Saturday, July 11, 2009

Don't Hold Your Breath

In one of the more insane ruling by the Monetary Authority of Singapore (MAS), the MAS recently banned 10 financial institutions in Singapore from selling structured notes for periods ranging from 6 months to 2 years.

The ruling is insane because the bans were supposed to be punishments for the structured notes fiasco last year. However it’s hard to imagine how this ban is punishment when there is almost no Singaporean who would want to buy structured notes at this point of time. What’s the use of banning financial institutions from selling something no one is buying? Only the MAS can answer that question.

However one good thing that has come out of the ban is that it kick start some investors to file a class action lawsuit. 204 investors has filed a lawsuit against DBS in a bid to recover losses of around S$17 million due to the collapse of Lehman Brothers. I wish the investors good luck because they are going to need it.

Frankly I just cannot see how any ruling in Singapore will favor the small investors over the big financial institutions in Singapore. Unlike Hong Kong where small investors got a favorable outcome, I just cannot see that happening in pro-business Singapore. One only has to look at the history of class action lawsuits in Singapore to see why. What’s more they are going after DBS, which is like Singapore’s national bank!

Again I wish the investors good luck, but I’m not holding my breath


Anonymous said...

What prompted these unfortunate investors to invest in such high-risk structured notes in the first place? Misled? Misplaced? Mis-information? Simply GREED. The promise of high returns is too great a temptation to reject. And therein lies the bait, and the hook.

Ghost said...

I agree on some level with this comment. Are all the investors misled and misinform? Not likely but its impossible to separate the greedy from the real victims of this mess. Another reason why I'm not hopeful for their chances in court

Wang said...

As this is a commercial case, any class action suit is determined by the merits of the case or the arguments raised. DBS and other GLCs or statutory bodies have lost commercial cases in the past and the recent past.

Ghost said...

Even if this is a commercial case, it is still a class action suit pitting small investors againest a big coperation. DBS and statutory broads may have lost commercial cases in the past but those are mainly againest other big coperations. Againest small investors is another matter