car insurance: Nov 6, 2011

Sunday, November 6, 2011

After the Fall

Watch this video
http://www.youtube.com/watch?v=xigkb7Cg3kg

Kin Lian the link between Pinnacle, High Notes cases

Published in the Business Times. I hope that the top management of DBS reads the Business Times and decide to be magnanimous.

By GRACE LEONG(SINGAPORE) Two court rulings issued this week - one in Singapore and the other in New York involving Singapore investors of DBS High Notes 5 and Morgan Stanley's Pinnacle Notes respectively - couldn't have turned out more differently.But they have one thing in common - former presidential hopeful Tan Kin Lian. He was among those providing advice to investors affected by the bankruptcy of US investment giant Lehman Brothers, and organised petitions to the government to investigate possible wrongdoings by local banks in the sale and marketing of Lehman- linked products such as High Notes, Pinnacle Notes and Minibonds.He said that the Pinnacle Notes ruling highlighted the difference in legal recourse available to investors in Singapore and America.'In the US, a lawyer can bring cases under a 'success fee' arrangement, where the investors do not have to bear any legal cost, if they do not succeed in the case. The lawyer takes on such cases after studying the chances of success for the effort, time and expense he makes in undertaking the case. But it gives the small people a chance to seek redress.'So far, the Pinnacle Notes investors have not had to cough up a single cent in bringing the case against Morgan Stanley and its affiliates in New York. And even if they lost the case, they're not liable for the defendants' legal costs.But that's not the case for DBS High Notes 5 investors, who lost their appeal against the High Court's decision that the Singapore bank owes them nothing.'The investors already lost all of their investments. They now have to bear their legal expenses and, possibly, the expenses of the DBS lawyer,' Mr Tan said.The DBS investors, who collectively lost $18 million when the structured product failed with the Lehman Brothers' collapse in 2008, had sued the bank, arguing that the DBS High Notes 5 were void at the time they were issued.But the Singapore Court of Appeal, in a judgment this week, ruled: 'A person who signs a contract which is set out in a language he is not familiar with or whose terms he may not understand is nonetheless bound by the terms of that contract.'In contrast, the US federal court hearing the Pinnacle matter observed that warnings in offer documents do not always provide immunity.'While there is little doubt that the cautionary language warned plaintiffs that (Pinnacle) Notes carried some risk, it is inadequate to have put the reasonable investor on notice of the alleged fraud,' US District Judge Leonard Sand ruled.That finding is pivotal because it allows the issue to be examined at trial of whether issuers and arrangers of such products should have legal immunity through 'generalised warnings of risk' buried in many investment products.Now that the Court of Appeal has ruled, Mr Tan said that it would be a 'a good time for DBS to be compassionate and magnanimous in undertaking to bear the legal cost of both sides, so that their customers do not have to bear any further loss'.

Story of Singapore, Hong Kong and USA

This is an interesting account of how retail investors are protected, or not protected in Singapore, Hong Kong and USA. It is a sad account for the investors in the DBS High Notes 5.
http://singaporemind.blogspot.com/2011/11/video-clip-from-meltdown.html

Strange rules

Singapore has many strange rules to determine who qualifies for certain benefits. Here is an example about the income ceiling that qualifies for a BTO (built-to-order) or subsidised HDB flat.
http://theonlinecitizen.com/2011/11/bto-flat-income-ceiling-rules-why-include-commissions-but-exclude-bonuses/

This type of rules apply to many other areas, such as means-testing, access to welfare assistance, etc. This is what life is like in Singapore:

Convoluted
Wasteful in spending time in rationalizing and managing these complexities
Creating a selfish and self-centered people, fighting for their self interest.

A better system is to manage the economic and social life so that the wages are in line with the cost of housing and cost of living, so that all these convoluted rules are not required.

Banks selling off bad loans

This is an interesting investment for cash waiting to be invested, to buy off the bad loans from banks at a hefty discount. However, the problem is in finding the right honest manager to manage the funds that are invested in these bad loans. It could be a solution to the mess involving the bad mortgage loans on properties that have now fallen in value.

http://finance.fortune.cnn.com/2011/11/04/bank-bad-loans/?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29