Marina Bay Sands’ opening delayed to early 2010

Marina Bay Sands’ opening delayed to early 2010

By Valarie Tan

SINGAPORE: Singapore’s Marina Bay Sands integrated resort, originally slotted to welcome its first visitors by the end of this year, has pushed back its opening to the beginning of 2010.

Developer Las Vegas Sands said this is due to the complicated construction of the integrated resort’s SkyPark situated at the top of its 55-storey-high hotel.

Half the facilities including the casino, half the retail and dining outlets and the first 20 storeys of each of the three hotel towers will open early next year for its initial phase. The other half will be operational two to three months later.

The SkyPark is a 340-metre rooftop strip housing three swimming pools and gardens for 3,900 people. Construction of the SkyPark’s foundation will start in August.

Marina Bay Sands is Singapore’s first casino project to be awarded, in 2006. As well as gaming, the complex will include hotel, convention, luxury retail and performing arts facilities.

A second casino, Resorts World at Sentosa, is scheduled to open in phases also starting early 2010 and will feature the world’s biggest oceanarium with 700,000 fish and a Universal Studios theme park.

Singapore in 2005 gave the approval for casinos to be developed in a bid to draw more visitors to the city-state, whose main attractions are shopping, dining, night life and animal parks.

- CNA/AFP/yb/ir

Source : Channel NewsAsia - 08 July 2009

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Court quashes couple’s bid to convert semi-detached to bungalow

Court quashes couple’s bid to convert semi-detached to bungalow

House attached to it does not sit on a plot big enough for a bungalow

By Joyce Teo, Property Correspondent

A DECISION in a legal case has just re-affirmed a key principle of property development - a semi-detached house can be converted to a bungalow only if the neighbouring house is also on a plot large enough for a bungalow.

The High Court said the applicant cannot assume that the URA will allow the couple’s house to be redeveloped into a bungalow and then claim they have suffered hardship when their own assumption turned out to be wrong.

The case centred on co-owners who wanted planning permission to convert their semi-detached house in the Upper Thomson area into a bungalow.

Madam Borissik Svetlana and her husband Low Eng Pah applied for permission in 2007 - after buying the house - to erect a two-storey bungalow with a basement, an attic and a swimming pool.

Their application was rejected by the Urban Redevelopment Authority (URA) but the couple went to the High Court to get the order overturned.

The court dismissed their appeal last week and referred to a 2002 URA order that imposed restrictions on the redevelopment of semi-detached houses.

It was concerned that redeveloping some semi-detached houses into bungalows could leave the adjacent semi-detached house with a lop-sided appearance if the land it is on is too small to accommodate a bungalow.

The 2002 circular stated that ‘a semi-detached house can break away if the adjoining semi-detached house is also capable of redeveloping into a standard detached house under prevailing guidelines’.

This means that the adjoining semi-detached houses must each stand on at least 400 sq m of land - the minimum plot size for a detached house. The plots must also have a width of 10m.

The couple’s semi-detached house at 2 Jalan Chengam sits on 419 sq m of land but the house to which it is attached, 1A, has a plot of only 244.5 sq m.

If their redevelopment plan had been approved, the remaining semi-detached house would become the type of lop-sided home the 2002 circular was drafted to prevent, the High Court said.

To make it worse, the remaining house would be sandwiched in between two bungalow lots of at least 400 sq m. This would create an anomaly in the Jalan Chengam area that would be hard to correct, it said.

The couple argued that there was no reason why their redevelopment plans had been rejected when the redevelopment plans for 1 Jalan Chengam and 3 Jalan Chengam were approved.

But 3 Jalan Chengam received approval early this year as it sits on a 432.8 sq m plot while its adjoining house sits on a 446.3 sq m plot. And the redevelopment of 1 Jalan Chengam - which once sat on 653 sq m of land - took place in the early 1990s and was approved before the 2002 rules kicked in.

Source : Straits Times - 08 July 2009

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When to tax property gains: Law made clearer

When to tax property gains: Law made clearer
By Goh Eng Yeow, Senior Correspondent

A PROPOSED change to income tax laws will make clearer to property sellers when they will be taxed on their profits.

Anyone who sells only one property in any four-year period will not be taxed on his profit, according to a proposed amendment to the Income Tax Act.

But if he sells another property within four years of the first sale, the profit from the second sale may be taxable.

If the proposal becomes law, it will provide certainty for owners who now cannot be sure if the taxman will come calling after they sell.

Under existing rules, an individual does not pay tax on gains made from selling a property unless the taxman decides that he is trader - someone who buys and sells multiple properties within a short time span. And there is no way for the seller to know in advance if he might be deemed a trader.

The new way of taxing property profits is one of many changes listed in a draft Income Tax (Amendment) Bill 2009 put up for public feedback last month by the Finance Ministry.

If implemented, the change will take effect from January.

A ministry spokesman told The Straits Times yesterday that the proposed change aims to provide certainty of non-taxation to individuals who own property.

Once it takes effect, the individual who sells a property for a profit can be sure that his gains will not be taxed - provided he had not sold any other property in the previous four years.

If he sold other properties within that period, the spokesman said, the Inland Revenue Authority of Singapore (Iras) will decide whether he should be taxed, ‘based on the facts and circumstances, no different from the present tax treatment’.

Although Singapore does not have a capital gains tax, profits from selling property can be taxed at the appropriate individual income tax rates if Iras deems the seller to be a trader.

Tax and property market experts contacted by The Straits Times welcomed the move to clear the air over taxes on property sales.

Mr Tan Tiong Cheng, chairman of property consultant Knight Frank, said: ‘Since the Government has clarified that the treatment on capital gains would remain the same, it will be business as usual. Genuine investors will not be deterred from buying properties.’

A stockbroking director said that the Government’s assurance will calm any jitters investors might have experienced when they first learnt of the proposed tax change.

‘There were initial misgivings that this provision might be a roundabout way to introduce a capital gains tax on properties. The misconception has been cleared,’ he noted.

But others felt that by raising the issue of taxing property sales gains, the Government is also sending a signal to speculators that they can expect to be taxed if they buy properties to ‘flip’ for quick money.

During the property boom of 2007, some speculators could have bought and sold as many as half a dozen properties in the space of a year.

With the change, a property owner juggling several properties cannot sell more than one within a four-year period if he wants to be sure of avoiding a tax bill on his gains.

Since February, sales of new private homes have exceeded 1,000 units a month compared to a monthly average of 330 units last year. Worries are surfacing that speculators might be ramping up sales and driving up prices, as the economy recovers.

Businessman James Chen, 40, said the proposed change may make the short-term investor think harder before buying.

‘He will have to consider whether he wants to take such a risk and give up a part of the gains as taxes.’

The draft Bill can be read at the Finance Ministry website www.mof.gov.sg and the public has up to next Tuesday to give feedback.

The Bill is expected to go before Parliament later in the year.

TARGET OF CHANGES
‘HE WILL have to consider whether he wants to take such a risk and give up a part of the gains as taxes.’

Businessman James Chen, 40, on how the proposed change may make the short-term investor think harder before buying. A property owner juggling several properties cannot sell more than one within a four-year period if he wants to be sure of avoiding a tax bill on his gains.

Source : Straits Times - 08 July 2009

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Q2 property investment sales triple: DTZ

Q2 property investment sales triple: DTZ

Investment value for the quarter up 254% to $662m

PROPERTY investment sales more than tripled in Q2 this year as sentiment improved on the back of easing credit and the stockmarket rally, says DTZ.

The firm says in its Q2 Singapore property market report that total investment value during the quarter jumped 254 per cent to $662 million - the first increase after two quarters of decline.

Other property firms, including Jones Lang LaSalle and CB Richard Ellis, have reported the same trend in recent weeks. However, DTZ’s data shows that for the first half of 2009, total investment sales were $849 million.

This was still the lowest level in a decade, since $703 million in H2 1998.

Small-quantum deals continued to dominate, with all deals below $100 million apiece in Q2.

Most investments were by locals. Foreign investors remained cautious.

Investments by foreign companies or private investors, excluding buyers of unknown nationality, contributed only 13 per cent of total investments in H1 - much lower than the 41 per cent in 2008.

Participation by institutions and property vehicles also remained inactive.

Just one transaction, the built-to-suit development deal of a high-tech industrial building for SingTel, was made by a property trust - Ascendas Real Estate Investment Trust or A-Reit.

Although office rents are falling and not expected to recover until 2011, buying interest in the sector picked up in the latest Q2.

Office investment value was up 310 per cent, mainly due to two major sales - Anson House and Parakou Building.

The Anson House transaction in May was the biggest deal in the quarter.

It changed hands at 34 per cent below the price that it fetched two years ago.

Residential transactions also increased significantly - by 190 per cent to a total of $203 million.

But the collective sale market remained quiet, with no sale since Q4 2008.

DTZ expects that transactions in H2 2009 will be mostly involve local corporations and high net worth individuals who have a longer investment horizon.

The picture will start changing next year as the Singapore property market reaches fair value, the firm reckons.

Source : Business Times - 08 July 2009

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Woodlands industrial site draws 8 bids

Woodlands industrial site draws 8 bids

A WOODLANDS industrial site put up for sale by the government drew healthy interest by the time the tender closed yesterday.

The Urban Redevelopment Authority (URA) received eight bids, with Wee Hur Development placing the highest bid of $22.9 million, or $34 per square foot per plot ratio (psf ppr).

‘The healthy response to the tender could be a reflection of the expected turnaround for the manufacturing sector,’ said Li Hiaw Ho, executive director at CBRE Research.

‘After six consecutive months of negative figures, manufacturing output finally recorded positive figures in April and May 2009.’

At the same time, the Purchasing Managers’ Index (PMI) indicated an expanding sector in May and June 2009 after contracting since September 2008, he added.

Wee Hur’s bid is 45 per cent higher than the application bid of $12.5 million, or $19 psf ppr. It is also higher than the winning bid of $30 psf ppr submitted by Soilbuild Group in July 2008 for an industrial site in the same area. Soilbuild Group made the second-highest bid of $21 million, or $31 psf ppr, for the latest site.

The site, offered from the government’s reserve list, is at the junction of Woodlands Industrial Park E5 and Woodlands Avenue 4. It has an area of 2.5 hectares and a gross plot ratio of 2.5. The lease period is 60 years.

Property firms have said in recent reports that demand for private industrial space continued to shrink in the second quarter of this year.

DTZ said on Monday that private industrial rents - in decline since Q4 2008 - registered steeper falls in Q2 2009 than in the two preceding quarters. The outlook for the industrial market remains weak until to 2011 due to demand-supply imbalances and weakness in the office sector, the firm said.

Source : Business Times - 08 July 2009

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Singapore is 10th most expensive city for expats

Singapore is 10th most expensive city for expats
Mercer survey also lists S’pore as fifth most expensive in Asia-Pacific

By TEH SHI NING

SINGAPORE has become the 10th most expensive city in the world for expatriates, up three places from last year, says HR consultancy Mercer.

Singapore is also the fifth most expensive expat location in the Asia-Pacific, according to Mercer’s 2009 cost of living survey.

Tokyo overtook Moscow as the most expensive city for expats, as the Japanese yen strengthened considerably against the US dollar.

The strong yen also lifted Osaka into second place, from 11th last year. Moscow slipped to third place but remained the most expensive European city.

The significant reshuffle of rankings is largely due to currency fluctuations and less to price movements.

For instance, the stronger US dollar makes it dearer for European-based companies to send expatriates to US cities.

It also explains why London dropped out of top 10 for the first time since 2001 - falling from third last year to 16th this year, while New York City rose to eighth, from 22nd last year.

Mercer senior researcher Nathalie Constantin-Metral said: ‘Many currencies, including the euro and British pound, have weakened considerably against a strong US dollar, causing a number of European cities to plummet in the rankings.’

Middle Eastern cities rose in the rankings, mainly due to the United Arab Emirates dirham being fixed to the US dollar.

And the Chinese yuan’s relatively strong performance lifted China’s cities up the ranks. Beijing rose 11 spots to ninth place.

Ms Constantin-Metral said: ‘The cost of expatriate programmes is heavily influenced by currency fluctuations and inflation rates.

‘Now that cost containment and reduction is at the top of most company agendas, keeping track of the change in factors that dictate expatriate cost of living and housing allowances is essential.’

Mercer’s survey is conducted annually to help multinational companies gauge expatriate pay packages.

The March 2009 survey covered 143 cities and more than 200 items, including housing, transport, food, clothing, household goods and entertainment, in each city.

All cities are compared against New York, which is used as the benchmark. Currency movements are measured against the US dollar.

Source : Business Times - 08 July 2009

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Goldman may lose millions from code theft

Goldman may lose millions from code theft
Program can be used to manipulate markets: prosecutor

(NEW YORK) Goldman Sachs Group Inc may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said.

Sergey Aleynikov, an ex-Goldman Sachs computer programmer, was arrested July 3 after arriving at Liberty International Airport in Newark, New Jersey, US officials said. Aleynikov, 39, who has dual American and Russian citizenship, is charged in a criminal complaint with stealing the trading software.

At a court appearance on July 4 in Manhattan, Assistant US Attorney Joseph Facciponti told a federal judge that Aleynikov’s alleged theft poses a risk to US markets.

Aleynikov transferred the code, which is worth millions of dollars, to a computer server in Germany, and others may have had access to it, Mr Facciponti said, adding that New York-based Goldman Sachs may be harmed if the software is disseminated.

‘The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,’ Mr Facciponti said, according to a recording of the hearing made public yesterday.

‘The copy in Germany is still out there, and we at this time do not know who else has access to it.’ The prosecutor added: ‘Once it is out there, anybody will be able to use this, and their market share will be adversely affected.’

The proprietary code lets the firm do ’sophisticated, high-speed and high- volume trades on various stock and commodities markets’, prosecutors said in court papers. The trades generate ‘many millions of dollars’ each year.

Defence attorney Sabrina Shroff said in court that the government’s allegations are ‘preposterous’. The firm was aware that Aleynikov, who is the father of three young girls, was downloading programs to his personal computer to do work at home and that he has not disseminated the code, the lawyer said.

‘If Goldman Sachs cannot possibly protect this kind of proprietary information that the government wants you to think is worth the entire United States market, one has to question how they plan to accommodate every other breach,’ she said.

Michael DuVally, a spokesman for Goldman Sachs in New York, declined to comment.

US Magistrate Judge Mark Fox ordered Aleynikov, who earned US$400,000 a year, to be held on US$750,000 bail, after prosecutors claimed that he posed a threat to the community. Aleynikov planned to earn three times his salary by joining a start-up company and engaging in high-volume automated trading, prosecutors said. He posted bail on Monday and was released.

He did not speak at the hearing, except to say that he understood the conditions of his bail.

‘Someone stealing that code is basically stealing the way that Goldman Sachs makes money in the equity marketplace,’ said Larry Tabb, founder of Tabb Group, a financial market research and advisory firm.

‘The more sophisticated market makers - and Goldman is one of them - spend significant amounts of money developing software that’s extremely fast and can analyse different execution strategies so they can be the first one to make a decision.’ Someone could use the code ‘to implement the same strategies and maybe on certain stocks they can be faster and, in effect, take away money that would normally be Goldman’s’, Mr Tabb said in a phone interview.

‘The second thing that they can do is actually analyse the code so that they know what Goldman’s going to do before Goldman does it and kind of reverse engineer Goldman’s strategies and make money basically at the expense of Goldman.’

Aleynikov spent four hours with a Federal Bureau of Investigation agent after his July 3 arrest, Ms Shroff said. He told the agent that he had done nothing wrong, authorised prosecutors to seize his personal computers, and said that he did not know that the server he was using was in Germany, she said. — Bloomberg

Source : Business Times - 08 July 2009

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Financial institutions pledge to clean up act

Financial institutions pledge to clean up act

After Lehman-linked notes fiasco, they are improving sales processes, training

By CONRAD TAN

(SINGAPORE) Banks and other financial institutions here yesterday promised to tighten their internal controls and step up staff training in response to a damning report by regulators that found various faults at the 10 distributors of structured notes linked to Lehman Brothers.

Industry insiders said that they were already braced for the ban on selling structured notes for at least six months that was slapped on the three banks, one finance company and six securities broking firms by the Monetary Authority of Singapore (MAS) - the penalty for shortcomings uncovered by MAS’s investigation into shoddy practices in the sale and marketing of the structured notes.

Some had already stopped selling structured notes late last year.

David Gerald, president of the Securities Investors Association of Singapore, which represents retail investors here, said that he was ‘pleased that there’s been a recognition by the MAS that there have been some failings on the part of the financial institutions and the fact that they’ve made it public’.

Now, ‘the question that comes to mind is, how do we ensure that it doesn’t happen in future’, he added.

The Association of Banks in Singapore (ABS) - which represents more than 100 banks here - said that its members are putting in place ‘a series of measures to further protect the interests of consumers who buy investment products’.

Many of the measures that ABS has chosen to adopt are identical to, or closely resemble, the proposals mooted in a consultation paper published by MAS on March 12.

These include banning bank tellers from referring customers to staff selling investment products.

Previously, tellers who served customers’ traditional banking needs such as the updating of passbooks or cash withdrawals at a branch counter were not allowed to sell investment products, but it was common practice for them to suggest that customers talk to sales staff within the branch about investment or insurance products. That will no longer be allowed, ABS said last night.

Banks that sell structured products will also be required to introduce a ‘cooling-off’ period of up to seven days during which investors can cancel their purchase without paying sales charges or commissions.

In addition, banks will provide better and more specialised training for staff who sell complex investment products, ABS said. The industry is working with MAS to put together a new test for product knowledge on complex investment products that bank staff must pass before they are allowed to sell such products, it added.

Banks are also refining the way they pay sales staff so that performance is assessed on multiple measures rather than just rigid sales targets - to ensure that staff aren’t tempted to push products or services aggressively.

In a statement, ABS director Ong-Ang Ai Boon acknowledged that ‘banks have a responsibility to ensure that the right products are sold to consumers, depending on their risk profile and the suitability of products’.

Lim Eng Hai, chief executive of the Securities Association of Singapore - which represents all 10 local securities broking firms and several foreign stockbrokers operating here - said that its members would continue to improve the training and education of sales and other frontline staff.

Financial institutions insisted that they have been busy improving their sales processes.

DBS Group, which sold $104 million of Lehman-linked notes to over 1,000 retail investors, has strengthened its investment sales processes and stopped all counter referrals for investment products since January after a thorough review last year, a spokesman for the bank said.

Hui Yew Ping, managing director of OCBC Securities, said that as one of the distributors of the Lehman-linked notes, it ‘regrets that investors who applied for the structured notes through us have suffered losses’.

He added that it had stopped distributing structured notes since November and is ‘currently reviewing our sales and distribution processes’.

Hong Leong Finance, which has been barred from selling structured notes for at least two years - the longest ban of all 10 distributors of the ill-fated notes - said that it ‘will take appropriate steps to address those findings applicable to the company’. Some of the others mentioned in the MAS report declined comment or could not be reached.

Source : Business Times - 08 July 2009

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The cane whistles, but does it really hurt?

The cane whistles, but does it really hurt?
MAS bans won’t affect FIs much and it shouldn’t gloss over deeper issues

By WONG WEI KONG

IT is a pity that what seems so tough is really just a slap on the wrist.

So the Monetary Authority of Singapore (MAS) has banned 10 financial institutions (FIs) from selling structured notes for periods ranging between six months and two years for mis-selling products linked to collapsed US bank Lehman Brothers.

The offending banks on the list are all established names: ABN-Amro, DBS Bank, Maybank, DMG and Partners Securities, UOB Kay Hian, CIMB, Kim Eng Securities, OCBC Securities, Phillip Securities as well as Hong Leong Finance. These were names that many investors instinctively trusted - but, as the MAS findings show, it was a trust that was grossly misplaced.

On the surface, the MAS ban, following approximately seven months of investigations, appears to be appropriate punishment. But it really rings hollow, because it isn’t going to hurt the FIs very much. The fact is that the whole structured products market has vanished - the financial crisis and the structured notes fiasco have seen to that. Even without the ban, these FIs weren’t selling any structured notes.

This will be cold comfort to the 10,000 or so investors who suffered from the mis-selling, some of whom will never fully recover from the blow. And it isn’t satisfactory, given the serious lapses at the FIs. The list of shortcomings makes for shocking reading: risk profile questionnaires that were wrongly scored; risk profile scoring systems that did not allocate numerical scores; wrong classifications of products, and relationship managers (RMs) and representatives who refused to attend the pre-requisite training. And all the FIs get, so far at least, is a ban on doing a business that doesn’t exist anymore.

If a ban really means nothing, the MAS should have imposed fines, big fines, that will hurt the FIs. If it does not want to collect fines, it should have considered pushing the FIs to compensate, more than what they have done, the investors who are seeking redress. Of course, the FIs will say they’re suffering reputational damage, but that’s already a fact, and that is well deserved.

Oversight and processes

There’s another point worth making. Apart from investigations into FI-wide issues, the MAS is concurrently looking into specific cases ‘where individuals involved in the sale and marketing of the notes may have departed from the relevant regulatory standards’. Inquiries are ongoing and any regulatory action taken against individuals will be published in due course, the central bank said.

While it remains to be seen what the MAS will do in this respect, it will be a pity if any subsequent action taken is only against the RMs and representatives actually selling the products on the ground. The nature of the lapses identified by the MAS suggests a failure in oversight and processes, which really points the finger at senior executives, and they shouldn’t escape responsibility.

And what about the MAS’ own role? Dare we suggest that if the sub-prime fiasco hadn’t happened and Lehman hadn’t collapsed, the mis-selling would have continued merrily and no one would be the wiser? How closely did the central bank supervise the banks when it came to the sale of structured products before the crisis? Liberalising the market is good, but if not implemented properly, the costs, as proven now, are enormous. The MAS itself should be deriving lessons from the whole affair.

Time to win back trust

The industry will respond to this as it usually does. Indeed, the Association of Banks in Singapore (ABS) immediately announced that its member banks are putting in place a series of measures to further protect the interests of consumers who buy investment products, with the measures covering a range of governance and assurance processes, training and compensation of sales personnel, consumer education and enhancements to the sales process. Investors will take all this with a pinch of salt. Weren’t there such protestations before?

Forget expansion - winning back trust should be the biggest priority for banks and financial institutions.

Source : Business Times - 08 July 2009

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MAS caps unsavoury saga with selling bans on 10 FIs

MAS caps unsavoury saga with selling bans on 10 FIs

Damning report on how Lehman-linked notes were sold; sanctions on selling structured products

By SIOW LI SEN

(SINGAPORE) A seven-month investigation into the manner in which Lehman-linked products were mis-sold to unsuspecting, and often inexperienced, investors has concluded with some disturbing revelations - and an unprecedented step.

The Monetary Authority of Singapore (MAS) has banned 10 financial institutions (FIs) from selling structured notes for periods ranging between six months and two years.

The 100-page report released by MAS yesterday paints a picture of occasionally untrained staff at these FIs aggressively pushing complex products at retail investors. The risk associated with these products - and sometimes even the clients’ risk profile - was treated cavalierly on occasion.

There were instances of salespeople who had not even attended training. High-risk products were classified as low risk.

Hong Leong Finance, which was handed the most severe two-year sanction - used a client risk profile sheet which was basically meaningless - as no scores were assigned. It sold such notes to 428 people who had no prior investment experience.

OCBC Securities improperly used ‘introducers’ to sell the notes. For this, it has been slapped with a lifetime ban from using licensed financial advisers who earn referral fees for introducing clients, apart from a one-year ban from dealing in and providing financial advisory services for structured notes.

CIMB-GK Securities, Kim Eng Securities and Phillip Securities also received one-year bans. In each case, their staff were found to be improperly trained.

ABN-Amro, DBS, Maybank, DMG & Partners Securities and UOB Kay Hian face six-month bans from dealing in structured notes with effect from July 1, 2009 or until there are adequate measures in place, the MAS said.

Hong Leong Finance (HLF), which received the stiffest ban, has also paid the most in compensation - some $57.6 million in all. It was also the single biggest seller of the toxic products. Over a 19-month period, Singapore’s largest finance company, which has 28 branches mainly in the heartlands, sold a total $106.2 million worth of Minibond and Pinnacle notes to 2,781 investors.

HLF has offered full or partial compensation to 2,048 investors representing 95.5 per cent of cases decided.

Maybank’s risk profiling scoring system was found to be faulty. It, too, did not allocate scores to the client’s investment experience and suitability for the product. For some of the Minibonds - which were not bonds - Maybank in fact informed its salespeople that they were suitable for clients who wanted to diversify their portfolio with bonds.

While the findings were pretty damning in highlighting some of the unsavoury practices which have been going on in the industry for several years, there was no magic bullet for investors unhappy with settlements offered by the FIs and thinking of taking legal action.

‘The failings identified in MAS’s investigations do not automatically mean that the financial institutions are liable to individual investors,’ said the MAS.

‘An investor would have to show that he relied on the particular recommendation or representation based on the specific facts and circumstances at the time of purchase,’ it said.

‘These would include the various documents that the investor signed or acknowledged receipt of as part of the transaction such as documentation containing risk warnings and disclaimers about the liability of the financial institutions distributing the notes.’

Chung Wing Kee, a Minibond Investors Action Group member, said that the action taken by MAS did not go far enough.

‘Who in their right minds will buy structured products for the next two years . . . it’s just a slap on the wrist,’ said Mr Chung.

‘MAS did not come up to say the FIs were wrong, we’ll let the courts decide; if they didn’t do anything wrong, why impose a two-year ban?’ he said.

As at the end of May, the three banks and HLF have offered settlements to 67 per cent of investors whose cases have been decided, amounting to about $105 million.

More than 50 per cent of cases decided have been offered settlements of 50 per cent and above with 26 per cent receiving offers of full settlement. Some 85 per cent of settlement offers have been accepted, 3 per cent have been rejected and the rest have yet to decide. The stockbroking firms have offered settlements amounting to $2.7 million to 33 per cent of investors whose cases have been decided. 70 per cent of settlement offers by the stockbroking firms have been accepted, 11 per cent have been rejected and the rest have yet to decide.

The MAS said that 10,320 retail investors sank $520 million into the Lehman-linked products which became worthless following the collapse of the US investment bank Lehman Brothers last September.

With additional reporting by Brandon Chew

Source : Business Times - 08 July 2009

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