"In June 2006, a year before the subprime mortgage market collapsed, Morgan Stanley created a cluster of investments doomed to fail even if default rates stayed low -- then bet against its concoction" - Bloomberg [Link]
The US govt is current conducting an investigation into the sale of certain mortgage linked products by US investment banks and whether these banks bet against these products themselves as they sold them to unknowing customers. The investigation also hope to uncover if the banks knew that these products have a high chance of failing when they sold it. If that is the case, the banks have engaged in fraud - outright cheating.
The structured products such as Lehman Minibonds and Pinnacle Notes were sold to Singaporeans in around mid-2007. The SEC is looking at products sold as early as mid-2006. If investment banks knew that these products were bad and sold them to Asian investors, they have engaged in fraud. The Pinnacle Notes sold to Singaporeans was a product by Morgan Stanley currently under investigation by the SEC.
Unlike the US which has the SEC and very tight regulation, the MAS and Singapore govt takes a handoff approach on such matters always holding up the "buyer beware" principle. If US investments have engaged in fraud, to allow them to go unpunished is not just a grave injustice but sends the signals to the cheats and crooks of this world to come to Singapore and take Singaporeans for a ride.