Fifty elderly customers of Hong Leong Finance who invested in Lehman Minibonds are likely to be the first here to get their money back, as early as by the end of this week.
A spokesman for the finance company said it has already started contacting these investors with the good news.
‘We have started mailing out letters to investors in the vulnerable group, informing them of our intention to buy back 100 per cent of their investments in Minibonds,’ he said.
All that these investors need to do now is ‘complete some paperwork’ at its branches, he added.
They should then receive the money they put into the investment, net of all interest earned, ‘about three days later’.
Lehman Minibonds are one of three investment products in Singapore that have been terminated following the collapse of the US investment bank Lehman Brothers. In all, 10,000 investors have been affected.
Customers have complained that they were sold these complex investments without being told the risks involved.
The Government has in turn told all financial institutions involved to investigate all cases of mis-selling and to pay special attention to ‘vulnerable’ customers who were either elderly and lowly educated, or had invested substantial sums.
Hong Leong Finance announced on Oct 22 that it will buy back the Minibonds from these ‘vulnerable’ customers at full cost, minus interest received. This means these customers will get all their money back.
The finance company has defined this group to include investors with up to primary school education and above the age of 62 when they invested in the ill-fated Lehman-linked notes.
If the investment was made through a joint account, the joint account holder must also not have higher than a primary school education.
Since then, DBS Bank, Maybank and five other stockbroking companies have also issued similar statements - saying that they are working hardest to help ‘vulnerable’ investors.
Hong Leong’s action over the weekend makes it the speediest among its counterparts in making a firm commitment to investors to buy back the doomed investments.
The swift move by Hong Leong Finance has given new hope to Madam Ng Ai Hua, who had invested $100,000 in Minibonds.
Although Madam Ng does not technically fall into the company’s ‘vulnerable’ definition, she chose to remain positive.
‘That’s great news,’ said the 57- year-old retiree, who is a cancer patient. ‘I’ve already attended an interview and told them my side of the story, so even though I haven’t got a letter, I’m going to continue to remain hopeful.’
Although Hong Leong Finance is unable to elaborate what the actual ‘paperwork’ will entail, people familiar with the matter say it may include signing a waiver agreeing not to take any legal action against the institution for mis-selling.
An industry source who spoke to The Straits Times on condition of anonymity said: ‘Hong Leong’s statement clearly says that it will offer a full settlement ‘without any admission of liability’, so investors will have to bear that in mind, but as long as they get their money back, I doubt they will complain.’
Some lawyers have suggested that investors will be able to take out a class action suit against banks who have mis-sold them investments.
Yesterday, Law Minister K. Shanmugam gave his take on this at a community event in response to a reporter’s question.
He said that while it is possible for lawyers to take up action on behalf of a number of people, investors need to weigh the options carefully.
‘One would generally in these situations look at legal action as the final option if you really believe you haven’t gotten justice, and you believe it’s worth spending the kind of money you would have to in a legal action, and your case is strong enough,’ he said.
‘But that’s really individual choices to be made.’
The Minibonds programme was secured by swap obligations guaranteed by Lehman Brothers.
Since Lehman’s collapse on Sept 15, investors have been clinging on to hope that a new institution will step forward to replace Lehman as swap counterparty for the Minibond programme.
Sources say HSBC Trustee, the trustee of the programme, is expected to make an announcement this week on the issue.
1 comment:
Money back for 50 elderly
Hong Leong will repay the first batch this week
By Francis Chan
3 November 2008
Fifty elderly customers of Hong Leong Finance who invested in Lehman Minibonds are likely to be the first here to get their money back, as early as by the end of this week.
A spokesman for the finance company said it has already started contacting these investors with the good news.
‘We have started mailing out letters to investors in the vulnerable group, informing them of our intention to buy back 100 per cent of their investments in Minibonds,’ he said.
All that these investors need to do now is ‘complete some paperwork’ at its branches, he added.
They should then receive the money they put into the investment, net of all interest earned, ‘about three days later’.
Lehman Minibonds are one of three investment products in Singapore that have been terminated following the collapse of the US investment bank Lehman Brothers. In all, 10,000 investors have been affected.
Customers have complained that they were sold these complex investments without being told the risks involved.
The Government has in turn told all financial institutions involved to investigate all cases of mis-selling and to pay special attention to ‘vulnerable’ customers who were either elderly and lowly educated, or had invested substantial sums.
Hong Leong Finance announced on Oct 22 that it will buy back the Minibonds from these ‘vulnerable’ customers at full cost, minus interest received. This means these customers will get all their money back.
The finance company has defined this group to include investors with up to primary school education and above the age of 62 when they invested in the ill-fated Lehman-linked notes.
If the investment was made through a joint account, the joint account holder must also not have higher than a primary school education.
Since then, DBS Bank, Maybank and five other stockbroking companies have also issued similar statements - saying that they are working hardest to help ‘vulnerable’ investors.
Hong Leong’s action over the weekend makes it the speediest among its counterparts in making a firm commitment to investors to buy back the doomed investments.
The swift move by Hong Leong Finance has given new hope to Madam Ng Ai Hua, who had invested $100,000 in Minibonds.
Although Madam Ng does not technically fall into the company’s ‘vulnerable’ definition, she chose to remain positive.
‘That’s great news,’ said the 57- year-old retiree, who is a cancer patient. ‘I’ve already attended an interview and told them my side of the story, so even though I haven’t got a letter, I’m going to continue to remain hopeful.’
Although Hong Leong Finance is unable to elaborate what the actual ‘paperwork’ will entail, people familiar with the matter say it may include signing a waiver agreeing not to take any legal action against the institution for mis-selling.
An industry source who spoke to The Straits Times on condition of anonymity said: ‘Hong Leong’s statement clearly says that it will offer a full settlement ‘without any admission of liability’, so investors will have to bear that in mind, but as long as they get their money back, I doubt they will complain.’
Some lawyers have suggested that investors will be able to take out a class action suit against banks who have mis-sold them investments.
Yesterday, Law Minister K. Shanmugam gave his take on this at a community event in response to a reporter’s question.
He said that while it is possible for lawyers to take up action on behalf of a number of people, investors need to weigh the options carefully.
‘One would generally in these situations look at legal action as the final option if you really believe you haven’t gotten justice, and you believe it’s worth spending the kind of money you would have to in a legal action, and your case is strong enough,’ he said.
‘But that’s really individual choices to be made.’
The Minibonds programme was secured by swap obligations guaranteed by Lehman Brothers.
Since Lehman’s collapse on Sept 15, investors have been clinging on to hope that a new institution will step forward to replace Lehman as swap counterparty for the Minibond programme.
Sources say HSBC Trustee, the trustee of the programme, is expected to make an announcement this week on the issue.
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