ST Forum: MAS should have been more objective

Png Eng Huat writes to the Straits Times Forum, 10 July 2009:

MAS should have been more objective

I REFER to Wednesday’s report, ‘MAS acts against 10 institutions’.

It seems the Monetary Authority of Singapore (MAS) has learnt little from the Lehman crisis. The crux of the sale of those toxic structured products was that their profits were oversold or misrepresented while their underlying risks were undersold.

In short, too much positive spin was put on the marketing of such products. In its latest report on the structured notes linked to Lehman Brothers, MAS has fallen into this ‘positive spin’ mode by highlighting the impressive statistics on settlement cases, while not addressing the pressing issue that most affected investors did not get any closure at all.

Telling the public that 70 per cent to 80 per cent of settlement offers by the 10 institutions have been accepted is rather one-sided because the figure amounts to only about 3,280 investors. This is closure for just 33 per cent of all affected investors. There are more than 6,600 investors who are still trying to get their lives in order.

The total value of the settlement offered by these institutions is $107.34 million, which is only 21 per cent of the amount invested by almost 10,000 retail investors. The actual payout is even less since not all settlements offered were accepted as of May 31.

If the MAS report was an attempt to find closure for all affected parties, it should have been more objective. The good and bad statistics must be summarised for all to digest.

Apart from 1,384 investors who were offered full settlement, more than 8,500 affected investors, or 86 per cent, are still on the losing end.

Png Eng Huat

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3 thoughts on “ST Forum: MAS should have been more objective”

  1. You know what really disturbs me is that different institutions were penalised to varying extents, without much detail as to what went wrong in each of them and how they were allowed to happen.

    For example, yesterday’s ST reported that 49 of DBS sales staff had not received the requisite training for selling of structured deposits. That to me, sounds very serious if one is providing financial advice under license. I wonder what greater transgressions were committed by Hong Leong Finance, which has been banned for 2 yrs as opposed to DBS’ 6 months.

    MAS should also be transparent about the internal control failures which have been reported by not detailed, so that the public has confidence that the different players in the market are being treated fairly.

    And what about individual accountability for those failures? No names of any top management have been reported as being sanctioned. Have any been found complicit, or negligent? What will the penalties be against them?

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