Saturday, November 15, 2008

Pinnacle Notes 9&10 become worthless

en This is what the advertisement for the notes look like. The one above is for Pinnacle Notes 10. Right at the bottom it lists the reference entities Australia, Hong Kong, Singapore, SingTel and Temasek. None of entities have had a credit event but the notes are now worthless. The underlying securities were not bonds of Australia, Hong Kong and Singapore etc but a basket of toxic waste CDOs. If this is not mis-selling what is? Last week I spoke to friend who bought some structured products . He insisted that what he bought was very very safe and "guaranteed" by "govt" and Temasek and he was "sure" it was not high notes or minibonds. I told him to "better go and check" turned out to be Pinnacle Notes Series 10. The whole process of selling these structured products from the marketing material to the RM's sales pitch was designed to close the sale - no ordinary layman buyer educated or not can come close to comprehending the risks. You think the RM bothered to go through the list of CDOs that was the real source of risks? No, the RM who earned commissions would simply tell the customer that his investment is safe because of the reference entities - Singapore, Hong Kong, Australia, Temasek, SingTel - to close the deal. Pinnacle Notes 10 was sold only in one country : Singapore.

The Hong Kong govt has admitted that the whole regulatory framework from the approval of these products, marketing and selling has to be reviewed. In the meantime, they have frozen the sales of these products. They have admitted that they have done something incorrect in the regulation of these products. They are now answerable to the people. The MAS has denied EVERYTHING. They deny that deregulation of these products have led to these problems. They denied all responsibility associated with debacle. In fact our leadership has laid the blame solely on the people who lost their lifesavings especially those who are educated and young. These people are now told that they have gone in with their "eyes open" and have no legal recourse ....and banks are compensating out of the kindness of their heart because legally it is "case closed". ...all these words from MM Lee.

In Singapore we (some of us) gave up some of our rights and personal freedom as a result of a social contract in which the PAP will protect the interests of the people without the full implementation of democracy. In this saga, we see this social contract broken (if not shattered), the govt took care of itself first, then its other interests with the people coming in last. Singaporeans who lost their lifesavings left to fend for themselves. .....

.[I have an urgent matter to attend to will complete this posting when I get home later perhaps after Hong Lim Park...please people, Singaporeans go to Hong Lim and show support for your fellow Singaporeans....learn something in the process.

Please post your comments and your views....I'll be back]

I'm back. Here a video of Goh Meng Seng's speech on social justice at Hong Lim. The sentiment on the ground is the govt and MAS will not be doing anything more for investors. If anything, the advice given out by MAS to go back to the banks one by one to complain proved to be useless for most investors. The bank will simply send a letter telling them "no case". Why would the banks respond in any other way? The remarks by MM Lee saying that investors went in with their eyes open and legally it is "cased closed" ...and banks compensate the vulnerable out of goodwill...all this tells us that at the highest levels of govt, they believe that MAS and the banks have done no wrong and investors are solely and fully responsible for their own loss. Only 3 countries in the world allowed these products to be sold and Singapore is one of them. Looking at past cases, if the same thing had happened to investors in US or Britain, I have litle doubt the regulators will not only force the banks to buy back the securities, they will also impose heavy fines on the banks for violating regulations. Perhaps that is why US investment banks travelled half way around the world to peddle their toxic waste and our regulators allowed them to be sold in Singapore.

The next step for investors is to take collective action - there is really not many choices left. However, because our govt refuses to conduct a proper investigation into mis-selling, it is hard for investors to produce hard evidence to support their case - they will have to go to courts with their affadavits and hope there will be whistle blowers among RMs willing to step forward to tell the truth. At the end of the day, justice might have to be imported from HK where the govt is starting a public probe into the bank. Our govt, the People's Action Party has other more important things to do than to act for people.


Anonymous said...

Don't worry too much lah people. Sg still have a big big foreign reserves. Check IMF website if u like to. After 30+ years of accumulation, there are still plenty to go around. The end is not that near as many ppl feel. Take it easy. Take sg as a "country club", pick up whatever skills and knowledge u need. After a few yrs, return your "club membership" and off u go. I just hope that when I return my membership, the club wont change rules and prohabit my "total withdrawal".

Anonymous said...

Technically is a credit event as the subordinate level of 2.60% to hold the credit event has been breached.

I managed to work it out with the 100 names of the CDO basket and found that the total loss is 2.9799% which exceeds the 2.60% subordinate level.

The current market value of PS 9 & 10 is about 5% of the original capital value and it may not be sufficient to meet the unwinding cost. MS, may even have the pay for the balance of the unwinding cost.

U're right that these notes are now worthless.

Anonymous said...

Wonder what is the hue and cry from Lim Swee Say about?

If DBS is willing to let 900 staff go and some are RMs in DBS - I say well and fine.

better than our Mayors investing our Town Council money in minibonds and 'it happened - let's move on.' I say let the mayors go, as well as MM Lee, SM Goh. They are collecting huge pays as ministers.

I wonder if they get extra salary as MD of MAS / GIC etc? Two salary or one?

Anonymous said...

You lost your life savings. You have no more purpose to serve.

You want to sue? Go and die lah! You have NO MORE MONEY LEFT! You lost your life savings in the Pinnacle notes or 'minibongs', remember?

Who is going to lend you money to hire a lawyer?

You think Davinder Singh will fight your case for free????

A penniless guy is not much better off than a guy in a wheelchair. No one will give a shit whether you deserve justice or not.

Onlooker said...

And the point that came to mind is

“If we just send away the foreign workers now, it will do us harm, because the company already in difficulty and they hire half foreign workers, half Singaporeans and you tell them foreign workers must go out, you take Singaporeans, its cost may go up and the company may close.”

quote Lee Hsien Loong

Had noticed that the interest that have been protected is and has always been GLC especially the loss making ones.

If a GLC has been losing money it is apt that they have to reorganize or simply fire the top decision makers because they are given the most money yet they can't perform.
In a nutshell the people they axe now are the wrong group.They should axe the ones taking most money and/or relative of "Clean" politician who did nothing but get everything.
Unless these are people know secret of the "Where is the money?" and could help the public know more about our Mutual hedge see pea F fund.

Sgcynic said...

Our reserves? I don't know how many "credit events" have occurred already. ABC learning centres cost Temasek Holdings $400m (just a bagful of peanuts). What about shares of citigroup, Merril Lynch (or Bank of America)?

To Lim Swee Say, don't wayang! If PAP can heck care 10,700 citizens, it certainly ain't shedding a tear for 900 (who incidentally still have their savings and bonuses intact).

Anonymous said...

our gov, and the people they led, subscribes to the free market system.

so what are you complaining about?

our gov insists the rule of law will keep corruption down and the people agree.

so what are you complaining about?

our gov prescribed a meritocratic system that puts them in power and the people embraced it

so what are you complaining about?

the above ideology has produced the best in power to run your life and now you have been screwed

so what are you complaining about?

if you can't offer a better ideology than the current ones then accept the fact that your arseholes will be violated now and then.

Anonymous said...

Up till now, Singaporeans are doing the wrong thing. People are still buying into pinnacle notes and other structured investments offered by the banks.

As long as sales is not affected, people do not boycott, the banks WILL NOT do the right thing.

In Singapore, if there is one thing to learn, it is to hit people at the wallets.

Even justice in Singapore depends on the size of the wallet.

Anonymous said...

In other words, there is no justice for the average joes or janes and worse...if you are poor and has no voice.

So what have we educated our best to be?

Nothing but a bunch of fucking hypocritical mercenaries!

AlphavilleSG said...

This one really takes the cake, I really sympathies your friend, who brought the product aided by the claim which says the Reference Entities are governments and blue chip GICs, while hidden in the facts are clauses that says you are equally likely to loss your entire principle if there's a 'Mandatory Redemption Event' on the underlying assets, which is toilet CDOs

Is this not providing a false impression of risk or what? Yes, my eyes are really wide open now. :(

Anonymous said...

If our eyes are truly open, then we should stop buying any structured products offered by the bank.

Something tells me that despite the huge hooha, the majority of Singaporeans still don't know, still don't care and still are proud that they don't know and they don't care.

People will still continue to buy the structured products. People will continue to be taken for a ride. Lucky Tan's friend is just one prime example. He still buys into structured products even after what happened to the minibonds.

So, why will the banks compensate the affected investors?

In any case, the banks have the backing of MM, who claimed that if you are educated or are a seasoned investor, it is legal to mis-sell to you.

Sgcynic said...

If our eyes are truly open, we will vote the PAP down! Not vested.

Anonymous said...

These pinnacle notes seem like a clear cut case of fraud perpetuated on the masses by the banks. This shit goes deeper because apparently the Spore regulator approved its sale.

Anonymous said...

Pinnacle note totally useless ?
Nonsense, it still very useful as toilet paper to wipe the shit off the ass.

Anonymous said...

Pinnacle note totally useless ?
Nonsense, it still very useful as toilet paper to wipe the shit off the ass.

Anonymous said...

FYI - below are two links on Pinnacle Notes.

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