266 people have signed the online petition to the Prime Minister, asking the PM to help investors get the same type of compensation that is being offered to investors in Hong Kong.
Our target is to get 1,000 signatures by 29 August. Please pass the word around and get the other investors to help. For those who have already signed, please help to get other people to sign as well.
The petition can be found here.
Sunday, July 19, 2009
Saturday, July 18, 2009
SCMP: Clear up the mess
18 July 2009
The incessant dispute over compensation for Lehman Brothers minibond victims could seriously tarnish Hong Kong's image as an international financial centre. And without proper closure, protests by victims will continue to be a common sight outside banks in Central. Nearly a year after Lehman collapsed, leaving behind HK$30 billion in now virtually worthless minibonds, some 40,000 local customers are still awaiting a resolution and proper compensation.
After the crisis exploded, all the political parties immediately swung into action to help victims, a special Legislative Council subcommittee was set up to investigate the debacle, and the government also moved quickly last October to push banks to devise suitable buy-back packages.
Despite the slow progress, we are beginning to see some breakthroughs in negotiations. There have been reports that 16 banks are offering to settle with minibond investors for about 60 to 70 per cent of their principal investment. This is similar to the Bank of China (Hong Kong)'s proposed settlement.
But, Peter Chan Kwong-yue, chairman of the Alliance of Lehman Brothers Victims, said the offer is unacceptable because the underlying assets are worth more than 60 per cent. Investors want to be fully compensated for their principal investments.
About 48,000 Hongkongers lost billions of dollars when the value of minibonds credit-linked to Lehman Brothers plunged after the US investment bank collapsed last year. Critics question whether banks that offer to buy back the minibonds at only 60 or 70 per cent should still have full title to the collateral.
The market values of collateralised debt obligations (CDOs) are determined by numerous factors, and a slight economic rebound in recent months could have pushed up their values. But the question is: does the modest recovery truly reflect the beginning of a bull market? We would do well to remember that we might not have experienced the full impact of the financial crisis.
All things considered, it is doubtful whether the market values of CDOs could retain the 60-70 per cent level for a sustainable period. Market trends are incredibly erratic, thus the buy-back offer is realistic and reasonable. The tug of war over compensation should not be allowed to drag on indefinitely; the longer the process drags on, the fewer benefits investors will receive.
It is understandable that investors want to hold out, hoping for a better deal. But it's baffling to see why the Securities and Futures Commission has been involved in negotiations. It has flatly rejected the offer on behalf of investors and asked banks to pay a higher value of the principal investment.
The minibond crisis has exposed a myriad of problems in the financial regulatory system - loopholes in the law, gaps in the regulatory system, inadequate investor protection and a lack of crisis management in the event of the failure of a large firm. And the SFC must shoulder a fair share of blame.
Frustrated at the lack of compensation, many minibond investors have criticised the lengthy negotiations with the sellers and the lack of clear guidelines from the regulators about handling their complaints. They are also confused as to where they should take their case - the Monetary Authority, which regulates banks, or the SFC, which regulates the securities market.
Still, we cannot ignore the fact that the SFC has failed to police banks and brokers that sold toxic investment products to ill-informed investors. It has been grossly negligent in performing due diligence in regulating Hong Kong's increasingly complex financial markets. And now it has put on a futile political show by assuming the role of saviour, which will benefit no one at best, and damage its reputation and that of the government at worst.
Our regulatory system has failed to evolve with the times, despite the emergence of increasingly obscure and complex financial products.
The ever-increasing amount of cross-sector selling has intensified calls for reform. But the key question is: do we have the will and the wit to move forward?
The incessant dispute over compensation for Lehman Brothers minibond victims could seriously tarnish Hong Kong's image as an international financial centre. And without proper closure, protests by victims will continue to be a common sight outside banks in Central. Nearly a year after Lehman collapsed, leaving behind HK$30 billion in now virtually worthless minibonds, some 40,000 local customers are still awaiting a resolution and proper compensation.
After the crisis exploded, all the political parties immediately swung into action to help victims, a special Legislative Council subcommittee was set up to investigate the debacle, and the government also moved quickly last October to push banks to devise suitable buy-back packages.
Despite the slow progress, we are beginning to see some breakthroughs in negotiations. There have been reports that 16 banks are offering to settle with minibond investors for about 60 to 70 per cent of their principal investment. This is similar to the Bank of China (Hong Kong)'s proposed settlement.
But, Peter Chan Kwong-yue, chairman of the Alliance of Lehman Brothers Victims, said the offer is unacceptable because the underlying assets are worth more than 60 per cent. Investors want to be fully compensated for their principal investments.
About 48,000 Hongkongers lost billions of dollars when the value of minibonds credit-linked to Lehman Brothers plunged after the US investment bank collapsed last year. Critics question whether banks that offer to buy back the minibonds at only 60 or 70 per cent should still have full title to the collateral.
The market values of collateralised debt obligations (CDOs) are determined by numerous factors, and a slight economic rebound in recent months could have pushed up their values. But the question is: does the modest recovery truly reflect the beginning of a bull market? We would do well to remember that we might not have experienced the full impact of the financial crisis.
All things considered, it is doubtful whether the market values of CDOs could retain the 60-70 per cent level for a sustainable period. Market trends are incredibly erratic, thus the buy-back offer is realistic and reasonable. The tug of war over compensation should not be allowed to drag on indefinitely; the longer the process drags on, the fewer benefits investors will receive.
It is understandable that investors want to hold out, hoping for a better deal. But it's baffling to see why the Securities and Futures Commission has been involved in negotiations. It has flatly rejected the offer on behalf of investors and asked banks to pay a higher value of the principal investment.
The minibond crisis has exposed a myriad of problems in the financial regulatory system - loopholes in the law, gaps in the regulatory system, inadequate investor protection and a lack of crisis management in the event of the failure of a large firm. And the SFC must shoulder a fair share of blame.
Frustrated at the lack of compensation, many minibond investors have criticised the lengthy negotiations with the sellers and the lack of clear guidelines from the regulators about handling their complaints. They are also confused as to where they should take their case - the Monetary Authority, which regulates banks, or the SFC, which regulates the securities market.
Still, we cannot ignore the fact that the SFC has failed to police banks and brokers that sold toxic investment products to ill-informed investors. It has been grossly negligent in performing due diligence in regulating Hong Kong's increasingly complex financial markets. And now it has put on a futile political show by assuming the role of saviour, which will benefit no one at best, and damage its reputation and that of the government at worst.
Our regulatory system has failed to evolve with the times, despite the emergence of increasingly obscure and complex financial products.
The ever-increasing amount of cross-sector selling has intensified calls for reform. But the key question is: do we have the will and the wit to move forward?
Friday, July 17, 2009
6 day detox programme (3)
Here is the final report of my 6 day detox programme. Several of my blog readers and friends have decided to try the programme. I will ask for their assessment and post them here.
TODAY: On the issue of responsibility
MAS was asked about its accountability in the minibonds saga at the press conference:
About the Lehman saga, there were some comments that MAS sort of allowed such instruments to be marketed to consumers. Do you think MAS should take some responsibility?
Mr Heng Swee Keat, managing director of MAS, replied: “I have highlighted a number of things that MAS has been doing in terms of regulation and the supervision of financial institutions (FIs).
“And if you go through the investigation report which has been issued, you will notice that there is a fairly detailed report that goes into the operation of the FIs, and quite a lot of those are operational lapses.
“I emphasised in my remarks that those are the actions that we expect board and senior management of FIs to take, to ensure that guidelines and standards are complied with.”
Would it be fair to say that MAS has no responsibility for the crisis?
Mr Shane Tregillis, MAS deputy managing director of market conduct, said: “We outlined the steps that we took before. In terms of setting the rules, in terms of inspecting, you can clearly outline what we have done since the problems emerged.”
About the Lehman saga, there were some comments that MAS sort of allowed such instruments to be marketed to consumers. Do you think MAS should take some responsibility?
Mr Heng Swee Keat, managing director of MAS, replied: “I have highlighted a number of things that MAS has been doing in terms of regulation and the supervision of financial institutions (FIs).
“And if you go through the investigation report which has been issued, you will notice that there is a fairly detailed report that goes into the operation of the FIs, and quite a lot of those are operational lapses.
“I emphasised in my remarks that those are the actions that we expect board and senior management of FIs to take, to ensure that guidelines and standards are complied with.”
Would it be fair to say that MAS has no responsibility for the crisis?
Mr Shane Tregillis, MAS deputy managing director of market conduct, said: “We outlined the steps that we took before. In terms of setting the rules, in terms of inspecting, you can clearly outline what we have done since the problems emerged.”
Thursday, July 16, 2009
MySudoku Contest 17 July
Try the MySudoku contest in My Paper (Wo Bao) today. It appears on Fridays. Rules of the contest can be found here: http://www.tankinlian.com/mysudoku/
The prize is TKL Sudoku Vol 1. This book of challenging puzzles can be bought at: http://www.easyapps.sg/iShop/public/common/Home.aspx
Petition to Prime Minister (2)
Read this online petition to the Prime Minister of Singapore. It ask the Prime Minister to get the Monetary Authority of Singapore and/or other relevent body to get the financial institutions to offer compensation similar to what is being offered in Hong Kong.
If you agree with the Petition, please sign it and encourage other investors (who have not been compensated) to join in.
The working committee agreed to lodge the Petition is there are at least 300 signatures. If there is insufficient signatures, we will not lodge the Petition.
If you agree with the Petition, please sign it and encourage other investors (who have not been compensated) to join in.
The working committee agreed to lodge the Petition is there are at least 300 signatures. If there is insufficient signatures, we will not lodge the Petition.
This Petition is dated 29 August 2009. We will get additional signatures from investors who attend the gathering on 22 August, especially those who are not able to use the internet.
Subscribe to:
Posts (Atom)