SINGAPORE: A group of investors who had lost money in Lehman
Brothers Minibonds has begun legal action against Royal Bank of
Scotland (RBS) in a bid to recoup their losses
They are taking RBS to court for allegedly misleading them into
buying the toxic products. RBS is being sued because it bought over
ABN—AMRO, which had sold the Minibonds to the investors.
The group of about 170 investors call themselves the Minibond
Investors Action Group or MIAG. Among them, they had invested a
total of S$20 million, with most of them putting in between
S$150,000 and S$200,000 each.
They are not what the government considers "vulnerable"
investors — that is, those over 62 years old and who have primary
school qualifications.
The "vulnerable class" has had some success in gaining
compensation after the Monetary Authority of Singapore intervened
early this year.
But an MIAG member told Channel NewsAsia that the prospectus was
so confusing it would not have been understood even by
sophisticated investors. He also said the bank did not do its duty
by making sure the product was safe.
Chung Wing Kee, an MIAG committee member, said: "If the
financial institution had told me that ’actually it’s not bonds
we’re selling, we just use the word ’minibonds’ to bring you in’,
it’s not bonds, it’s a complex instrument, I won’t touch it!"
Mr Chung said that going to FIDReC, which is the Financial
Industry Disputes Resolution Centre, will not allow the investors
to recover the bulk of their investments. That is because FIDReC
has a cap of S$50,000 against which claims can be made.
He said the group’s members are confident they have a good
chance of winning, and based on the success of Minibond investors
in Hong Kong, they are hoping to get back at least 70 per cent of
their investment capital.
And this will not be the last lawsuit by MIAG. The investors had
bought products from 10 financial institutions. If they succeed in
their case against RBS, they will initiate lawsuits against the
others.
— CNA/ir