Retiree sues UOB over high-risk investment losses

Nov 1, 2008, The Straits Times Retiree sues UOB over high-risk investment losses He loses $350k, says risks not explained; bank denies his claims By Selina Lum A 69-YEAR-OLD retiree, who lost more than $350,000 in high-risk investments, has sued United Overseas Bank (UOB) and his relationship manager for selling him the products. In May, Mr Go Sua Kui, a Privilege Banking customer of UOB, put $2.5 million into equity-linked notes at a 12.8 per cent yield. But he ended up having to sell the shares at a loss when his investment matured in June. Mr Go has sued UOB and 28-year-old relationship manager (RM) Yeo Beng Hee for misrepresentation, negligence and breach of duty under the Financial Advisers Act. Both UOB and Mr Yeo deny the allegations. This is believed to be the first case involving the statutory duty of financial advisers set out in the Act. Although the investments are not connected to the collapse of Lehman Brothers, this case is expected to be of great interest to investors who stand to lose money from products linked to the bankrupt American investment bank. Mr Go filed his lawsuit in the High Court on Oct 3; UOB and Mr Yeo filed their defence on Wednesday. Mr Go said that Mr Yeo made an appointment to meet him in April to introduce himself as his new RM. At the meeting, a risk profile was done that put him in the conservative category. But he claimed Mr Yeo recommended that he invest in equity-linked notes without explaining the risks. Mr Go first invested $250,000 in equity-linked notes that have since matured. He is still holding those shares. Within a month, he put in another $2.5 million in a second product. Mr Go said the RM told him that the second product was a safe investment, that his principal would be protected, and that he would not suffer a loss. He now wants both transactions to be revoked and to get back the loss from the second investment. But the defendants painted Mr Go, who used to be a property developer, as an experienced investor who bought stocks and had previously put $600,000 into funds in the medium- to high-risk class. Mr Yeo claimed that it was Mr Go himself who had expressed interest in equity-linked notes. He maintained that he had explained the workings of the product and denied making the representations

That day, a friend asked me why they called the Lehman Brothers\' products \"Mini-bonds\". \"Bonds\" are bonds, why called them \"Mini-Bonds\", she asked. I could not answer her on the spot... After going back and studying the prospectus of the minibonds, I realised these products should not even be called \"bonds\". These are credit swaps, mind you... high risk credit swaps. Why did the banks or MAS allowed these swaps to be called \"Bonds\"?? :woohoo: :woohoo:

MacGyver wrote:

That day, a friend asked me why they called the Lehman Brothers\' products \"Mini-bonds\". \"Bonds\" are bonds, why called them \"Mini-Bonds\", she asked. I could not answer her on the spot... After going back and studying the prospectus of the minibonds, I realised these products should not even be called \"bonds\". These are credit swaps, mind you... high risk credit swaps. Why did the banks or MAS allowed these swaps to be called \"Bonds\"?? :woohoo: :woohoo:

now we learn yet another lesson in \"How to Persuade People to Buy Things they Normally Would Not Buy.\"

Actually, our Singapore loansharks (the illegal ones lah) should learn to corporatize their businesses. :laugh: :laugh: Imagine a loanshark trying to collaterise his loans to the consumers/borrowers. He can package these loans and get a rating agency to rank their risknesses. AAA for people who can repay principal and interests. Coupon rates to investors -- 8-10% BBB for people who can repay interests only. Coupon rates to investors -- 10-15% CCC for people who can made periodic payments. Coupon rates to investors -- 15-25% 8-25% interests leh, better than Lehnman Brothers mini-bonds. If business well, maybe can go IPO leh. :laugh: :laugh: