# Husband and wife run provision shop all their lives
# They put life savings in Lehman Minibonds in July
# Two months later, they get a call from the bank: 'Your money is all gone.'
Retirees recount their big losses
By Francis Chan
ONE fateful decision was all it took to turn what should have been a comfortable retirement for Mr Ling Jun Zhi and his wife into a nightmare that threatens to destroy their golden years.
That decision was to trust a financial adviser and put their $100,000 of life savings into a structured product called Lehman Minibonds that was exposed to the now bankrupt Lehman Brothers bank.
A large part of their nest egg could now be gone, wiped out after a frenzy of incomprehensible financial market convulsions in New York somehow landed on the doorstep of the retired Bukit Timah shopkeeper.
It is no consolation but Mr Ling and his wife of 50 years are not alone. Thousands of retirees - people whose productive lives are behind them - bought the products in expectation that they had a safe haven for their hard-earned cash.
The Monetary Authority of Singapore (MAS) said there are approximately 10,000 retail investors who invested over $500 million into structured products linked to Lehman, such as Lehman Minibonds and DBS High Notes 5.
That $500 million represents the life savings of many people who have no chance to get back on their feet, although DBS has said that 80 per cent of its High Notes 5 customers are aged below 62.
The victims are angry, believing that retirees were seen as cashed-up soft touches by relationship managers selling the products.
Some, like Mr Ling, attended a rally at the Speakers' Corner in Hong Lim Park last Saturday to protest against what they claim were misleading sales pitches for the products.
Yesterday, he went again to a planned meeting of DBS High Notes 5 investors outside DBS Building on Shenton Way. He did not invest in High Notes, but was desperate for any kind of information he could get about his Lehman-linked investment.
Many retiree investors that The Straits Times spoke to were Chinese-speaking, middle-aged and elderly people who had invested their life savings.
They were angry and distressed at having been persuaded by bank relationship managers into buying Minibonds and High Notes 5 without being fully informed of the risks involved.
Investors have been receiving regular interest payouts on their investments, some every quarter. But now, they have been told to brace themselves for the loss of most of their principal investments.
DBS has confirmed its relationship managers were never instructed to specifically target retirees for High Notes 5.
But two relationship managers from other banks told The Straits Times that retirees have always been seen as prime customers.
'Of course the bank will not tell us to target retirees officially,' said a senior relationship manager from a foreign bank, who did not want to be named.
'But you don't have to be a genius to know that retirees are usually heavy with cash,' she said.
And a former relationship manager added: 'We have sales quotas for different products depending on sales targets from each month.
'And I have been coached, albeit informally, to seek out retirees when it comes to products that have a higher entry amount in the retail space.'
Investors have told The Straits Times similar stories of how they were convinced to invest.
'The relationship manager at DBS told me that my investment in High Notes 5 was guaranteed 100 per cent for five years,' said Mr Ang, a 68-year-old retiree.
'And from my understanding, that meant that if I remained invested for the entire five years, my principal would still exist.'
Mr Ang explained in Mandarin that he had invested $600,000 of his life savings in High Notes 5. He said he had thought the product was similar to a fixed deposit account.
All he had wanted to do was renew his fixed deposit at DBS, he said. Now, Mr Ang said, he faces the grim possibility of possibly losing the majority of his retirement funds.
Another couple in their 50s, who spoke on condition of anonymity, said that while they do not feel like they were cheated by DBS, they felt somewhat misled and let down.
'DBS is like our national bank,' said the husband, who invested $100,000. 'How could they not tell us that we can lose all our investment just like that? I feel really disappointed but what can I do? My wife signed the papers.'
Or take retiree Mr Tan, who invested $50,000 in High Notes 5.
He told The Straits Times that he has still not received or even seen the High Notes 5 prospectus from his DBS relationship manager.
'I never saw it, I just signed it based on my trust in DBS Bank as Singapore's bank,' said Mr Tan, who is in his 50s.
Part of the problem with the products as investment was their sheer complexity.
Mrs Amy Loh invested $25,000 in High Notes 5, funds she had earmarked while between jobs. She told The Straits Times: 'What the relationship manager said was, 'Don't worry, this is very safe, even if one entity (out of a basket of eight reference entities) fails, you still have seven.''
She was referring to the fact that High Notes 5 included a basket of seven other stocks - called reference entities - apart from Lehman.
But many investors did not understand that High Notes 5 had a 'first-to-default' clause. If one of the reference entities defaulted or went bankrupt - as in the case of Lehman - the entire structure unwinds, triggering a credit event.
When investors were asked by The Straits Times if they knew what terms like 'first to default', 'reference entities' or 'credit event' meant, very few knew.
'These are financial jargon; tell me how many of us regular folk or even the older retirees can understand them?' said Mrs Olivia Sun, 40.
'But my relationship manager was already tripping up just trying to explain 'credit derivative'.'
Industry experts told The Straits Times that the sales process and competency of relationship managers have been questionable, especially if they had targetted retirees.
Mr Leong Sze Hian, president of the Society of Financial Service Professionals, said: 'It's not fair to get people who are old and elderly to put their life savings into just one product. The key issue here is diversification.
'Most of the representatives selling these products were probably not even aware of the risks themselves...This is an issue that has to be addressed.'
Mr Paul Chan, an ex-president of the Insurance and Financial Practitioners Association of Singapore, agreed: 'Is it really fair to say caveat emptor (buyer beware)? I don't think so...I saw some of the retirees at the Speakers' Corner over the weekend, and they don't understand English.
'They showed me the documents that were in Mandarin, and they don't even understand it...These people deserve to have some recourse.'
There is a ray of hope. On Monday, Mr Rajan Raju, DBS's head of consumer banking, assured investors that the bank 'will not hesitate to take responsibility' if evidence of mis-selling is established.
A spokesman for Hong Leong Finance, which also sold the products, said yesterday: 'We are focusing resources to address as quickly as possible all the issues brought up by our customers.'
Just how much assurance that will bring Mr Ling and his wife is debatable, but they do not have much else to cling to.
They had spent decades running a provision shop in Bukit Timah, saving up for the time when they could finally call it quits.
It came around July and Mr Ling, 78, went to Hong Leong Finance's main branch at Raffles Quay to get his finances settled.
'I went to start a fixed-deposit account,' said Mr Ling in a mix of Mandarin and Teochew.
'But the staff told me to try this special account which would give me more interest - 5 per cent guaranteed, he said, so I agreed.'
Then it all turned sour with a single phone call that would chill anyone's blood.
'In September, a man from the bank called and told me that all my money was gone and he didn't, or maybe couldn't, even explain to me why it was gone,' said Mr Ling.
'All he said was that because I had invested in something called 'Mini Bong', my $100,000 was all gone.'
Additional reporting by Robin Chan and Gabriel Chen
[Very sad stories. The banks and their relationship managers have been very irresponsible to sell such products to retirees. Yes, the retirees are cash heavy, but their appetite and capacity for risk is so very low.
There is definitely mis-selling.
I would like to think that I would have the sense to decline buying anything that I did not understand. However, the sales approach and the misrepresentation means that I may well have been persuaded by the lies or misrepresentations.
Of course I am always suspicious of sales persons and I am a hard customer to sell to, so I may not be persuaded. But preying on retirees is very bad.]