Hi,
I attended today Fri 31 Oct 11:30am session public forum for Highnote 2 investors. Just to give a quick summary of the main points.
From the many people who spoke it was clear that most if not all the investors are not aware at point of purchase that HN2 carries a CDO risk of 5 credit events out of a basket of 100 companies. In fact this was only made known to investors recently after 3 credit events had occurred. Most were sold on the basis it is a low risk product “designed for defensive investors”.
On the basis that the HN2 was mis-represented to investors as a low risk product but is now known to be extremely high risk which is not what the investors intended to invest in, the group wanted DBS to do the right thing by executing an early redemption and return all investors their capital invested, forgoing any interest. DBS did not give a response.
That Raju guy tried to defend their position by explaining that for an investor with many different types of investments, HN2 would fit in as a “defensive” play. What crap. Someone pointed out that DBS has changed their wordings subsequently in phrases such as “designed for defensive investors”.. So it is highly suspect that DBS realised it mis-sold it as low risk product and is now trying to cover their tracks.
DBS continually stress that investors fill in the form to describe the circumstances under which they were sold the product and they will look into each individual case, which will take about 4 weeks.
The strategy of DBS seems to be (a) divide and conquer, look at the merit of each case individually (b) non committal, not answering the important questions (c) delay tactic, maybe hoping that another credit event will take place and they can then return nothing to investors.
Towards the end the group requested (demanded?) that DBS come back with a policy statement as a whole, not to give separate answer to individual investors. The group requested that DBS get everyone back in a next meeting and to be chaired by people who can make decisions.
I wrote this based on what I can remember. Those who were present please add if anything left out, or amend if anything incorrect.
Also, would be glad to hear what happened in the other public forum sessions.
Rgds,
Alex
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1 comment:
Adding to Alex's comment, I was at the 9am session on 31 Oct where an important point was highlighted by one attendee. He turned to a page in the prospectus which states something that was totally different from what HN2 was implemented. He said that was product misrepresentation. Therefore, I think all buyers should be entitled to rescind their contracts. I am not sure of this. Maybe a lawyer can comment. If that is true, then this additional flaw is on top of mis-selling to many the product as a deposit enhancement product.
Another attendee raised another important point - the product is a leveraged product and as such, she highlighted that this is a derivative product - highly risky and not disclosed to purchasers.
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