10/31/2008

The risks were clearly highlighted

Investors of High Notes and Minibonds are in for a tough time. The risks were clearly highlighted in the front page of the brochures with copies printed in the Straits Times. In the High Notes case, it states 'investors may lose their entire investment and may nor receive any principal amount on the Notes.' In the case of Minibonds, 'There will be no guarantee from any entity to you that you will recover any amount payable under the Notes and you could lose all or a substantial part of your investment in the Notes.' Given the above, it would be better if these were in big black bold letters, it is difficult for the investors to say they don't know or did not read. For those who cannot read English, there can still be an escape route. For the rest, jiat lat liao. The only thing now is whether such an important point has been carefully explained to the investors and they went in with their eyes wide shut. The other point is that indeed the products are highly dangerous and the issuers knew of this risk. The regulators who approved the products too must know of the risk. So it is not a case of nobody knows what they are selling. They are really toxic stuff. For the kind of returns, they should not be sold at all.

2 comments:

Anonymous said...

Even fixed deposits were not guaranteed until this month, only insured up to $20K. And the guarantee is only up to December, 2010.

Supposing one of the banks operating here collapse, what do you think will happen to those who have fixed deposits above $20K? I am sure there are still many, many people who never know that the banks only insure their deposits for $20K, and that is what they will get back regardless of how much they have with the bank. So, can depositors plead ignorance? I don't think the bank tellers will tell customers this fact, not that I know of personally.

Matilah_Singapura said...

Hahahaha... as I said before — Caveat Emptor!