Letter to: SFC Mr. Martin Wheatley -- DBS Constellation Victim Alliance

Letter to: SFC Mr. Martin Wheatley -- DBS Constellation Victim Alliance
Securities and Futures Commission
Attn: Mr. Martin Wheatley 21 October, 2009
Re: DBS Constellation, Investigation Progress
By virtue of the Settlement Agreement as reached by the HKMA, SFC and 16 numbers of Banks, the Mini-Bond Victims would be re-paid with 60 to 70 percentage of the invested capital. On contrary, the Constellation Victims are treated differently. As at the time of this letter, we, Constellation Victims have ZERO redemption.
For becoming the world financial center, Hong Kong has to act as pioneer and recruit different kinds of financial products. The idea is absolutely right and admirable. Unfortunately, the cunning bank officers, take the advantages of the statutary loopholes, promoted and sold out the complicated structural products. Virtually, under the regulations and rules being laid down by the financial regulator to the Banks, the Banks have to disclose all the risks to the investors and to allow them fully understand and carefully consider. Unfortunately, due to the pressure given by the Banks and the attraction of high rate commission, the bank front liners used different kinds of gimmick to convince the customers to purchase the structural products. The outcome after the financial tsunami was disastrous and it affected all ranks of people in the society. It indicated that the cover-up technique by the banks was very high. If the risks of the products had been fully disclosed, would there be anyone bought the so-called Bond with the unbalanced return?
The DBS Constellation victims in the numbers of more than six thousand and nine hundred are very concerned for the investigation progress by SFC. It is hard to imagine why SFC could allow DBS Bank to have the self-investigation over a year since October last year after they made an announcement of the ZERO redemption. DBS keeps business operated and diversifies the interest without taking the liability and obligation. Does it imply that the HKSAR Government was scared of the Singapore Government?
With the fact that DBS Bank made the settlement offer to some of the victims, it proved that their mis-selling was a systematical mistake.
DBS emphasized that the Constellation Bond was as safe as bond or even equivalent to the fixed deposit in terms of capital security, which was obviously mistaken. Apart from this, DBS also failed to:
1. Assess the product’s risks impartially and diligently,
2. Highlight the product’s complexity and high risks to the front line staff,
3. Use the professional and precise assessment method to identify the customers’ ability to sustain the downturn of the market,
4. Set up a particular mechanism to enhance and ensure the elderly un-educated people, impaired and those who put their eggs in one basket to fully understand the product’s characteristics at risk.
DBS Bank had made more than one of the above failures. No matter whether DBS had misled individually or not, it clearly demonstrated that they had constituted the mis-selling systematically.
The training material did not illustrate precisely the risks of the products. It caused the Bank front-liners unable to elaborate clearly to the customer of the pros and cons. It resulted in the improper selling in every transaction. Thus, it can be concluded that the systematical mistake was implanted in the bank’s internal system.
There was no response received since our last letter submitted on 7 August this year. We have been struggling for more than a year. When will you stand up for justice?
We, as DBS Constellation Victim Alliance, cordially request for:
1. Being treated equally as those Mini-Bond holders,
2. Compensation from DBS, as DBS designed, issued and distributed the Constellation Bond and also, acted as swap counterparties. This caused conflict of interest. They disregarded the Code of Practice laid by the Financial Regulator, which endangered the customers,
3. Effective investigation to resolve the long-dredged problem.
We look forward to your earliest reply. Should you have any queries, please do not hesitate to contact our leader, Ms Wong .

Yours faithfully,
DBS Constellation Victim Alliance