Tuesday, December 13, 2011

Pinnacle Notes : Morgan Stanley ordered to halt attempts to block lawsuit

After DBS won its lawsuit in Singapore, Morgan Stanley wanted to block the Pinnacle Notes lawsuit in US using a Singapore court. A US judge in New York tells them they can't do that.

There are a number of reasons why they want the lawsuit to be fought in Singapore instead of US.  SEC and others have won a number of cases involving mis-selling, mis-representation and neglect of fudiciary duties- the recent one mentioned in my blog involving Citigroup:

"The SEC had accused the bank of betting against a complex mortgage investment in 2007 -- making $160 million in the process -- while investors lost millions. The settlement would have imposed penalties on Citigroup but allowed it to deny allegations that it misled investors".[Link]

Citigroup was counter party that benefited from massive losses of investors to which it sold mortgage investments. Citigroup offered to pay US$285M to settle the lawsuit with SEC but the settlement was rejected by a judge because it allows Citigroup to get away without admitting fraud.

So who was the counter party that made from all the losses from Pinnacle Notes? Morgan Stanley...the same investment bank that sold these notes to investors. Now you see why they want to avoid fighting the lawsuit in USA. In the US the authorities took up the hard work of investigating the banks, gathering evidence and suing the bank to recover investors' money....so what did our 1st world govt do for Singaporean investors? ...These Singapore investors were left to fend for themselves against a powerful investment bank, they had to get their own lawyers, fork out their own money and do every thing themselves to get some justice. Where are the men and women who say they have to be paid well to serve the people?

In Singapore,  according our ex-MM  - they went in with their "eyes open" and signed on the contract so there is no case. This feels like an  over-simplification of justice,,,and a case that cannot be won in Singapore has more than a fighting chance in USA.
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Morgan Stanley Ordered to Halt Singapore Suit


QBy Bob Van Voris - Dec 13, 2011 12:34 PM GMT+0800 inShare1More

Business Exchange Buzz up! Digg Print Email Morgan Stanley (MS) can’t ask a court in Singapore to block investors there from suing outside the country over their losses on $154.7 million in synthetic collateralized debt obligations, a judge in New York ruled.



The New York-based bank’s attempt is vexatious, U.S. District Judge Leonard Sand said yesterday, granting a request by investors including the Singapore Government Staff Credit Cooperative Society Ltd. to stop Morgan Stanley from seeking a Singapore High Court order.



Several Morgan Stanley units created a “classic bait and switch scheme secretly designed to benefit Morgan Stanley” at customers’ expense, according to the lawsuit filed in October 2010. The investors claim Morgan Stanley didn’t tell them it was a counter-party to the agreements, meaning that for each dollar the investors lost, the bank gained a dollar.

Morgan Stanley disagrees with the ruling and its Singapore court action was entirely appropriate, Hong Kong-based spokesman Nick Footitt said today.

“This dispute involved plaintiffs who are all based in Singapore, who purchased notes in Singapore, and who contractually agreed to the exclusive jurisdiction of the Singapore courts,” he said.

Morgan Stanley, which had sought to have the investors’ lawsuit thrown out because the Monetary Authority of Singapore investigated the sale of structured financial products and created a resolution system, this month denied any wrongdoing.

‘Fare Better’

Morgan Stanley has “a sense they would fare better in Singapore,” said Eugene Tan, assistant professor of law at the Singapore Management University.

Any alleged misstatements by Morgan Stanley on the notes “were mere puffery or were vague statements of optimism,” the bank said in a court filing. “Defendants had no duty to disclose the allegedly omitted information.”


In October, Sand dismissed some of the investors’ claims and permitted the rest of the case to go forward. One month later, Morgan Stanley asked the Singapore court for an order blocking the investors from pursuing the case.

“Rather than availing themselves of the remedies available here, defendants are attempting to require the plaintiffs to begin anew in Singapore,” Sand said yesterday in his ruling. He also denied the New York-based bank’s request that he certify his October decision for pretrial appeal.

Pinnacle Notes

The plaintiffs seek to represent a class of all investors who bought the Pinnacle Notes from Aug. 1, 2006, to the end of 2007.

A group of investors in Singapore last month lost a bid to recoup losses on Lehman-related products with an appeal court in the city state ruling that “the principle of caveat emptor applies equally to literates and illiterates,” using the Latin phrase for ‘buyer beware.’’

The Monetary Authority of Singapore banned 10 financial institutions from selling structured investments in 2009 following claims by investors that they were misled on products tied to Lehman Brothers Holdings Inc.

The authority lifted the ban last year after the institutions boosted internal procedures of their advisory services across all investment products.

Tan said the disputes surrounding collateralized debt obligations were unique.

“I don’t think investors are going to have a different investment climate in Singapore based on this lawsuit” against Morgan Stanley, he said.

The case is Dandong v. Pinnacle Performance Ltd., 10- cv-08086, U.S. District Court, Southern District of New York (Manhattan).

27 comments:

Anonymous said...

Opinions, are often correlated with vested interests.

For example, ask anyone about the direction of the housing market and the answer will probably correlate to whether that person has invested or is sitting on the sidelines.

The status of the finance sector here is no mystery, so why the surprise?

sgcynic said...

“Defendants had no duty to disclose the allegedly omitted information.” yeah right. I am advising you, seliing you, No need to tell you that I have vested interests. Screw you.

Anonymous said...

Go into the financial industry to work.. it pays very, very well and worse case scenario, you get to be arrested for defrauding millions of dollars and even get paid for writing about it!

Best career to be at!

Anonymous said...

The financial industry is finished.

The smart ones have already all gone in plantations.

That means only the botton skimmers are still in the system.

Anonymous said...

A conservative investor bought a financial product from a financial institution with the understanding (from the sales brochure and newspaper advertisements) that it is a long term bond issued by six leading banks. The bond pays 5% interest per year for a 5-year tenure.

He discovered later that the product he bought is not a bond. And worse, it is bad or toxic.

The product he bought is a very high risk complex financial product. A group of “elites” (financial and legal experts) is responsible for the drafting of the newspaper advertisements, sales brochures and prospectus so that it appears similar to those low risk bonds issued by banks.

The investor complains to the authorities, but the authorities is having an opinion that he must be invested with his eyes open because he did not satisfy the conditions of “vulnerable investors” (i.e. education level must be below primary 6 and age must be 65 or above).

The authorities did not investigate into the complaints of misleading advertisements, sales brochures and the quality of the product (whether bad or toxic). Instead, it is more interested in how the financial institutions train their sales staff.

The group of “elites” and their associates managed to create an impression that the victim is greedy and has unrealistic expectation (such as expect high return and no risk …).

The poor investor not only lost most of his 30-years hard earned money, but also deeply humiliated.

Ignoramus minus said...

That is the trouble with people.

When they do not know anything, they try to pretend that they know and act as though they have been to wall street, have connections with lots of wealth managers etc.

In reality, they know next to nothing about the products that was presented to them, and they dare not ask since it may reveal their ignorance.

This is what sales people are looking out for: the ignoramus who thinks he knows everything.

Instead of asking good questions, these ignorant few talk too much and convince themselves without the sales people having to break a sweat!

Just watch & listen to people at property launches, car showrooms
and even ad hoc insurance booths at MRT stations.

All ignoramus... and its not an extinct reptile either.

Anonymous said...

A little knowledge is dangerous

Anonymous said...

Fuck#@$@#ing old fart and his corrupted dynasty ! He will totally no integrity and shameless. Who can forget that Old fart is advisor to Citibank... anyone guess how much he is paid. Your guess is still as mine !!!!

Vote those bastards !!!

Anonymous said...

"Where are the men and women who say they have to be paid well to serve the people?"
Lucky Tan

At every election since 1965, at least 60% have endorsed these men and women to be well paid.

And which has given these men and women 93% majority seats in Parliament to make and amend the laws, including laws for investors and banks.

So whether these men and women serve the people well, does it matter?

Anonymous said...

Perhaps Lucky Tan should form a political party to lead, contest and win at least 93% seats in the next election.

Then what he says in his blog will really matter. Because he will have the mandate and power to right all the wrongs he mentioned.

This is what democracy is all about.

Anonymous said...

The American courts will see that justice is served.

As for Singaporean courts they should go and learn from the Americans.

I am glad someone bigger put them in their place. Now they have to eat humble pie and reflect on the error of their ways.

Anonymous said...

Singaporeans know all along the PAP places the interests of the employers, developers, investment banks, etc over the interests of ordinary citizens. This is so very obvious from the way citizens who were left to fend for themselves after suffering great financial loss from investing in fraudulent S-chip companies listed in SGX and toxic financial products such as Pinnacle Notes sold by banks. Why did some countries such as the US and HK deal with such cases so differently? Are their government not as talented as the PAP? It seems PAP Ministers paid themselves
millions for possessing the rare talent of washing off any responsibility for its ordinary citizens.

Anonymous said...

"Singaporeans know all along the PAP places the interests of the employers, developers, investment banks, etc over the interests of ordinary citizens."

But then some, if not most, of the ordinary citizens are part of the 60% that voted PAP, right?

Cannot be that all the 60% are employers, developers or investment bankers what, right or not?

Wylie Wilde said...

In a democracy, the Govt works for the good of the masses. That is why we vote for a government because it cares for us. In some other countries, the govts seems to prefer working for the benefit of minority groups who are usually well paid, cash rich and powerful. Do you think voters should vote for such govts?

Anonymous said...

"Do you think voters should vote for such govts?"
Wylie Wilde 13/12/11 21:29

Doesn't matter what you, I, Lucky Tan or whoever think.

What matters is what majority (60%) voters think.

Anonymous said...

This is a factor leading to the end of progress. Strictly speaking, financial sector is not productive at all as it is making many from manipulating money in different forms and thus all the complex derivatives. This world is a very unfair world. That is why those dealing with money are paid a lot but their productivity is very minimum. This is the end of capitalism. extreme capitalism like the US case is showing cracks in its system. If you know and understand the US healthcare system, you would understand how unproductive medical sector is run like financial sector. Medical doctors are only productive up to certain threshold and thereafter surplus leads to abuse and unproductive operation in any society. Government intervention is necessary to control the overall cost of healthcare. Otherwise, it will lead to US current system of finance and healthcare corruption.

Anonymous said...

This is a factor leading to the end of progress. Strictly speaking, financial sector is not productive at all as it is making money from manipulating money in different forms and thus all the complex derivatives. This world is a very unfair world. That is why those dealing with money are paid a lot but their productivity is very minimum. This is the end of capitalism. extreme capitalism like the US case is showing cracks in its system. If you know and understand the US healthcare system, you would understand how unproductive medical sector is run like financial sector. Medical doctors are only productive up to certain threshold and thereafter surplus leads to abuse and unproductive operation in any society. Government intervention is necessary to control the overall cost of healthcare. Otherwise, it will lead to US current system of finance and healthcare corruption.

Anonymous said...

Events are unfolding which further confirms that the Singapore Judiciary is bias in favour of the big institutions. Singaporeans are denied natural justice. LKY has changed the system so extensively to dish out the kind of justice he prefers which is distorted justice.

Anonymous said...

Fucking asshole Investment Banks...

Anonymous said...

In USA, USA citizens are treated like human beings with proper protection under human right.

In Singapore, Singapore citizens are marginalized, have to work like cow and horse, but eventually still lose the jobs and replaced by foreigners.

Amused said...

My bet is that MS will settle the lawsuit without admitting guilt. They know they will likely lose the case in the US.

Singaporeans used to be able to seek justice from the UK court. The PAP government took away that venue because their version of "justice" could not survive scrutiny overseas.

Anonymous said...

Most Singaporeans values are misplaced. Having been conditioned over the years with PAP's values of kiasuism and kiasism (LKY using the worst exmaples of Darwnian survival of the fittest to run a country), they have seen their lives as to make money only and nothing much from that.

It is not that difficult to change all the misgivings of this party. It's just that many Singaporeans don't care and do not give their energies to change the bad status quo perpetuated by the governments' numerous bad policies and system, Singaporeans end up putting up with a lot of PAP's shit.

It's up to singaporeans to examine the quality of live the government policies have brought us these past 10 years and in the examination and free enquiry, hopefully insight arises to make them realise we need to improve the quality of live in singapore to that of Norway, etc. where human beings are treated as the end and not a means to an end or as a commodity.

Anonymous said...

Why MAS so silent with regards to this lawsuit ? Let me answer- they approved this toxic product to be sold using some of the big corporations names as reference entities...Spore Telecom, Temasek and many more. Ask yourself this questions--will you allow you name and to be used without knowing the intention of the party using them ?

Anonymous said...

Singapore courts are "employer-friendly" and they usually rule in favour of the bank. This is not a justice system, it's an economic system it is trying to protect. Banks will screw customers, employees and each other for the sake of money. It has no morals or values. And I'm speaking as a banker.

Anonymous said...

No doubt the buyers did not do sufficient 'homework' before investing their retirement nest eggs. But ignorance is not a reason to punish people to be penniless for old age retirement. Everyone makes mistakes - does it mean that just bcos a mistake is made, any consequence like death is justified?

Some Singaporeans show the same heartless and punitive approach of the Pappies. So much for all the talk about being a Confucian ruler by some ex-MM huh?

Anonymous said...

LKY's citigroup advisor, no wonder he said you gone in with your eyes opened. Has anyone seem conflict of interest?

Anonymous said...

Thats why all other developed countries have a SEC or securities commision. In Spore, we have NONE.

Msia - SC
Indonesia - BAPEPAM
India - SEBI
Thailand - SEC
HK - SFC
Australia - ASIC
Japan - FSA

Here in SG, the motto is "we make the rules as we go along"