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23 Feb 2019
Monetary Auth of Singapore
Feedback View - 604
Why was the Hyflux perpetual securities allowed to be sold to retail investors?

Someone asked me to raise this questions - why was the perpetual securities allowed to be sold to retail investors?

He said that they are high risks and many of the retail investors are not sophisticated enough to be able to assess the risk.

These securities are more suitable for institutional investors who are able to assess the risk and to make an informed judgment. 

He said that the regulator, i.e. the Monetary Authority of Singapore, has not learned the lesson from the collapse of Lehman Brothers in 2008.

At that time, 10,000 investors lost $500 million due to the structured bonds. 

This time, the loss is bigger. It affected 34,000 investors (of the preference shares and perpetual securities) and the sum involved is $900 million. Under the restructuring plan, the investors get back only 10%.

He also asked i the Singapore Exchange had done its due diligence in allowing these perpetual securities to be sold to the retail investors. 


 


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