By: musicwhiz
With the recent bankruptcy of Lehman Brothers, there has been much controversy over the structured products which have been sold (through various financial institutions and brokerages) to retail investors. One of them is the DBS High-Notes, while another contentious product are the Lehman Brothers Mini-Bond Series. When a major event such as a credit event occurs, these products are rendered virtually useless for the retail investor and many are now questioning the amount of risk they took up (unknowingly) and whether there was any mis-representation on the part of bank officers who sold them such products.
Deep in the heart of such controversy lies the term "Caveat Emptor", which means "buyer beware" in Latin. Essentially, it means that purchasers of securities and investment products should understand what they are buying before they plunge in, or suffer the consequences of their lack of understanding. While the flip side for this argument is that the "pushers" if such securities ought to be more informed and provide better clarity on the structure of such products; the reality is that sometimes the sellers of such products themselves may not fully understand the consequences or ramifications of obscure events such as "credit events" or "default".
If sufficient appropriate disclosure of risks had been made, perhaps the issue would not have blown up in the media to the extent that it is (in Hong Kong, and now in Singapore). Read more..