interests, we must bankrupt them and have them jailed or exiled.

I prefer leaders who have very good academic credentials but do nothing for the people in times of urgent need.

Anonymous said...

Meanwhile in Us u actually have people with brains and balls to protest.

Anonymous said...

I make a point not to trust some banks after my brush with investing in the Surf structured deposit. The instruments are sold by young graduates in which the banks imposed quotas and targets.
DBS - Stands for
Don't Bank on Security
They lost the safe boxes in Dao Heng Bank which they own
Don't Bank on us for Sound of Mind
That's what is happening to most
customers
Don't Bank on us for Safety

Anonymous said...

I never have faith in DBS related product since years back.
Whenever i see any product, IPO, etc promoted by DBS, i will give it a miss.
However, products promoted by UOB and OCBC are more reliable. Furthermore, I find them more accurate too. Just my experience to share. I am thinking of closing all my accounts with DBS and go with UOB.

Anonymous said...

Let me tell u guys out there thinking we are putting our money like gambling. Most of us went there to save our money, to get better interests that's all. We don't even know what Bond or Shares. The Relation Manager only keeps telling us the interest is higher and very safe and put for 5 1/2 years. After convincing us, only ask us to put more money and sign the papers, even the DATE was not written! I wonder why as a conservative person and made known to the relation manager would end up like this? so sad...........DBS is also not responding........

Anonymous said...

Very sad indeed, national bank of Singapore DBS also morally bankrupt.

Anonymous said...

I guess you're talking about fund brokers who peddle a fund package to our common Singaporean folk. While it may look rosy and all when they sell to you...(just like how they sell insurance policies for example)...fresh grads...or even new ones follow textbook style way of selling, which they impress on people who have little financial know how. So who is to blame?

I guess gahmen partly as there is remarkably no regulation in the part of the MAS...

Banks too...(as they employ 'professionals')...should know whether a particular party is suitable for a certain financial fund package to suit the party's needs...not just those which promise high commisions to the RMs which i feel...(from experience)...RMs try to push and push on their customers...

But if one wants to invest in the markets and hope to gain from it, one has to learn about wad to look out for...I am a common singaporean too feeling the rising costs we face. I feel for these couples and people who suddenly find their hard earned savings vanish...how their dreams get quashed...But i guess what one doesn't know, will hurt...hence financial knowledge is important here...

Then again...gahmen is surprisingly silent on this...and GIC returns are really surprisingly positive...despite SG being strongly linked to US economy...funny dun ya think??

Zhong said...

Anonymous 1:01AM, for victims of DBS HN, there is another element of trust in DBS, owned by our government. Just give you two analogies: (1)when you travel by SIA, do you expect the plane to crash easily? (2) when PAP field a new candidate during election, do you expect him to be a crook?

Anonymous said...

DBS is our National Bank and trusted them with good faith. Bank with them from young....now they do not have anymore honesty and integrity at all. They sell to unsuspecting customer by telling them only the " GOOD STUFF" but not the critical risk detailed in the "devil's fine line" in the contract. DBS do not expect a AA+ rating company like Lehmen Bro to go under so they do not want to be honest and upfront with their conservative investors with this high risk as by doing so they got no business but instead chose to hide the truth with a clear intention to misled these conservative investor ( including ols uncle and aunties ) into buying. DBS got nothng to lose and in the event of any issue ..all they do now is very clear " Ple see the fine line in the contract" sorry lah...That how a trusted national bank work???..there no integrity at all ..I am pulling out all my saving from DBS and hope they do not go under too!!

Junnie said...

I should considered myself "heng" when I didn't get trapped into sticky situation. I almost encashed my fixed deposit into this structured product last year under the pressure of a manager.

Luckily my instinct told me not to do so. I am a conservative investor by nature, although a young gun like me should take high risk and be aggresive.

After this episode, I had lost complete faith in not just DBS. In fact, I lost faith in any so-called "financial planner" who will sucuumb to selling products that don;t even suit you at the first and earn from you.

The problem lies in the moral ethics of these so-called "professional" planners. Some are pretty okay, while most of them often think of personal benefits. They will always sell you "simple" and "safe" products which, in the end, will always be that complex for us to understand.

Now, I don't even know if I should trust my present independent financial advisor (read: licensed).

Rdieu said...

I am pretty conservative too and invested $40,000 in the so called Triple Happiness Capital Guaranteed Fund issued by DBS. Just redeem...wonder why? The CRM explained that there are 2 possibilities.
1. Wait till maturity date - Jan 2001 and get back the initial capital...but unlikely to get any payout for the next 2 1/2 years and faced potential risk of losing the initial investment as the guarantor is Banque AIG or
2. Redeem now and accept some losts. I ever need to sign an indemnity that I understand the NAV will be lower for early termination.
I am lucky, in the end I decided to redeem and lost only around $1200. So ever Capital Guaranteed is not guaranteed. In any case, the bank is happy as its lost nothing (and potential trouble) but obviously I am unhappiness. What can you do ? That's life.
All of you out there, Good luck on your High Note and Take Care !

Anonymous said...

The whole system of how to sell financial products to consumers is flawed.

If you give the saleman a sales commissions then all he cares about is making the next sale. He will say and do anything to seal the deal and then it's "So long sucker! NEXT!!!"

For financial products that people are investing their life savings, the banks need to suffer loss when the consumer loses money and can only make money if the consumer makes money.

Why do I have to pay you management fees if you screw up and lose my money?

That is the only way to ensure that the banks will take proper care of your money and not lose it in some half baked investment.

Until then, we should just take a lesson from history where our parents invested in gold jewelry and kept money at home.

You never know which bank/investment will collapse next!

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