[Discussion] Lehman Brothers Holdings Inc

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As I mentioned that LEH is cheap at USD 13...And I would not thought they will end up in this situation...This is unbelieveable as the shares are well below USD 5 and the company is in "ICU" stage...
 
Lehman Said to Be in Discussions About Potential Sale (Update3)
 
By Yalman Onaran


 
Sept. 11 (Bloomberg) -- Lehman Brothers Holdings Inc. entered into talks with potential buyers of the securities firm after Moody's Investors Service said the company must find a ``stronger financial partner'' and the shares plummeted.
The U.S. Treasury and the Federal Reserve have been working with Lehman on a sale, and a deal may be announced before Asian markets open Sept. 15., a person with knowledge of the matter said. The government isn't likely to contribute money, the person said. Bankers from other firms were reviewing Lehman's books today, according to people with knowledge of the situation, who declined to identify potential acquirers.
Without a ``strategic arrangement'' in the ``near term,'' Lehman's credit-ratings may be downgraded, Moody's said yesterday after the New York-based investment bank announced the biggest loss in its 158-year history. A downgrade could increase Lehman's borrowing costs and deter others from trading with the bank. Lehman, led by Chief Executive Officer Richard Fuld, fell 42 percent in New York trading today, ceding its spot as the fourth-biggest U.S. securities firm by market value to Raymond James Financial Inc. in St. Petersburg, Florida.
``While the number of potential acquirers at this point is very few, Moody's action certainly raises the specter of takeout, potentially at a very low price,'' said Merrill Lynch & Co. analyst Guy Moszkowski in a report today. He lowered his recommendation on the stock to ``no opinion,'' saying a potential ``take-under'' makes it hard to gauge a price target.
`Nominal Sum'
Bank of America Corp. is among the possible buyers, the Wall Street Journal reported, citing unidentified people. Spokesmen for Lehman and Bank of America declined to comment.
Michele Smith, a spokeswoman for the Fed, declined to comment on Lehman earlier today. Treasury is ``monitoring markets,'' and is ``in regular contact'' with market participants, spokesman Jennifer Zuccarelli said.
Lehman fell $3.03 to $4.22 at 4:15 p.m. in New York Stock exchange composite trading. The drop reduced Lehman's market value to about $2.9 billion. Raymond James, a regional brokerage, is valued at about $3.8 billion.
``The likely solution is that someone will bail it out and at this rate it may be for a nominal sum,'' said Simon Maughan, a London-based analyst at MF Global Securities Ltd. ``The market is not going to give Lehman time to get on with its plan.''
Goldman Sachs Group Inc., the biggest U.S. securities firm, has no plan to buy Lehman without financial backing from the Federal Reserve or Treasury, which hasn't been offered thus far, a person briefed on the matter said today. Goldman spokesman Michael DuVally said the investment bank ``continues to do business'' with Lehman.
`Attractive Proposition'
Nomura Holdings Inc., Japan's biggest investment bank, may bid for a stake in Lehman, the Yomiuri newspaper cited Nomura President Kenichi Watanabe as saying last week. Michiyori Fujiwara, a Tokyo-based Nomura spokesman, declined to comment yesterday. Nomura has a market value of $28 billion.
Asked yesterday whether he'd consider selling the firm, Fuld didn't rule it out.
``I have always said that if anybody came with an attractive proposition that made it compelling for shareholder value, that would be brought to the board, discussed with the board and evaluated, and that has not changed,'' Fuld said on a conference call with analysts.
Several of the largest European banks may be tempted to buy Lehman to bolster their presence in the U.S., analyst Richard Bove said earlier this week. Ladenburg Thalmann & Co.'s Bove speculated that HSBC Holdings Plc, Europe's biggest bank by market value, could be a suitor. London-based HSBC said yesterday it was ``highly unlikely'' to buy an investment bank.
Ackermann Demurs
Josef Ackermann, the CEO of Deutsche Bank AG, Germany's largest bank, said yesterday in Frankfurt that he wasn't interested in ``parts or all of Lehman.''
Lehman said yesterday it's in the process of selling a majority stake in its asset-management unit, spinning off real- estate holdings and cutting the dividend in an effort to shore up capital and regain investor confidence. The announcement failed to assuage investors' concerns and the shares sank 7 percent, after a 45 percent drop the day before.
Pressure on Fuld, the longest-serving CEO on Wall Street, mounted this week after talks about a capital infusion from Korea Development Bank ended. Fuld, 62, is striving to convince investors that the firm will stem losses on securities tied to real estate even as housing prices decline. He and his management team also must keep clients and employees from leaving.
BlackRock Proceeds
BlackRock Inc., the biggest publicly traded U.S. fund manager, was continuing to negotiate the acquisition of $4 billion in U.K. residential mortgages from Lehman under the plan Fuld announced, a person familiar with the talks said today.
Private equity firms continued to weigh making bids for Lehman's asset management business, people familiar with the talks said. Private-equity firms KKR & Co. LP, Bain Capital LLC, Hellman & Friedman LLC and Clayton, Dubilier & Rice Inc. may make bids valuing the unit at about $5 billion, the people said. Officials at the firms declined to comment.
The restructuring plan ``fell short of what was necessary to lessen the bear case on the stock,'' Goldman analyst William Tanona wrote in a note today, cutting his rating to ``neutral'' from ``buy.''
``A downgrade would likely force Lehman to post additional collateral, increase short-term and long-term funding costs, and limit its ability to transact with partners which demand certain credit ratings,'' Tanona wrote.

`Counterparty Risk'
Moody's said yesterday that a downgrade below Lehman's single-A rating was possible. Standard & Poor's said it was also reviewing the firm for a potential downgrade.
``There's a level of counterparty risk below which another broker-dealer is going to say, `this isn't adequate backing,''' said Michael Shaoul, chief executive officer of Oscar Gruss & Son, a New York brokerage. ``Lehman relies on being able to use its balance sheet as a currency almost. If S&P downgrades by several notches, that's the sort of thing that threatens to get things out of control.''
Bear Stearns Cos., once the fifth-biggest U.S. securities firm, collapsed in March because clients, lenders and other Wall Street firms stopped trading with the firm.
The day the Treasury and Fed brokered JPMorgan Chase & Co.'s takeover of Bear Stearns, the central bank opened a lending facility for brokerages to dispel concern that they might face a bank-run. Lehman has access to the facility.
Bonds Plunge
In addition to Goldman, Morgan Stanley, Merrill, Citigroup Inc., JPMorgan Chase & Co., Bank of America, Credit Suisse Group AG, UBS AG and BlackRock are among the biggest brokerages, banks and fund managers who've said this week that they continue to do business with Lehman as usual.
Lehman bonds plunged for a second day, leading investment- grade debt lower. Lehman's 6.75 percent notes due in 2017 dropped 16.1 cents to 72.75 cents on the dollar for a yield of 11.6 percent, or 8 percentage points more than Treasuries of similar maturity, according to Trace, the Financial Industry Regulatory Authority's bond-pricing service.
Lehman would have to post $4.4 billion additional collateral for its derivative contracts in the event its rating is downgraded two notches, according to the firm's quarterly report filed with regulators in July.
Peter Cohen, founder of Ramius Capital Group LLC, said the hedge fund is sticking with Lehman as one of its prime brokers for processing trades. Lehman is ``very different'' from Bear Stearns Cos., Cohen, the CEO of Shearson Lehman Brothers Inc. from 1983 to 1990, told CNBC in an interview today.
`Confidence Issue'
Fitch Ratings, which also placed Lehman on credit watch this week, said speculation about Lehman's woes aren't related to liquidity but to concern that it can't raise more capital.
``At this point it's an equity confidence issue,'' said Fitch analyst Eileen Fahey in an interview. ``They've raised capital over the past few quarters. Their ability to raise more equity, because the equity price keeps falling, is hampered.''
To contact the reporter on this story: Yalman Onaran in New York at yonaran@bloomberg.net.
Last Updated: September 11, 2008 18:39 EDT

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and some discussion on it.

dude in all reality it can go close to zero. dont buy a counter just because it looks cheap. look at historics & u can see that many stocks (in singapore also) have crashed 80-90% before recovery.
 
from a fundamental perspective, many pple worry that its in questionable NAV situation, so like Bear, its worht nothing actually, hence the token buyout by JPM due to a broker by paulson.
 
dont trade on kopitiam or newspaper articles. look at historics & the macro situation. i wldnt touch these flaming chips unless i was willing to lose all my capital i put into them, or u had some divine tikam god telling u future events

My take is that the Fed will not allow another of the investment banks to go under. By allowing so, they risk a cascading effect in market confident which might possibly affect the rest of the players such a Goldman Sachs and Citigroup. The resultant loss in combined value will cost the US economy a lot more than what it will take the Fed now to bail them out.
 
We've not seen the end of the whole credit crisis that sparked all these off chain events. The investment instruments associated with the US mortage market has been packaged, re-packaged so many times over the last 2 to 3 years that most bankers don't even know in detail what their portfolio are actually hedged against. Now that the Fed had institutionalized Freddie Mac and Fanny Mae, they have stop the haemorrage. But they've create such a big blood bath, it's take years to clean up.

going by that logic. Lehman might be a good buy.

however, the Fed has mentioned they will not bail out another.

i feel theres nothing wrong with letting lehman slide. this to me is the best way to make other banks "own up", instead of hiding off-balance sheet debts etc & expecting fed to bail everytime (SNL was the long ago case, no its not saturday night live hahaha). everytime they bail bad debt, fed is taking on more n more debt themselves ah, its not dissappear somewhere deh) Banking is full of "never say means never no". Well the sins of wall street is begging the devil's prong & I say let lehman slide

Its true that Fed will not bail Lehman out and in fact it did not also bailed Bear...Fed will simply "brokered" a deal for other banks to absorb Lehman in...Who will be the so called financial partner? I really dont know who has the capital or appetite to take on Lehman's toxic balance waste where the gungho Koreans also walked away...I have been wrong to assume that no other IB firm will fall after Bear..Let see what pans out in the next few days...This is going to be a nail bitting momemt for Lehman's employees.

via : http://vagsg.com/forums/showthread.php?t=14535

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Following is a summary of exposures to Lehman or its subsidiaries reported by major financial firms in Asia so far, or as detailed in Lehman's Chapter 11 bankruptcy filing:


COUNTRY/COMPANIES AMOUNT TYPE OF EXPOSURE

JAPAN

Aozora Bank $463 mln Loan

Mizuho Trust $382 mln "

Shinsei Bank $231 mln "

UFJ Bank $185 mln "

Sumitomo Mitsub Bk $177 mln "

Chuo Mitsui Trust $144 mln "

Shinkin Central $93 mln "

Nippon Life Ins $46 mln "

TAIWAN


Investments

Shin Kong Fin (2888.TW: Quote, Profile, Research, Stock Buzz) $78 mln

Cathay Fin (2882.TW: Quote, Profile, Research, Stock Buzz) $33 mln

Central Reins (2851.TW: Quote, Profile, Research, Stock Buzz) $32 mln

Entie Bank (2849.TW: Quote, Profile, Research, Stock Buzz) $24 mln

Bk of Kaohsiung $18 mln

Polaris Securities $11 mln

SinoPac Fin $2 mln

Bank loans

Hua Nan Fin (2880.TW: Quote, Profile, Research, Stock Buzz) $59 mln

First Financial (2892.TW: Quote, Profile, Research, Stock Buzz) $25 mln

Bank of Taiwan (unlisted) $25 mln

Fubon Fin (2881.TW: Quote, Profile, Research, Stock Buzz) $10 mln

AUSTRALIA

Commonwealth (CBA.AX: Quote, Profile, Research, Stock Buzz) Below $123 mln Range of products

ANZ (ANZ.AX: Quote, Profile, Research, Stock Buzz) $120 mln Mostly to subsidiaries

Westpac (WBC.AX: Quote, Profile, Research, Stock Buzz) Below $8 mln

NAB (NAB.AX: Quote, Profile, Research, Stock Buzz) Below $81 mln

HONG KONG

Citibank (C.N: Quote, Profile, Research, Stock Buzz) HK branch $275 mln Loan

CHINA

Bank of China New York $50 mln Loan

(3988.HK: Quote, Profile, Research, Stock Buzz) (601988.SS: Quote, Profile, Research, Stock Buzz)

SOUTH KOREA

The Bank of Korea said the country's financial institutions had exposure of a combined $1.34 billion to Lehman and Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) as of Aug 31.

THAILAND

Central bank said Thailand's 14 commercial banks had only $124 mln of direct exposure to Lehman and more than that in foreign exchange contracts. Bangkok Bank BBL.BK said it holds $101 million in senior, unsecured bonds.

SINGAPORE

DBS (DBSM.SI: Quote, Profile, Research, Stock Buzz)^ Insignificant

UOB (UOBH.SI: Quote, Profile, Research, Stock Buzz) Very small

Bank of Nova Scotia(BNS.TO: Quote, Profile, Research, Stock Buzz) $93 mln loan

(Singapore branch)

PHILIPPINES

The Philippines' two biggest banks -- Metropolitan Bank and Trust Co. (MBT.PS: Quote, Profile, Research, Stock Buzz) and Banco de Oro Unibank (BDO.PS: Quote, Profile, Research, Stock Buzz) -- on Tuesday set aside nearly $100 million to cover exposure to Lehman Brothers but the central bank said the total exposure of the local financial sector was small.

via : http://forums.hardwarezone.com.sg/showthread.php?t=2096353

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In the first Congressional hearing into the financial crisis, the former CEO of the bankrupt Lehman Brothers, Richard Fuld, became the poster boy for Wall Street greed today as he defended the $484 million he received in salary, bonuses and stock options since 2000.

"Is that fair?" asked committee chairman Rep. Henry Waxman (D-CA) who pointed out Fuld owns a mansion in Greenwich, Connecticut, an ocean front estate on Jupiter Island, Florida, a ski chalet in Idaho and a Manhattan apartment.

"If you haven't discovered your role, you're the villain today," said Rep. John Mica (R-FL).

Fuld said given the collapse of Lehman Brothers and its now worthless stock, his actual holdings were closer to $350 million.

"That's still a lot of money," he told the hearing.

Fuld said he took "full responsibility" for the bankruptcy of Lehman Brothers and "felt horrible" about it.

source

via : http://forums.hardwarezone.com.sg/showthread.php?t=2119107

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Richard Fuld testifies in Washington

It was a showdown to cherish for critics of Wall Street's culture of enrichment. The grim-faced boss of the bankrupt bank Lehman Brothers was left squirming yesterday as a veteran Democrat roasted him over his multimillion-dollar pay.

With the startled look of a man unaccustomed to sharp examination, Lehman chief executive Richard Fuld clashed bluntly with the chairman of the House oversight committee, Henry Waxman, on Capitol Hill.

Called on to explain why Lehman collapsed last month, Fuld began with a note of humility, saying he felt "horrible" over the demise of the 158-year-old institution. "I want to be very clear," Fuld said. "I take full responsibility for the decisions I made and for the actions I took."

In a brief speech which was heard in silence, Fuld told legislators that if he could turn back the clock he would do many things differently. As soon as he finished speaking, sparks began to fly.

The chairman of the committee held up a chart suggesting that Fuld's personal remuneration totalled $480m (£276m) over eight years, including payouts of $91m in 2001 and $89m in 2005.

"Your company is now bankrupt and our country is in a state of crisis," said Waxman, a liberal from California. "You get to keep $480m. I have a very basic question: Is that fair?"

After a long pause, Fuld said the figure was exaggerated: "The majority of my compensation, sir, came in stock. The vast majority of the stock I got I still owned at the point of our [bankruptcy] filing."

Waxman cut him off, saying that even if the figure was slightly lower, it was "unimaginable" to much of the public. "Is that fair, for a CEO of a company that's now bankrupt, to make that kind of money? It's just unimaginable to so many people."

"I would say to you the $500m number is not accurate," said Fuld. "I'd say to you, although it's still a large number, for the years you're talking about here, my cash compensation was close to $60m, which you've indicated here, and I took out closer to $250m [in shares]."

Interrupting again, Waxman listed Fuld's collection of property, including a $14m ocean-front villa in Florida and a home in an exclusive ski resort.

"You and your wife have an art collection filled with million dollar paintings," Waxman said. "Your former president, Joe Gregory, used to travel to work in a helicopter."

A pugnacious congressman with a bald head and military moustache, Waxman warmed to his theme: "You made all this money taking risks with other people's money."

Refusing to give ground, Fuld said his pay had been set by an independent compensation committee which spent "a tremendous amount of time" making sure executives' interests were aligned with those of shareholders.

"When the company did well, we did well," Fuld said. "When the company did not do well, we didn't do well."

Waxman disagreed: "Mr Fuld, there seems to be a breakdown, because you did very well when the company was doing well and you did well when the company was not doing well. And now your shareholders who owned your company have nothing. They've been wiped out."

Fuld's evidence was his first public appearance since Lehman failed, sparking a chain of events which has sent shockwaves through the global financial system and prompted the US government to begin a $700bn bail-out of the banking sector.

A lifelong Lehman employee who joined the firm as an intern in 1966, Fuld has been blamed for the debacle by many of the bank's 28,000 staff - including those in London who have accused senior management of filleting Lehman's British operation of money in the bank's final days.

Deadpan and emotionless, Fuld repeatedly frustrated congressmen by answering questions with lengthy, technical financial explanations.

Frustrated by his demeanour, a Republican congressman, John Mica, tried humour: "If you haven't discovered your role, you're the villain today. You've got to act like a villain."

Fuld stared back wordlessly, without a shadow of a smile.

via : http://www.guardian.co.uk/business/2008/oct/07/lehmanbrothers.banking

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old lady lost 400K savings.

just because she put it all in Lehman Brothers mini bond? wow?

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not Singapore though.

those in Singapore, good luck.

Hong Kong banks to buy back Lehman minibonds

Reuters
Friday, October 17, 2008

HONG KONG: Hong Kong banks will buy back minibonds offered by the collapsed investment bank Lehman Brothers from holders at market value, as proposed by the government, the chairman of the Hong Kong Association of Banks chairman, He Guangbei, said Friday.

The association, which includes HSBC and Bank of China, has appointed accountants Ernst & Young as the independent financial adviser responsible for the buyback process, including valuation of the minibond, He told reporters after a meeting with the Hong Kong Monetary Authority, the city's central bank.

"Because the market situation is volatile, it's very difficult and hard to wait until the end of the liquidation process," He said. "We are still working on a timetable with independent financial advisers. For the time being, I don't have a deadline."

He said the price should be decided according to a methodology acceptable to banks.

The Hong Kong government had proposed a way to let investors recoup some of the losses from a reported $2 billion in securities linked to failed bank Lehman Brothers, urging distributing banks to buy the bonds back.

More than 30,000 Hong Kong investors lost money on Lehman credit-linked notes, known as minibonds, after the investment bank collapsed in the wake of the global financial crisis.

"The banks have been spending a lot of time doing this," said Chan Ka-keung, secretary for the financial services and the treasury. "I thank the banks for giving the government such a quick response. This plan can really help many mini-bond holders,"

Hong Kong Monetary Authority said Friday that it had referred 24 complaints of alleged misconduct in the sale of Lehman products to the Hong Kong Securities and Futures Commission. They involved accusations of improper selling by two Hong Kong banks, the authority said.

Investors in the product have protested outside banks in recent weeks demanding compensation, with some claiming the bonds were sold as low-risk products when they were actually complex derivatives.

Investors in Singapore who bought Lehman products have staged similar protests.

Hong Kong and Singapore both have rules stipulating banks must ensure that clients purchase investment products that are consistent with their needs and risk profiles.

via : http://www.singsupplies.com/showthread.php?t=7302

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Risky financial products: It's all to do with confidence

I WISH to comment on the Lehman Brothers Minibonds affair. First of all, let me say I feel very sorry for the retirees who lost their money. They should be helped to recover it.
At the same time, I do not think it is the bank's fault for having sold them such financial products. To understand why, it is necessary to understand the nature of finance, which has a lot to do with confidence.
Every financial product has risk. Even an ordinary fixed deposit or savings account has risk. That is because banks borrow short-term money from depositors and lend it out long term. For example, your three months deposit with a bank could be loaned to a home buyer who signed a 20-year mortgage with the bank.
Thus if every depositor withdraws his money, the bank will go bust because it cannot get its money back from its long-term borrowers in time. But the risk of this happening is low because the depositors have confidence they can get their money back when they want it. Confidence means they don't ask for their money back. Banks typically keep less than 10 per cent cash to meet withdrawals. Thus if more than 10 per cent of depositors want their money back, the bank goes bust.
No matter how low the probability of that happening, it is not zero. This means bank runs will happen some day - but it will be a very rare event, perhaps once in a few centuries. Similarly, the financial crisis that caused the collapse of 185-year-old Lehman Brothers is a rare event.
The last comparable crisis was the Wall Street Crash of 1929 which took place nearly a century ago. People suddenly lost confidence in stocks and all sold at the same time.Thus the probability of a financial crisis of this magnitude that caused Lehman Brothers' collapse is in the ball park of 1 per cent.
So if a relationship manager tells you the probability of Lehman Brothers going bust is very low, he is telling you the truth. Therefore, it is unfair to blame banks for selling Lehman Brothers Minibonds to their customers.
Forcing banks to compensate customers for the losses will lead to unintended consequences. It was reported that many buyers are poorly educated retirees who cannot pronounce 'Minibonds' correctly (calling them 'Minibong'), let alone understand them. If the bank is forced to pay on the basis of educational level, it does not take a genius to realise they will not sell higher yielding but more risky products to the 'Minibong' crowd in the future.
The 'Minibong' people will soon become disgruntled and surly in that others can enjoy a higher rate of return than them, simply because they have one or two O levels more. Since a major financial crisis such as this one that can sink Lehman Brothers comes once in about 100 years, it means Minibongers will be unhappy 99 per cent of the time.
They will be forced to put their money in fixed deposits and savings accounts, which, as I explained earlier, also have risk. So what is to be done for retirees who lost their money? I think they should be treated with compassion, as you would the victims of a natural calamity such as an earthquake. What happened to them was in fact a financial earthquake for which no one is to blame.
I propose the Government set up a charitable fund to which the public and especially the banks are invited to donate. The Government should contribute on a one-for-one basis. Funds raised should go to help those older and less educated retirees. In this way, it is clear no one is at fault.
If not, why stop at Minibonds? I am an illiterate when it comes to car mechanics. My car recently broke down. I recall a few years ago, the salesman told me the car is wonderful and won't give me trouble. Can I get my money back? Tan Keng Soon

via : http://www.singsupplies.com/showthread.php?t=7348

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spoke too soon.

then banks will buy back.
http://www.celicasg.org/index.php?topic=4376.msg45638#msg45638

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Town councils' sinking funds not substantially affected by financial turmoil
By May Wong, Channel NewsAsia | Posted: 28 October 2008 2029 hrs
   
   

SINGAPORE : The sinking funds under all 14 PAP-managed town councils are safe and not significantly affected by the failed Lehman Brothers products.

Town councils said only a small percentage of their total investments were spent on those affected products.

Town councils use their individual sinking funds to carry works such as repairing damages at HDB (Housing & Development Board) common areas or maintaining an HDB elevator.

Every PAP town council has between S$30 million and S$150 million in their sinking funds.

Under current guidelines, each town council can use 65 per cent of their sinking funds to invest in government bonds, while up to 35 per cent can be invested in other financial instruments like corporate bonds and equities.

Although some of the town councils have purchased Lehman Brothers-linked products, the investments are [COLOR="Red"]minimal[/COLOR].

"Maybe a couple of percentage out of the total investment portfolio (were used in those investments), so the exposure will not affect the overall investment portfolio or the sinking funds per se. There's definitely no fear that any of the PAP town councils' sinking funds will be wiped out. All the supporting PAP town councils' sinking funds are in safe hands," assured Dr Teo Ho Pin, Coordinating Chairman of the 14 PAP Town Councils. He is also the mayor of North West District.

For Jurong Town Council, it has not invested in any Lehman-linked products, but explains that it only spends about 18 per cent or S$15 million of its S$84 million sinking funds in slightly riskier products.

Even then, that investment guarantees the principal amount.

"The position that we've taken is really to be very cautious with our investments because [COLOR="Red"]we're very clear that these are public funds[/COLOR], and therefore we decided to err on the side of being conservative in our investment policy. The public do not have to worry... there will not be enough funds in order to take care of their needs," said Jurong MP Halimah Yacob.

Many agree the current financial turmoil has taught the town councils that they should further diversify their investments in the future.

Going forward, town councils are expected to exercise even greater prudence when investing their sinking funds. But it's hoped that they will still be able to get up to 4 per cent of returns on their investments annually. - CNA /ls

via : http://www.singsupplies.com/showthread.php?t=7903

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“Every PAP town council has between S$30 million and S$150 million in their sinking funds. Although some of the town councils have purchased Lehman Brothers-linked products, the investments are minimal. Maybe a couple of percentage out of the total investment portfolio (were used in those investments), so the exposure will not affect the overall investment portfolio or the sinking funds per se.”



My interpretation: Assuming the most conservative 1 percent of the sinking fund is used in those investments, this will represent a loss ranging from S$300,000 to S$1.5 million dollars for ONE Town Council only. We do not know how many town councils have bought the products. “Some” can mean three, four or even ten town councils, but what we can be sure about is that the TOTAL LOSS incurred by the PAP Town Councils are definitely close to or even more than S$ 1 million dollars !!



XXX



Public funds should never be used in high-risk investments at all to generate returns. When there is a surplus, it should either be used to provide more amenities for the residents and or refund back to the residents in the form of decrease in the annual conservancy fees. The reserves of sinking funds held by the Town Councils (ranging from S$300 million to S$1.5 million) begs the question if there is really a need to accumulate such a huge surplus in the first place. Since there is more than enough funds to maintain the estates, why not reduce the conservancy fees of the residents ?



At a time when Singapore is in technical recession and Singaporeans are tightening their belts in a worsening economic climate, losing such a large amount of public funds is tantamount to gross negligence and dereliction of duties. It is disappointing that both the authorities and media do not realize the magnitude of the mistake and of the urgency to address the underlying flaws and loopholes in the administration, choosing instead to dismiss it as another “honest and unavoidable mistake“.


Read the full article and watch the CNA video here:

http://wayangparty.com/2008/10/29/how-much-public-funds-did-pap-town-councils-lose-in-total-from-the-failed-minibond-investments/

via : http://www.singsupplies.com/showthread.php?t=7941

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minimal perhaps. what's the number?

dun be like so many people i know... "coming, on the way."
when they are already late, and dun give an indication of what time they will reach (in minutes/hours.)

what's the number?

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[youtube]xhm3hmVKVqA[/youtube]
http://www.youtube.com/watch?v=xhm3hmVKVqA

How much public funds did PAP Town Councils lose from failed minibond investments?
via : http://forums.hardwarezone.com.sg/showthread.php?p=33365008#post33365008

$1 billion in town council funds : what’re they used for?

I refer to the CNA news report “Prudent to protect sinking funds of town councils: DPM Wong” (CNA, Dec 2) and the article “Move to protect council funds” (Today, Dec 1).

According to Creative Technology’s (CT) annual report, Holland-Bukit Panjang Town Council (HBPTC) was listed as one of the majority shareholders with 530,000 shares currently valued at about $3.2 million. I understand that CT’s share price from 2003 to 2007, has ranged from a high of $27.30 to it’s current price of $6.10 on 12 October 2007.

According to CT’s Statistics of Shareholding as at 19 August 2005, HBPTC held 200,000 shares. The CT high price for fiscal 2005 and 2006 was $27.20 and $14.40 respectively. Does this mean that the 200,000 shares could have cost as much as $5.4 million?

When did HBPTC purchase its CT shares, and at what price?

If it had held its total holding of TC shares on 1 July 2006, I believe it would have been valued at about $6 million.

According to HBPTC’s annual report, it had $8.4 million of quoted equities on 1 April 2005.

If this is the case, does it mean that it accounted for about 70 per cent of HBPTC’s total quoted securities portfolio of $8.4 million?

If the above assumptions and timelines are correct, why is its quoted securities portfolio so apparently non-diversified?

Isn’t diversification the key principle of prudent investing?

What guidelines do town councils use in investing their residents’ funds?

Another question which needs to be asked is: What are the profits from such investments used for and have they ever been used, since town council funds keep growing to more than $1 billion now? Perhaps the town councils should include this in their annual reports and make them public.

When we last checked, only 6 out of the 16 town councils have their annual reports easily available on their websites. Why are the reports of the other 10 town councils not available on their websites?

http://theonlinecitizen.com/2007/12/1-billion-in-town-council-funds-whatre-they-used-for/

this one best riao, gct self pwn ~ :s13:
http://wayangparty.com/2008/10/30/is-it-time-for-us-to-look-into-the-accounts-of-pap-town-councils/


[SIZE="5"]Is it time for us to look into the accounts of PAP Town Councils ?[/SIZE]
Posted by wayangparty on October 30, 2008
By Fang Zhi Yuan, Chief Editor

In his speech at a National Day dinner held in Hougang in  July this year, SM Goh urged Hougang residents to “study the annual accounts of the town council to ensure that the funds are properly used”.

Now it has been revealed by the press that some PAP Town Councils have lost few percentage of their sinking funds in the purchase of Lehman-linked products, is it time for us to relook into the accounts of these Town Councils ?

I did a check on the websites of the 14 PAP Town Councils as well as the 2 opposition Town Councils and none have published their accounts online.

Given that the sinking funds of the Town Councils are public funds contributed by residents, shouldn’t its balance sheet be made public for us to know how it is being managed ?

Why can’t the Town Councils made their yearly statements of accounts available online if they are indeed well managed ?

In the United Kingdom which has a similar system in place, almost all its Town and District Councils published its yearly statements of account online for its residents to see and review. They are even encouraged to lodge a complaint to the Court if they have any objections to how the funds are being utilized.

For simplicity sake, let me quote the example of the District Council of Salisbury, a small romantic town in Southern England at the confluence of the East Avon, Bourne, and Nadder rivers with a population of about 120, 000, the size of a typical GRC in Singapore.

Attached below is the Statement of Accounts for 2007/2008 of the Salisbury District Council compiled by Alan Osborne, Head of Financial Services and Matthew Tiller, Chief Accountant in which every single cent collected and used by the Council is properly accounted for.

The accounting statements comprises of five core financial statements:

1. The Income and Expenditure Account which summarizes the resources generated and consumed n providing service and managing the Council during the year.

2. The Statements of Movements on General Fund Balance.

3. Statement of recognized Gains and Losses: This brings together all the gains and losses for the year and shows the aggregate increase in net worth of the authority.

4. The Balance Sheet: Shows what the authority owns and owes.

5. The Cash Flow Statement: This shows where money came from and where it went.

As we can see for ourselves, the high degree of transparency displayed by the Salisbury District Council ensures that public funds are cautiously and competently utilized to the benefit of the residents paying for them.

For a government which has always pride itself on the three tenets of good governance - competency, accountability and transparency to the extent of promoting itself as a flag-bearer for neighboring countries to follow, it is most unusual that it fails to practice what it preaches at the grassroots level.

I sincerely call on Mr Chiam See Tong of Potong Pasir and Mr Low Thia Kiang of Hougang to publish their latest statement of accounts online for all Singaporeans to see and judge for themselves how the two opposition wards have been managing their estates without charging exorbitant levies on its residents. This will lead to increasing pressure on the PAP Town Councils to follow suit without which we will never know the amount of sinking funds which have been squandered away through unwise investments.

more reading via : http://wayangparty.com/2008/10/29/how-much-public-funds-did-pap-town-councils-lose-in-total-from-the-failed-minibond-investments/

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read the header of an article in the forum (newspaper).

"why should we shareholders bear the payout?" (something along that line.)

the money has to come from somewhere, and ultimately.. it's the shareholders.

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elsewhere in the papers, more guidelines n what-not are set up to "protect" investors.

wow, just wow.

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here's the article.

Dear Mr Tan Kin Lian how about those honest DBS bank investors, who can help serve their interest?

DBS financial products: Why must shareholders absorb the loss?
Tue, Jan 20, 2009
The Straits Times

IT WAS reported that DBS has completed its review of complaints related to structured financial products. The amount is estimated to be $80 million.

The report said the bank will absorb the loss. In fact, it is the shareholders who ultimately absorb the loss. Throughout this saga, I, as a shareholder, have seen no specific communication from management to assure me that my interests will be well taken care of.

There is either mis-selling in each case, or there is not. If there is, the bank should indeed compensate investors. However, as a shareholder I must insist that there is assurance that those responsible are also held accountable - this could include (but may not be limited to) the relationship managers in question, the head of wealth management or equivalent (there must be leadership and accountability, not to mention that the bonus would surely have reflected 'successful sales' over the past few years), and, to some extent, the risk or compliance manager who approved the policies and procedures that were supposed to prevent misselling.

Kevin Kwek

via : http://www.singsupplies.com/showthread.php?t=15390

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http://www.reuters.com/article/ousivMolt/idUSTRE5864CH20090908?rpc=60

By Clare Baldwin, Jui Chakravorty and Jonathan Spicer

NEW YORK/KETCHUM, Idaho (Reuters) - "You don't have a gun; that's good."

That was how Richard Fuld greeted a Reuters reporter who had tracked him down to his country house in a bucolic setting beside a river and amid tree-covered slopes in Ketchum, Idaho last Friday.

The man vilified for the collapse of Lehman Brothers (LEHMQ.PK) almost a year ago, a failure that triggered the global economic crisis, seemed burdened but not crushed by the pressure of the upcoming anniversary.

Standing on his gravelly driveway wearing a black fleece vest, dark gray shorts and sandals, Fuld indicated he was torn about speaking out in his own defense, partly because of ongoing litigation but also because he felt the world was not ready to listen.

"You know what? The anniversary's coming up," he said. "I've been pummeled, I've been dumped on, and it's all going to happen again. I can handle it. You know what, let them line up."

Fuld again emphasized his concern about what will be said and written about him in the days leading up to the September 15 anniversary of the Lehman collapse but also stressed his ability to see it through.

"They're looking for someone to dump on right now, and that's me," Fuld lamented and later added: "You know what they say? 'This too shall pass.'"

Fuld, 63, took Lehman's reins in 1994 when it was troubled and rebuilt it into the fourth-largest U.S. investment bank, a Wall Street powerhouse whose massively profitable mortgage banking machine inspired rivals' envy. Even Goldman Sachs (GS.N) was nervous.

But it was forced to file the biggest bankruptcy in U.S. history after it choked under the weight of souring assets and lost investor confidence, and as the U.S. government and Federal Reserve failed to find a buyer and decided not to come up with a rescue package.

Fuld was then humiliated before a Congressional panel last October as stock markets spiraled downwards. He was told by one politician that he was the designated "villain" of the day and screamed at by protesters who called for him to be jailed.

Since then, he has mostly ducked the spotlight, allowing an image of greed, arrogance and failure to cling unchallenged to his name.

In Ketchum on Friday, Fuld said he wanted to speak but didn't see the point. "Nobody wants to hear it. The facts are out there. Nobody wants to hear it, especially not from me."

The former CEO, who embraced the "gorilla" nickname that characterized his fierce and intimidating business style, looked and sounded sad as he lingered with the surprise visitor outside the house, which is beside a river in the Rocky Mountains.

Fuld, who said he had hiked up a nearby mountain earlier in the day, declined to speak about his current work.

But friends and acquaintances say he has started his own consulting firm named Matrix Advisors LLC, based out of an office on Third Avenue in New York. He is also doing some work for restructuring firm Alvarez and Marsal, helping to unwind Lehman free of charge, according to sources.  Continued...

more reading via the link above.

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http://bloomberg.com/apps/news?pid=20601087&sid=axX9PCd9qLd0

Lehman Says Barclays Got $5 Billion Discount, Wants Assets Back
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By Christopher Scinta and Linda Sandler

Sept. 16 (Bloomberg) -- Lehman Brothers Holdings Inc. said Barclays Plc got a $5 billion discount when it bought the North American brokerage business and some real estate days after Lehman’s bankruptcy filing a year ago, and wants assets back.

“Material components of the transaction were not disclosed to the court before and at the sale hearing,” lawyers for Lehman said in a filing yesterday in U.S. Bankruptcy Court in Manhattan. “The fact is that the deal was actually structured to give Barclays an immediate and enormous windfall profit. Certain Lehman executives agreed to give Barclays an undisclosed $5 billion discount off the book value of securities.”

Lehman said Barclays’ windfall may have been more than $8.2 billion when margin deposits and liabilities Barclays assumed are taken into consideration. Lehman filed the largest bankruptcy in U.S. history on Sept. 15 with assets of $639 billion.

The collapsed bank is asking U.S. Bankruptcy Judge James Peck to revise the deal and force Barclays to return assets to Lehman’s estate and give it the opportunity to pursue claims for breach of contract, breach of fiduciary duty and unauthorized transfer of assets.

‘Opportunistic Claim’

“This is an opportunistic claim,” Barclays spokesman Michael O’Looney said. “Now that the economy has begun to stabilize the Lehman Estate is trying to re-trade the deal on the basis of a meritless argument.”

The committee representing Lehman’s unsecured creditors filed their own court papers, which were substantially redacted, saying Barclays should return assets to Lehman and its creditors.

James Giddens, the trustee liquidating Lehman’s brokerage on behalf of the Securities Investor Protection Corp., also filed court papers yesterday stating Barclays continues to assert claims for “billions of dollars of additional assets” beyond the $47.4 billion set in the sale pact.

“The transfer of these assets to Barclays would create an unfair windfall for Barclays at the expense of public customers,” Giddens said in a statement. “I am seeking to protect customer property and asking the court to reject and grant relief from Barclays’ claims.”

Lehman can’t say more about the executives responsible for the sale to Barclays or the possible extent of the British bank’s profit on the deal because of a confidentiality agreement required by Barclays, Lehman Chief Executive Officer Bryan Marsal said yesterday in an e-mail.

While “we would prefer full transparency, the ultimate public disclosure will be up to” Barclays, Marsal said.

Support for Sale

Lehman’s assets were under the control of the bankruptcy court when Barclays paid $1.54 billion for them in a sale that closed Sept. 22. The U.S. Securities and Exchange Commission and the Federal Reserve Bank of New York supported the speedy sale to Barclays in an effort to calm global securities markets. Some Lehman creditors opposed the sale, saying it was moving too quickly and London-based Barclays was underpaying.

Lehman and Barclays had been in talks about a tie-up in the days before Lehman’s Chapter 11 filing, though they didn’t result in a deal. Within hours after the bankruptcy filing, Barclays again approached Lehman and negotiated an agreement “very quickly” as the value of Lehman’s assets tumbled, according to court papers.

Terms Changed

While the hearing on the deal was going on before Peck, people negotiating the sale changed some terms without disclosing them to the court, according to the filing by attorneys at Jones Day representing Lehman. Terminating a repurchase agreement between Barclays and Lehman’s brokerage allowed more assets to be transferred to Barclays than was originally agreed, according to the filing, which was partially sealed.

Lehman asked in May for permission to investigate whether Barclays got too good a deal after the U.K. bank’s financial results for 2008 showed a gain of 2.26 billion pounds ($3.72 billion) from the acquisition of Lehman’s North American operations. A hearing on the request to amend the sale order is scheduled for Oct. 15.

Separately, Peck ordered yesterday that disputes among the collapsed investment bank and counterparties on derivative and swap contracts must go to mediation.

Lehman had more than 900,000 derivative contracts outstanding when it filed the largest U.S. bankruptcy a year ago. The New York-based bank said alternative dispute resolution, or ADR, will save money and time in resolving its complex Chapter 11 case over arguing each dispute in court.

Peck approved the request to require mediation at a hearing yesterday, turning aside objections from counterparties on the derivatives who said it would severely limit their rights and force them to provide too much information to Lehman and the committee representing its unsecured creditors.

The goal is “to get to an ADR process that encourages parties to write checks,” Peck said. “I think these procedures are quite appropriate.”

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

-- Editors: John Pickering, Mary Romano

To contact the reporter on this story: Christopher Scinta in New York at cscinta@bloomberg.net; Linda Sandler in New York at lsandler@bloomberg.net.
Last Updated: September 15, 2009 23:42 EDT

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Lehman number 2 in MF?