SINGAPORE: Retail investors in Singapore and Indonesia who bought structured products linked to the collapsed US investment bank Lehman Brothers are complaining about poor advice from banks and have urged authorities to save them from losses.

Over the past week investors have been outraged that the bond-like products they had purchased were actually complex derivatives and they stood to lose most or all of what they had invested.

The products include Lehman-linked minibonds, many of which offered modest returns of between 4 and 6 percent, and DBS Group's High Notes 5 series, which offered around 5 percent and were linked to eight securities including Lehman bonds.

Tan Kin Lian, the retired chief executive of Singapore insurance firm NTUC Income, who advises investors through his blog, said many investors bought such products believing these instruments were relatively safe.

"People who would not take the risk of buying shares have been asked to buy these structured products," he said.

He also added that authorities should examine the design of such products, which were often "grossly unfair" to investors in terms of the risks and rewards.

"The odds are not balanced. You have a chance of losing $1 million, but you won't win $1 million. The structure would take away most of the profits and give you very little," said Tan.

Singapore investor Archie Ong, who stands to lose the bulk of his investment in DBS' High Notes, hopes authorities would force banks to compensate investors who thought they had bought low-risk products that paid steady dividends.

"They had been marketed as a low-risk alternative to equities which are a much higher risk," he said.

A Singapore blogger, who called himself Falcon, said: "Why would one take such a high risk for the potential of earning 5 percent? Such high risks of losing everything should give a potential return of more than 100 percent."

DBS spokeswoman Karen Ngui said, however, that investors in its structured notes had been adequately advised of the risks.

"It's stated clearly in the prospectus and application forms and the pricing statement as well," she said.

DBS needed about 30 days to unwind its structured notes before it could determine the actual losses suffered by investors, she added.

Lehman, however, declined to comment.

The failed investments in structured products linked to Lehman have also affected investors in Indonesia who had bought such instruments from Citigroup, according to a report in the Jakarta Post yesterday.

Citigroup did not respond when asked to comment on the report. The Monetary Authority of Singapore did not immediately respond to queries.

Reuters

(HK Edition 09/23/2008 page2)