Offers For Lehman Investors: 79% Accepted

The Straits Times ran this story on 26 March 2009:

Offers for Lehman investors: 79% accepted
By Francis Chan

FOUR out of every five investors who received settlement offers for the failure of their investments in Lehman Brothers-linked structured products have accepted the settlements.

Trade and Industry Minister Lim Hng Kiang yesterday said 79per cent of investors had accepted the offers from financial institutions that sold them the ill-fated investments.

Only 1.5per cent had rejected the offers. The remaining investors have yet to make a decision as of March15.

Mr Lim, who is also the deputy chairman of the Monetary Authority of Singapore (MAS), was giving Parliament an update on investigations into the alleged mis-selling of structured products by financial institutions here.

In January, the MAS said 58per cent of complainants, or 2,974 investors, would get a full or partial refund from financial institutions that sold them the products.

Of this total, 43per cent - or 1,282 - were offered full compensation.

'Since my last update to Parliament in January, these institutions have received another 367 complaints. This number is accurate as of March15, 2009,' Mr Lim said.

He also provided an update for a fourth Lehman-linked product that defaulted - Morgan Stanley's Pinnacle Notes Series9 and 10.

'I have been told that the five financial institutions that sold these products have...received another 31 complaints,' he said.

In January, Mr Lim said six complaints were lodged by investors of Pinnacle Notes Series9 and 10.

He was responding to questions from Nominated MP Siew Kum Hong, who had sought an update on complaints to the Financial Industry Disputes Resolution Centre or Fidrec.

'MAS has been informed by Fidrec that as of March15, 2009, there have been a total of 561 formal claims lodged with Fidrec,' said Mr Lim.

According to him, these include claims for Lehman Minibonds, DBS High Notes5, Merrill Lynch Jubilee Series3 LinkEarner Notes, and Morgan Stanley Pinnacle Series9 and 10 Notes.

He said 485 out of the 561 claims are pending mediation, while 42 claims have been referred for adjudication. Thirty-four claims have so far been resolved at the mediation stage.

'In 32 of these 34 cases, the parties entered into some form of settlement, and in the remaining two cases, they may have decided not to pursue the matter further,' he said.

Mr Lim also responded to Mr Siew's additional queries on whether the recent consultation paper released by the MAS on its proposed regulatory changes implies that the central bank was 'lax' in regulating the sale of such structured products.

Mr Lim disagreed and assured the House that as 'a responsible regulator', the MAS has put up the consultation paper to receive feedback.

'We do recognise that structured products have become more complex, the environment has changed, and therefore, as a responsible regulator, MAS also has to make the adjustments,' he said.