MAS bans 10 financial institutions from selling structured notes


MAS bans 10 financial institutions from selling structured notes. Consumers say:
Punishment makes no real difference
THE Monetary Authority of Singapore (MAS) has banned 10 financial institutions (FIs) from dealing in structured notes for up to two years.
By Lediati Tan
09 July 2009

THE Monetary Authority of Singapore (MAS) has banned 10 financial institutions (FIs) from dealing in structured notes for up to two years.

The 10 FIs, which include three banks (ABN Amro, DBS Bank and Maybank), were taken to task for the way they sold Lehman-linked structured notes to consumers.

MAS’ investigation report released yesterday found these FIs had failed to comply with its guidelines on the sale and marketing of investment products. (See report on right.)

But consumers who got burnt investing in the toxic assets felt the ban was of no benefit to them.

Investors contacted by The New Paper felt that MAS has allowed these FIs to get away lightly.

Madam LS Lee, 37, an administrator who invested $300,000 in Lehman Minibonds, said: ‘The ban doesn’t make any difference, nobody is going to buy structured notes anyway.

‘While I am satisfied that action is being taken to make sure there won’t be future victims, not enough is being done.

‘If MAS really finds them guilty, can MAS do something to pay us back?’

Mr Chung Wing Kee, 53, an engineer who sank $500,000 into Minibonds, said: ‘The punishment does not make sense. Who in the right mind will buy structured notes now?

‘Our premise has always been that banks have done wrong. We don’t need MAS to come up with a statement like this.

‘It’s like closing the barn door after the horse has bolted.’

‘MAS should fight for us’

Another investor, who wanted to be known only as Mr Yap, compared the MAS actions with those taken by Hong Kong’s Securities and Futures Commission.

The retiree, in his late 50s, who invested $200,000 in Minibonds, said: ‘I think that MAS should do what Hong Kong’s regulator is doing, which is to fight for the investors.’

South China Morning Post reported last week that Hong Kong’s regulator has turned down the offer by a group of 16 Hong Kong banks that sold Lehman-linked Minibonds to repay investors 60 to 70 per cent of the principal invested.

Mr Martin Wheatley, the regulator’s chief executive, was quoted as saying that the proposal would be unfair if the underlying assets were worth more.

Noting that structured notes were sold in Singapore for a few years before Lehman’s collapse, Madam Lee said: ‘As the regulator, MAS approved the sale of these products.

‘It should have prevented this from happening before it got too big.’

Despite the investors’ misgivings, the MAS report may provide some backbone to those planning legal action against the FIs.

When contacted, lawyer Conrad Campos, who is acting for Minibond Investors Action Group, said: ‘The report reaffirms what investors were complaining about, that they were mis-sold the products.

‘MAS findings are helpful, but I think given the nature of the products, they should not have been sold to many of the retail investors in the first place.

‘What investors are looking for is a more holistic approach to helping them recover some of their lost savings.’


Tags: , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: