30 Dec 2008
The Hong Kong Association of Banks announced yesterday that leftover values of Lehman Brothers minibonds are as much as 78.31 percent.
However, a source from the banking sector said the pricing, set as at November 21, is no longer applicable because of fundamental uncertainties following a legal challenge from Lehman liquidators.
"There have been no attempts to update the valuation," the source said.
The pricing of the minibonds will continue once the legal issue is settled, the source said.
However, "there will be potentially additional costs to be incurred as a result of the legal challenge.''
The banking association also said: ``If this claim [from Lehman's liquidators] is upheld, the value of the minibonds will significantly decrease.''
According to a Legislative Council document submitted by the association's Lehman task force yesterday, prices, as at November 21, of the minibonds ranged from 0.82 percent to 64.03 percent on average.
Series 11, tranche A, was worth the most among all the series and its price was 78.31 percent, after calculating the value of the underlying collateral. Those who bought the product for US$100 (HK$780) would get US$78.31. Remaining values of series five to nine of the minibonds were only 0.82 percent.
The pricing information no longer represents the current market value of the minibonds and the banks cannot assess how much a minibond investor may recover from the proceeds of the collateral underlying the minibonds, the association added.
A Legco meeting relating to the government buyback proposal for the minibonds will be held this morning.
Late last month, the minibond trustee, a US unit of HSBC (0005), received a letter from legal advisers to Lehman in the United States that the proceeds from any sale of the underlying collateral for the minibonds should be paid to the collapsed US investment bank before the issuer of the minibonds and in turn the investors.
The banks are still circulating the documents for the provision of up to HK$100 million to the trustee and expect it will not only be used for paying legal fees.
"The precise terms of the proposed funding have not yet been agreed between the banks and the trustee," the association said.
Monday, December 29, 2008
Hong Kong: Lehman dozen feeling bullied
A dozen investors in Lehman Brothers products suffered a further setback yesterday when the Small Claims Tribunal adjourned until March a hearing on their demands for refunds. Adjudicator Anthony Chow Siu- wo told the tribunal that a further 100 claims needed to be processed, while one of the banks being sued, DBS, as well as an employee of Chong Hing Bank, had asked for their cases to be transferred to the District Court since they needed legal representation.
Legal representatives are not permitted at a hearing by the tribunal, which is limited to dealing with claims not exceeding HK$50,000.
Investors suing DBS complained of being bullied, saying they could not afford the fees in the District Court.
Chow told the 12 individual claimants seeking refunds from six banks that they will have to wait for another three months before the hearing can be continued.
Four claimants who bought DBS' Constellation products were told by a representative of the bank at the tribunal that their products had zero value.
Chow said the problem with some of the cases was that no one, including the banks, knew the value of the financial products that had been sold, though they may have been valued at zero for a certain period. Thus, one could not calculate the amount of money lost by investors, Chow said. ADELE WONG
Thought for the day - make an exception of myself
Contributed by Ho Cheow Seng
"The essence of immorality is the tendency to make an exception of myself: Jane Addams
(An example is a ruler who passes laws for his people and exempts himself from those very laws)
SCMP:Mis-selling of minibonds had 1980s precedent in Britain
http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=20Y5PIVUMQU5&linkid=593eb6f4-f2d5-4fa5-b42a-9ab1cf136f74&pdaffid=8HM4kDzWViwfc7AqkYlqIQ%3d%3d
29 Dec 2008
Jimmy Chow, Cheung Sha Wan
The controversy over the minibond saga does not only relate to compensation. It is about [alleged] mis-selling.
Instead of paying investors of Lehman’s minibonds back, local banks have come up with a complex way by providing a pool of HK$100 million to help the minibond trustee to perform its duty to protect the “interest of minibond investors” (“Deduction decision in legal fight irks Lehman investors”, December 19).
If a retired taxi driver did not seem to understand the minibond in which he had invested his life savings, he can hardly be expected to grasp this legal game [unfolding in the US]. Neither can I.
So far, only a limited number of people have received compensation from the banks, a small percentage of total claimants.
The mis-selling of securities in Hong Kong, which mostly occurred over the last two years, is reminiscent of the mis-selling in Britain between 1988 and 1994.
In 1988 the British government encouraged people to make private provision for retirement in addition to the state pension by purchasing personal pension plans.
It turned out that fast-talking salesmen misled people into buying retirement pension products they did not really need.
Realising there had been mis-selling on a huge scale, in 1994 the British financial services regulator “instructed” banks and insurers to stop these practices and review all cases.
By 1997 only 5 per cent of the cases were cleared up.
That year, the newly-elected Labour government decided to “name and shame” and to fine the laggards.
Disciplinary action was taken against 349 firms which resulted in fines totalling £11million (HK$126.3 million). Nearly £12 billion was paid in compensation to policyholders.
I hope I am wrong, but if our government remains reluctant to conduct a radical review on both the minibond scandal and the city’s regulatory framework, the saga will drag on indefinitely.
Jimmy Chow, Cheung Sha Wan
The controversy over the minibond saga does not only relate to compensation. It is about [alleged] mis-selling.
Instead of paying investors of Lehman’s minibonds back, local banks have come up with a complex way by providing a pool of HK$100 million to help the minibond trustee to perform its duty to protect the “interest of minibond investors” (“Deduction decision in legal fight irks Lehman investors”, December 19).
If a retired taxi driver did not seem to understand the minibond in which he had invested his life savings, he can hardly be expected to grasp this legal game [unfolding in the US]. Neither can I.
So far, only a limited number of people have received compensation from the banks, a small percentage of total claimants.
The mis-selling of securities in Hong Kong, which mostly occurred over the last two years, is reminiscent of the mis-selling in Britain between 1988 and 1994.
In 1988 the British government encouraged people to make private provision for retirement in addition to the state pension by purchasing personal pension plans.
It turned out that fast-talking salesmen misled people into buying retirement pension products they did not really need.
Realising there had been mis-selling on a huge scale, in 1994 the British financial services regulator “instructed” banks and insurers to stop these practices and review all cases.
By 1997 only 5 per cent of the cases were cleared up.
That year, the newly-elected Labour government decided to “name and shame” and to fine the laggards.
Disciplinary action was taken against 349 firms which resulted in fines totalling £11million (HK$126.3 million). Nearly £12 billion was paid in compensation to policyholders.
I hope I am wrong, but if our government remains reluctant to conduct a radical review on both the minibond scandal and the city’s regulatory framework, the saga will drag on indefinitely.
Sunday, December 28, 2008
HK: More frustration for minibond investors at tribunal
http://www.thestandard.com.hk/breaking_news_detail.asp?id=11349&icid=3&d_str=20081229
Lehman Brothers minibond investors have had their hearing at the Small Claims Tribunal in Wan Chai adjourned to March 23.
More than 10 investors who had bought products from banks such as DBS, Bank of China and CITIC Ka Wah filed cases with the tribunal, which has the power to claim compensation up to a ceiling of HK$50,000.
At the hearing, DBS representatives applied for cases against their bank to be heard in the District Court, citing complications in the case and the bank's need for legal representation. Cases needing legal representation cannot be heard at the tribunal.
More than 10 investors who had bought products from banks such as DBS, Bank of China and CITIC Ka Wah filed cases with the tribunal, which has the power to claim compensation up to a ceiling of HK$50,000.
At the hearing, DBS representatives applied for cases against their bank to be heard in the District Court, citing complications in the case and the bank's need for legal representation. Cases needing legal representation cannot be heard at the tribunal.
Saturday, December 27, 2008
Satisfaction with Life Index
http://en.wikipedia.org/wiki/Satisfaction_with_Life_Index#International_Ranking_.282006.29
Rank Country SWL
1 Denmark 273.4
2 Switzerland 273.3
8 Canada 253.3
16 Malaysia,
New Zealand
United States 246.7
25 Australia 243.3
33 Germany 240.0
41 United Kingdom 236.7
48 Singapore 230.0
61 France
Hong Kong
Indonesia 220.0
71 Thailand 216.7
77 Philippines 213.3
81 China 210.0
88 Japan 206.7
100 South Korea 193.3
122 India 180.0
177 Zimbabwe 110.0
Singapore rank below Malaysia (surprising!), USA and UK but ahead of Hong Kong, Japan (surprising!) and France.
Speaker's Corner, 27 Dec 2008 - Speech
Speaker’s Corner 27 Dec 2008
1. Meetings at Hong Lim Park
The first meeting for investors of the credit linked notes was held on 11 October 2008. This was followed by another 9 meetings. The first 8 meetings were held at weekly intervals while the last two meeting was held at fortnightly intervals. Today’s meeting is the 10th and final meeting to be held at Hong Lim Park for the credit linked notes.
You may wonder why Hong Lim Park was chosen to be the venue for the meeting. The most important reason is that it is free and is available at any time. However, it is not quite convenient, due to the lack of facilities. There is no sound system and everyone had to stand. On a few occasions, we had to share the use of the park with other activities. It rained on one meeting.
Still, it is a wonderful experience for us to meet at Hong Lim Park and to get to know each other.
2. Petitions
During the past three months, a total of four petitions sent organised, of which three petitions were presented to the Monetary Authority of Singapore.
The first petition dated 10 October and signed by 983 people, asked the Government to look into any possible wrong doings by the financial institutions that created and marketed the credit linked notes.
The second petition dated 17 October and signed by 277 people, asked the MAS to investigate the sales training given by the financial institutions to their representatives who sold the credit linked notes.
The fourth petition dated 31 October and signed by 1,073 people, asked the MAS to review the complaint handling process of the financial institutions, to set up an independent unit to receive the complaints and to encourage the financial institutions to adopt a collective approach in offering fair compensation to the investors.
These petitions were presented to the chairman and executive director of MAS and were acknowledged. My requests to meet with the chairman or senior management of MAS were declined. I received replies that any development would be communicated to the public through media releases.
Up to now, we have not received any communication on whether the specific requests contained in the petitions had been considered or implemented.
3. Complaint Handling Process
We have received reports that about 5,000 complaints had been received by the financial institutions that sold the credit linked notes. The MAS had issued a statement that the complaint handling processes of these institutions had generally met their expected standard.
We have not been provided with information on the number of people that have received full or partial compensation for the alleged mis-selling of the product. A small number of the so-called vulnerable investors had been compensated. Although the actual number is not disclosed, this is estimated to account for less than 2 percent of the investors.
The perception of the investors is quite different from the MAS. Many investors found the complaint handling process to be carried out in an unfair and unsatisfactory manner.
The anecdotal reports from any investors are that their complaints of alleged mis-selling were rejected by the financial institutions.
MAS had required the financial institutions to give their decision on each complaint within four weeks. This deadline appeared to have been not met. There are many reports from investors that they had not received any decision after six weeks or longer.
The next step for the investors is to lodge a complaint with the dispute resolution center, called FIDREC. From our survey, a small number of investors had taken this second step to lodge their complaints. Most of the investors intend to take this second step, but the process has been extremely slow and difficult.
4. Collective legal action
Many investors had indicated that they will join in a collective legal action against the financial institutions. It will be correct for me to say, on their behalf, they had taken this decision with great reluctance and difficulty. They would have preferred a more amicable way to get fair compensation for their financial loss.
I like to ask the investors to join the different groups representing the different types of credit linked notes, namely the Minibonds, High Notes, Jubilee Notes and the Pinnacle Notes.
The leaders of these groups will be holding separate meetings next year for the investors. As each group is smaller, it is easier to arrange a more conducive place to hold an indoor meeting.
Each investor group is also setting up a website and an e-mail list to communicate with their members. The key activities of these groups are to educate their members, provide assistance and advice, and to organise the collective legal action.
I shall be in touch with the leaders of these groups and to co-ordinate the activities of the various groups, if required.
5. My blog
I will continue to keep all investors updated through my blog, www.tankinlian.blogspot.com.
I wish to thank a few volunteers who had been providing me with daily updates of news and articles from other sources. I have put the relevant articles in my blog. I encourage the investors to the postings in my blog to keep in touch with the developments.
6. Conclusion
I am sorry that there was little progress in getting fair compensation for your financial losses, in spite of the great efforts that were put in by many people. We have tried many different approaches, but keep hitting a stone wall – even tough we keep our eyes “wide open”.
During the past three months, we have made many friends from among the investors and volunteers. Let us continue our friendship and continue our efforts to seek fair compensation for the investors, although the future efforts will be done outside of Hong Lim Park.
Let me wish all of you, all the best for 2009.
Tan Kin Lian
1. Meetings at Hong Lim Park
The first meeting for investors of the credit linked notes was held on 11 October 2008. This was followed by another 9 meetings. The first 8 meetings were held at weekly intervals while the last two meeting was held at fortnightly intervals. Today’s meeting is the 10th and final meeting to be held at Hong Lim Park for the credit linked notes.
You may wonder why Hong Lim Park was chosen to be the venue for the meeting. The most important reason is that it is free and is available at any time. However, it is not quite convenient, due to the lack of facilities. There is no sound system and everyone had to stand. On a few occasions, we had to share the use of the park with other activities. It rained on one meeting.
Still, it is a wonderful experience for us to meet at Hong Lim Park and to get to know each other.
2. Petitions
During the past three months, a total of four petitions sent organised, of which three petitions were presented to the Monetary Authority of Singapore.
The first petition dated 10 October and signed by 983 people, asked the Government to look into any possible wrong doings by the financial institutions that created and marketed the credit linked notes.
The second petition dated 17 October and signed by 277 people, asked the MAS to investigate the sales training given by the financial institutions to their representatives who sold the credit linked notes.
The fourth petition dated 31 October and signed by 1,073 people, asked the MAS to review the complaint handling process of the financial institutions, to set up an independent unit to receive the complaints and to encourage the financial institutions to adopt a collective approach in offering fair compensation to the investors.
These petitions were presented to the chairman and executive director of MAS and were acknowledged. My requests to meet with the chairman or senior management of MAS were declined. I received replies that any development would be communicated to the public through media releases.
Up to now, we have not received any communication on whether the specific requests contained in the petitions had been considered or implemented.
3. Complaint Handling Process
We have received reports that about 5,000 complaints had been received by the financial institutions that sold the credit linked notes. The MAS had issued a statement that the complaint handling processes of these institutions had generally met their expected standard.
We have not been provided with information on the number of people that have received full or partial compensation for the alleged mis-selling of the product. A small number of the so-called vulnerable investors had been compensated. Although the actual number is not disclosed, this is estimated to account for less than 2 percent of the investors.
The perception of the investors is quite different from the MAS. Many investors found the complaint handling process to be carried out in an unfair and unsatisfactory manner.
The anecdotal reports from any investors are that their complaints of alleged mis-selling were rejected by the financial institutions.
MAS had required the financial institutions to give their decision on each complaint within four weeks. This deadline appeared to have been not met. There are many reports from investors that they had not received any decision after six weeks or longer.
The next step for the investors is to lodge a complaint with the dispute resolution center, called FIDREC. From our survey, a small number of investors had taken this second step to lodge their complaints. Most of the investors intend to take this second step, but the process has been extremely slow and difficult.
4. Collective legal action
Many investors had indicated that they will join in a collective legal action against the financial institutions. It will be correct for me to say, on their behalf, they had taken this decision with great reluctance and difficulty. They would have preferred a more amicable way to get fair compensation for their financial loss.
I like to ask the investors to join the different groups representing the different types of credit linked notes, namely the Minibonds, High Notes, Jubilee Notes and the Pinnacle Notes.
The leaders of these groups will be holding separate meetings next year for the investors. As each group is smaller, it is easier to arrange a more conducive place to hold an indoor meeting.
Each investor group is also setting up a website and an e-mail list to communicate with their members. The key activities of these groups are to educate their members, provide assistance and advice, and to organise the collective legal action.
I shall be in touch with the leaders of these groups and to co-ordinate the activities of the various groups, if required.
5. My blog
I will continue to keep all investors updated through my blog, www.tankinlian.blogspot.com.
I wish to thank a few volunteers who had been providing me with daily updates of news and articles from other sources. I have put the relevant articles in my blog. I encourage the investors to the postings in my blog to keep in touch with the developments.
6. Conclusion
I am sorry that there was little progress in getting fair compensation for your financial losses, in spite of the great efforts that were put in by many people. We have tried many different approaches, but keep hitting a stone wall – even tough we keep our eyes “wide open”.
During the past three months, we have made many friends from among the investors and volunteers. Let us continue our friendship and continue our efforts to seek fair compensation for the investors, although the future efforts will be done outside of Hong Lim Park.
Let me wish all of you, all the best for 2009.
Tan Kin Lian
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