Source
3 Feb 2009
Enoch Yiu
The city’s corporate police seem to be getting smarter and faster – at least when it comes to such high-profile cases as the minibond issue.
While in the past insider dealing cases needed seven or eight years to reach a final verdict, the Securities and Futures Commission has made history by taking only four months to reach settlement with Sun Hung Kai Investment Services on the minibond refund.
The brokerage has agreed to voluntarily pay back all HK$85 million to 310 investors in minibonds issued or guaranteed by collapsed Lehman Brothers Holdings. The landmark settlement shows the commission can move mountains when it wants to.
It also appears to be a smart choice. While the broker insisted it had done nothing wrong, it agreed to give a full refund to investors. Had the SFC opted to take the case to the Market Misconduct Tribunal, it might have waited many years for a ruling and investors might not have got their money back in the end.
Our regulatory friends have assured White Collar that Sun Hung Kai is not the only one in the SFC’s sights. It is checking other minibond distributors – understood to include two brokers and 21banks – and will demand a full refund to clients if it is confirmed they had misled investors into buying the products without explaining the risks.
Once the SFC reached an agreement with an institution, all of the firm’s clients would receive the compensation.
White Collar is concerned investors may now ignore the moral hazard of investing in such dubious products. The 310 Sun Hung Kai investors who bought the Lehman minibonds did not need to bear any investment losses at all.
The SFC considered they should be fully repaid as they would never have been lured into buying the products if brokers and banks had clearly explained the risks involved.
But Sun Hung Kai has been a broker in Hong Kong for 40 years and has many sophisticated clients. Were all these clients so naive as to be misled by the brokerage staff? If some investors bought the products with their eyes open, they should bear at least some responsibility.
Has a precedent been set where investors use high-profile complaints and street protests to pressure the SFC to force intermediaries to accept liability for the investors’ own wrong investment decisions?
The other problem created by the Sun Hung Kai settlement is the expectation gap. Other minibond investors may not accept lower compensation levels from their banks or brokerages. It will certainly add pressure to other banks and brokers to follow suit, but neither the SFC nor the Hong Kong Monetary Authority can force them to offer the same settlement.
It is easy to understand why Sun Hung Kai was willing to pay up – the money involved was not large, at less than 1per cent of all minibonds sold. Also, if it said no to the SFC, it would have risked losing its licence.
For the banks, some of which have sold several billion dollars worth of minibonds, a full settlement may be less attractive. Although the SFC can mete out disciplinary action, it is the HKMA that supervises their daily operations and issues their licences.
As this column has mentioned before, the government should seriously consider a single financial regulator for banks and brokers.
Monday, February 2, 2009
SCMP:Lawmakers want brokerage's role in Lehman products saga revealed
Source
3 Feb 2009
Paggie Leung
Legislators have urged the Securities and Futures Commission to publish in full the details of its investigation into Sun Hung Kai Investment Services’ sales of Lehman Brothers investment products.
“Why don’t you release the investigation report to let us decide whether your penalty is a fair one?” financial affairs panel legislator Albert Ho Chun-yan asked SFC chief executive Martin Wheatley yesterday at a meeting to discuss reports on the minibond saga prepared by the commission and the Hong Kong Monetary Authority.
The question came 11 days after the SFC reprimanded the company over its sales of minibonds.
The firm immediately announced it would repay about 300 investors HK$85 million and review its internal systems. It did not acknowledge any liability or wrongdoing.
“No one knows what Sun Hung Kai did … we are all in the dark,” Mr Ho said. He said he would have preferred it if the SFC had just fined the firm and used that to repay the investors. “The message would be clearer and fairer,” he said.
Civic Party legislator Ronny Tong Ka-wah said disclosure would let firms know the “things [the SFC] is going to do to the institutions to make them realise that in future, they have to adhere to regulations faithfully”.
However, the commission said it had achieved the best outcome in the case, given that it did not have the power to order the company to pay compensation.
“Getting compensation back to its investors is the most important part of this investigation process and imposing a fine would not achieve that,” Mr Wheatley told lawmakers.
“I think you have to realise that it would make any negotiation we have with any of the banks concerned more difficult if we couldn’t achieve any agreement [with Sun Hung Kai].”
Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt in September 2008. Minibonds are not corporate bonds, but consist of highrisk credit-linked derivatives. They are marketed as a proxy investment in well-known companies.
3 Feb 2009
Paggie Leung
Legislators have urged the Securities and Futures Commission to publish in full the details of its investigation into Sun Hung Kai Investment Services’ sales of Lehman Brothers investment products.
“Why don’t you release the investigation report to let us decide whether your penalty is a fair one?” financial affairs panel legislator Albert Ho Chun-yan asked SFC chief executive Martin Wheatley yesterday at a meeting to discuss reports on the minibond saga prepared by the commission and the Hong Kong Monetary Authority.
The question came 11 days after the SFC reprimanded the company over its sales of minibonds.
The firm immediately announced it would repay about 300 investors HK$85 million and review its internal systems. It did not acknowledge any liability or wrongdoing.
“No one knows what Sun Hung Kai did … we are all in the dark,” Mr Ho said. He said he would have preferred it if the SFC had just fined the firm and used that to repay the investors. “The message would be clearer and fairer,” he said.
Civic Party legislator Ronny Tong Ka-wah said disclosure would let firms know the “things [the SFC] is going to do to the institutions to make them realise that in future, they have to adhere to regulations faithfully”.
However, the commission said it had achieved the best outcome in the case, given that it did not have the power to order the company to pay compensation.
“Getting compensation back to its investors is the most important part of this investigation process and imposing a fine would not achieve that,” Mr Wheatley told lawmakers.
“I think you have to realise that it would make any negotiation we have with any of the banks concerned more difficult if we couldn’t achieve any agreement [with Sun Hung Kai].”
Hong Kong investors lost billions of dollars on minibonds guaranteed by Lehman Brothers when the US investment bank went bankrupt in September 2008. Minibonds are not corporate bonds, but consist of highrisk credit-linked derivatives. They are marketed as a proxy investment in well-known companies.
Ten of the worst ... scams to avoid
Dear Mr Tan
Please find an updated list of top ten scams from the UK Guardian Feb 2 2009 . Land Banking is listed at number 4 and continues to be a problem. Is there any chance some action will be taken on this in Singapore
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Ten of the worst ... scams to avoid
More than 3 million consumers fall victim to scams each year, but you don't have to be one of them. Tony Levene picks the main ones to avoid
Tony Levene
Monday February 2 2009
guardian.co.uk
Scams cost UK consumers at least GBP3.5bn last year, according to the Office of Fair Trading (OFT). And the older you are, the more likely you are to lose money: older folk tend to have cash as well as being more trusting.
The OFT estimates 3 million UK consumers a year fall victim to scams sent by post, email, text or over the phone. But the real figure could be much higher. Many victims fail to report losses, often due to embarrassment.
Today is the first day of the OFT's scams awareness month designed to raise awareness of mass marketed scams. The consumer watchdog is setting up a nationwide "Scamnesty" scheme, which calls on consumers to drop scam mailings into scamnesty bins or boxes at local libraries and public areas across the country. The OFT says the information collected will help identify and develop strategies to combat the worst criminals.
So what are the scams most likely to catch people out? Here is our top 10.
Please find an updated list of top ten scams from the UK Guardian Feb 2 2009 . Land Banking is listed at number 4 and continues to be a problem. Is there any chance some action will be taken on this in Singapore
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Ten of the worst ... scams to avoid
More than 3 million consumers fall victim to scams each year, but you don't have to be one of them. Tony Levene picks the main ones to avoid
Tony Levene
Monday February 2 2009
guardian.co.uk
Scams cost UK consumers at least GBP3.5bn last year, according to the Office of Fair Trading (OFT). And the older you are, the more likely you are to lose money: older folk tend to have cash as well as being more trusting.
The OFT estimates 3 million UK consumers a year fall victim to scams sent by post, email, text or over the phone. But the real figure could be much higher. Many victims fail to report losses, often due to embarrassment.
Today is the first day of the OFT's scams awareness month designed to raise awareness of mass marketed scams. The consumer watchdog is setting up a nationwide "Scamnesty" scheme, which calls on consumers to drop scam mailings into scamnesty bins or boxes at local libraries and public areas across the country. The OFT says the information collected will help identify and develop strategies to combat the worst criminals.
So what are the scams most likely to catch people out? Here is our top 10.
1. Homeworking scams
Credit-crunched people turning to part-time work to help balance budgets need to watch out. Homeworking scamsters advertise "easy earnings" in return for cash. But all they send out is a leaflet telling people to advertise "easy earnings" schemes. Others promise big rewards for packing goods ? they take the money upfront and victims never see any earnings, even if they are conned into packing goods.
Credit-crunched people turning to part-time work to help balance budgets need to watch out. Homeworking scamsters advertise "easy earnings" in return for cash. But all they send out is a leaflet telling people to advertise "easy earnings" schemes. Others promise big rewards for packing goods ? they take the money upfront and victims never see any earnings, even if they are conned into packing goods.
2. Racing tipsters
Many tipsters try to find winners, but some offer "guaranteed" tips which turn into a regular income in return for a fee. Except they don't. Others ask you to put money on horses for them in return for a 50% share of winnings, while promising to recompense losing bets. The only safe bet is that you won't see your money again.
Many tipsters try to find winners, but some offer "guaranteed" tips which turn into a regular income in return for a fee. Except they don't. Others ask you to put money on horses for them in return for a 50% share of winnings, while promising to recompense losing bets. The only safe bet is that you won't see your money again.
3. Bogus foreign lotteries
You receive a letter from Spain saying you have won a million euros in a lottery you have never heard of, let alone entered. The fraudsters demand you send some money to "unlock the cash". And then some more. There is no prize ? victims can lose tens of thousands of pounds.
You receive a letter from Spain saying you have won a million euros in a lottery you have never heard of, let alone entered. The fraudsters demand you send some money to "unlock the cash". And then some more. There is no prize ? victims can lose tens of thousands of pounds.
4. Landbanking
Fraudsters buy a field, divide it into tiny slices and sell each one for big money ? usually ?10,000 ? by convincing victims the land will soon get planning permission. The land never gets planning consent and the landbankers disappear with your money, leaving you with valueless land.
Fraudsters buy a field, divide it into tiny slices and sell each one for big money ? usually ?10,000 ? by convincing victims the land will soon get planning permission. The land never gets planning consent and the landbankers disappear with your money, leaving you with valueless land.
5. Pyramid schemes
A classic pyramid scheme involves getting lots of people to invest small amounts of money and offering them a reward for every new recruit they sign up. For example, you might be invited to invest ?3,000 of your own money and asked to recruit seven other investors who will pay you ?3,000 each. You now have ?21,000. The incentive for your friends is that they are "allowed" to go out and each recruit seven other investors so they get ?21,000 as well. It is illegal and people soon run out of friends to con.
A classic pyramid scheme involves getting lots of people to invest small amounts of money and offering them a reward for every new recruit they sign up. For example, you might be invited to invest ?3,000 of your own money and asked to recruit seven other investors who will pay you ?3,000 each. You now have ?21,000. The incentive for your friends is that they are "allowed" to go out and each recruit seven other investors so they get ?21,000 as well. It is illegal and people soon run out of friends to con.
6. Business opportunity scams
Here you are offered a "franchise" or other business idea in return for thousands of pounds in fees. The attraction is along the lines of "thousands of pounds a month without leaving the comfort of your armchair." The idea is usually rubbish and the originator runs off with your money.
Here you are offered a "franchise" or other business idea in return for thousands of pounds in fees. The attraction is along the lines of "thousands of pounds a month without leaving the comfort of your armchair." The idea is usually rubbish and the originator runs off with your money.
7. Phoney jobs
Another credit crunch special. Websites promise jobs with high pay for an hour's work a day for those with no experience or skills. The first snag is you have to send substantial cash sums for the application form upfront. The second snag is that the job does not exist.
Another credit crunch special. Websites promise jobs with high pay for an hour's work a day for those with no experience or skills. The first snag is you have to send substantial cash sums for the application form upfront. The second snag is that the job does not exist.
8. Bouncing cheques
Advertise your car or motorbike in a legitimate website or publication and you could get someone offering you more than you ask for. They will back this up by sending you a "certified cheque" or "banker's draft" for the cash. By the time you discover the cheque is a forgery your vehicle is halfway across Europe. Many insurers will not pay out for "theft by deception".
Advertise your car or motorbike in a legitimate website or publication and you could get someone offering you more than you ask for. They will back this up by sending you a "certified cheque" or "banker's draft" for the cash. By the time you discover the cheque is a forgery your vehicle is halfway across Europe. Many insurers will not pay out for "theft by deception".
9. Boiler room investment frauds
Very persuasive salespeople call you up ? usually from abroad ? to offer you sure-fire share investments. The shares, if they exist at all, are overpriced by up to 100 times. And it is impossible to sell them. It is easy to lose ?20,000 or more.
Very persuasive salespeople call you up ? usually from abroad ? to offer you sure-fire share investments. The shares, if they exist at all, are overpriced by up to 100 times. And it is impossible to sell them. It is easy to lose ?20,000 or more.
10. Phishing
This is nothing to do with angling! Fraudsters send emails purporting to come from your bank's security department, asking you for your log-in, password and other personal details. Once they have these they loot your account. No legitimate bank ever asks for these details. And banks are getting tougher with victims, telling some they will not be recompensed for their losses because, by now, everyone should know about this racket.
Tony Levene is the author of How to avoid scams (Age Concern ?9.99)
Copyright Guardian Newspapers Limited 2009
This is nothing to do with angling! Fraudsters send emails purporting to come from your bank's security department, asking you for your log-in, password and other personal details. Once they have these they loot your account. No legitimate bank ever asks for these details. And banks are getting tougher with victims, telling some they will not be recompensed for their losses because, by now, everyone should know about this racket.
Tony Levene is the author of How to avoid scams (Age Concern ?9.99)
Copyright Guardian Newspapers Limited 2009
Sunday, February 1, 2009
Attend the interview with the bank now
Dear Mr. Tan,
I bought minibonds series. When I heard about the lehman brothers bankruptcy in last September, I went to the bank and asked them what would be the next step. They told me to wait.
I didn't hear anything specific for a couple of months so I went back to see the rep who sold me the product. He told me that I should meet his colleague for an interview. I was skeptical given what I read in newspaper about categorizing graduates and non graduates. But he managed to persuade me that it doesn't hurt and someone would call me the next working day.
Someone just called me to have an appointment. Can you advise whether going to meet this manager would help or hurt my chances of getting my money back?
REPLY
It is all right to attend the meeting. You should tell the truth, and focus on the questions listed here.
If you have been truly misled, you should expect a fair offer of compensation. If you do not get a fair offer, you can escalate the complaint to FIDREC.
Please read my blog in detail for the other information that you need. I am not able to advice you individually on this matter. I hope you understand my limitation.
I bought minibonds series. When I heard about the lehman brothers bankruptcy in last September, I went to the bank and asked them what would be the next step. They told me to wait.
I didn't hear anything specific for a couple of months so I went back to see the rep who sold me the product. He told me that I should meet his colleague for an interview. I was skeptical given what I read in newspaper about categorizing graduates and non graduates. But he managed to persuade me that it doesn't hurt and someone would call me the next working day.
Someone just called me to have an appointment. Can you advise whether going to meet this manager would help or hurt my chances of getting my money back?
REPLY
It is all right to attend the meeting. You should tell the truth, and focus on the questions listed here.
If you have been truly misled, you should expect a fair offer of compensation. If you do not get a fair offer, you can escalate the complaint to FIDREC.
Please read my blog in detail for the other information that you need. I am not able to advice you individually on this matter. I hope you understand my limitation.
Insurance company reject claim due to non-cooperation
Dear Mr Tan,
I had an accident on 2005 and had pleaded guilty at the court's hearing. My mother was the one who informed the insurance agent of this accident as the insurance was under her name.
Last year, I received first law letter from the insurance company that they will severe ties with me as I have bleached their contract of not cooperating with them on this case. I had once received a called from them but have told them that i was busy and would return call back which I had told my mother to. Since then, I had not received any further contact from them until this first lawyer letter.
Now I received a second letter to attend to court hearing between the plaintiff (the one whose car I knocked onto), the insurance company as co-applicant, and I as the defendant. Could you advice me?
REPLY
You should reply to the lawyer's letter to explain that you have been willing to cooperate, and you are waiting for their communication.
As to the letter to attend the court hearing, you should bring it to your insurance company's attention. They have to deal with this matter. As they are more experienced, they will know what they have to do.
I had an accident on 2005 and had pleaded guilty at the court's hearing. My mother was the one who informed the insurance agent of this accident as the insurance was under her name.
Last year, I received first law letter from the insurance company that they will severe ties with me as I have bleached their contract of not cooperating with them on this case. I had once received a called from them but have told them that i was busy and would return call back which I had told my mother to. Since then, I had not received any further contact from them until this first lawyer letter.
Now I received a second letter to attend to court hearing between the plaintiff (the one whose car I knocked onto), the insurance company as co-applicant, and I as the defendant. Could you advice me?
REPLY
You should reply to the lawyer's letter to explain that you have been willing to cooperate, and you are waiting for their communication.
As to the letter to attend the court hearing, you should bring it to your insurance company's attention. They have to deal with this matter. As they are more experienced, they will know what they have to do.
Forum, Sat 7 Feb 2009
I have agreed to speak at the following forum on the topic "Challenges that alternative/opposition parties have to face".
Date: 7 Feb 2009, Saturday
Time: 2-5 pm
Place: Copthorne Orchid Hotel, Dunearn Road, Radius Room
I hope that the regular visitors of my blog will attend this forum.
Date: 7 Feb 2009, Saturday
Time: 2-5 pm
Place: Copthorne Orchid Hotel, Dunearn Road, Radius Room
I hope that the regular visitors of my blog will attend this forum.
More details here:
Distribution cost of life insurance policy
Dear Mr. Tan,
I read your survey about "life insurance policy". I bought a policy a few months ago, and the agent did not tell me about the distribution cost. I am now aware about it, after reading the survey results. I feel cheated that such a high cost (representing nearly two years of my savings) was not brough to my attention, although it is printed in the many pages of the benefit illustration. Can I seek a recourse now?
REPLY
It is the duty of the insurance agent to disclose to you about the distribution cost of the life insurance policy that you have bought.
If it is not brought to your attention, I suggest that you should make a complaint to the insurance company and request that the policy be cancelled for a full refund. If the company does not agree, you can lodge a complaint with FIDReC (www.fidrec.org.sg).
You should look at the amount of the distribution cost. If it is a few hundred dollars, it is a fair remuneration to the insurance agents, in which case, you should not make the complaint. However, if it is $1,000 or more, you can make the complaint.
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