Posted: 02 Oct 2008 10:29 PM CDT
Will MAS be able to do anything concrete other than to breathe down the banks who sold you the Lehman Minibonds and DBS High Notes 5 to “do something”?
Honestly, “caveat emptor” (let the buyer beware) comes up to mind.
In reality, unless you can prove negligent misrepresentation which is a tortious act but requires you to engage legal counsel to sue for damages arising from losses suffered from investing in such instruments, it’s pretty challenging to do so. One would have to incur legal costs and there is no guarantee that the courts would award damages.
It’s interesting to see that MAS consider a review of how such products are sold. Anecdotal evidence suggests that banks have been hardselling some of this stuff to investors. In general, when the credit event or market event doesn’t happen, investors don’t get hit hard and regulators just carry on. But when real losses mount due to the current credit market crisis in the global financial sector, something needs to be done or else public confidence will be shaken.
Personally, I’m not impressed by the methods used by the banks to sell products to retail investors who don’t know a treasury bill from a fixed deposit. It’s unfortunate that people have to suffer first before things get done.
Remember, in Singapore Inc, it’s caveat emptor.
Be well and prosper.