THE Monetary Authority of Singapore (MAS) has barred 10 financial institutions (FIs) here which sold toxic credit notes linked to the collapsed US investment bank Lehman Brothers from selling new structured notes for between six months and a minimum of two years.
The unprecedented MAS directive followed its investigations into complaints of mis-selling of the Lehman-linked structured notes from investors in Singapore who lost money last year in the aftermath of the Lehman Brothers collapse.
The central-bank probe found the 10 FIs had in place procedures and controls for the approval and sale of the notes.
However, the level of internal controls differed. As a result, there were various forms of failings on the part of the FIs in the sale of the notes, said MAS, which released the findings of its investigations yesterday.
Some of the failings include assigning inconsistent risk ratings in sales prospectuses and pricing statements, taking insufficient steps to ensure sales staff were properly trained to sell the notes and weaknesses in how some FIs equipped staff with accurate and complete information about the products.
MAS has ordered the 10 FIs to stop selling new structured notes for periods ranging from a minimum of six months to a minimum of two years from July 1.
Hong Leong Finance received the heaviest penalty it cannot sell new structured notes for a minimum of two years.
OCBC Securities was ordered by MAS to stop using introducers to provide advice for new structured notes, for one year.
Over 10,000 people invested in products linked to Lehman, with more than $660 million invested. As of May, compensation of some $105 million was offered to investors who complained of mis-selling.
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