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DBS Group Holdings Ltd., one of 14 banks in Hong Kong that have agreed to compensate investors in structured notes linked to Lehman Brothers Holdings Inc., has been accused in a lawsuit of failing to comply with securities laws while selling the products.

The complaint, filed in Hong Kong’s High Court by a retired couple now living in California, claims Southeast Asia’s biggest bank failed to comply with the code of conduct for financial institutions under the city’s Securities and Futures Ordinance, including “failing to make accurate and not misleading representations.”

The Hong Kong units of DBS, Bank of China Ltd. and Citigroup Inc. and 11 other banks have compensated more than 60 investors, after lobbying from the city’s Democratic Party, its chairman Albert Ho said. Lawsuits including a proposed class action in the U.S. and a Hong Kong legislature investigation into the banks and structured financial products may encourage more, the lawyer and lawmaker added.

“The threat of litigation is one of the most effective tools in forcing settlement,” Ho said. Some of the banks became more willing to settle in case litigation exposes them to “more embarrassment,” he said.

DBS, which said Oct. 22 it expected compensation to Singapore and Hong Kong customers to amount to as much as S$80 million ($54 million), said it could not comment on the Hong Kong lawsuit. “If there are cases where our standards are not met, DBS will not hesitate to make compensation,” it added. read more

Today the SEC resolved charges against Citi and UBS alleging that the two firms misled investors about liquidity risks related to auction-rate securities. The $30 billion settlement is the largest in SEC history and restores liquidity to ARS investors at par value of their holdings.

According to the SEC’s release, Citi will offer to purchase ARS at par from all current or former clients that bought them—even if the customer moved accounts—restoring approximately $7 billion in liquidity to Citi customers who invested in the securities. UBS will do the same, restoring $22.7 billion to its customers. Importantly, “eligible” customers at these firms who have already sold their ARS below par will be eligible for reimbursement as well, according to the release. The SEC’s complaints against the two firms stated that between late 2007 and early 2008, both firms misrepresented the liquidity risks inherent in the securities market by comparing them to highly liquid money market funds, and failed to inform clients that their own growing balance sheet constraints may prevent them from supporting future auctions.

The auction rate-securities market—the obscure corner of the bond market that municipalities, student loan organizations and other institutional investors used for raising capital—was a popular cash storage investment vehicle for wealthier investors. That is, before they froze up in early February of this year. (Read Registered Rep.’s May cover story, A False Sense Of Security, for details of the collapse.) The ensuing liquidity crisis not only caused a lot of pain for investors and institutions that relied on the market for short-term liquidity needs, but it also revealed more problems and conflicts of interest in the market’s structure (despite SEC attention to similar issues in 2005 and 2006). read more

Troubled midcap miner Metorex on Friday staunched its share-price haemorrhage with the announcement of far-reaching restructuring that would see the stepping down of growth-era CEO Charles Needham, the exiting of founder Simon Malone, the creation of an all-nonexecutive "board oversight committee", and the disposal of cash-consuming assets to pay for a new bank loan.

Metorex, once a boom-time JSE darling but hit now by project delays, commodity price collapse and a shareholder revolt, said it had mandated the newly created oversight committee to review the company's key performance indicators and focus particularly on the completion of the Ruashi copper project, which was being built in the Democratic Republic of Congo (DRC).

Metorex said that the oversight committee would also see to structural changes and the recomposition of the board.

This followed an earlier announcement of a R922-million debt and equity finance plan to complete the production and ramp up of its Ruashi copper/cobalt project.

New executives would be introduced to assist with company management, the reduction of borrowings and the disposal of noncore and cash-consuming assets "in the short-to-medium term", in order to repay the new Standard Bank term-loan facility.

The oversight committee would also address the future of Metorex's investment in Copper Resource Corporation (CRC); monitor Ruashi's hedge, and secure "longer-term and appropriately structured financing" to improve the project pipeline. read more

According to the Bank for International Settlements ("BIS"), the global market size for over-the-counter ("OTC") derivatives, as of June 2008, exceeded $683 trillion (yes trillion) or $683,725 billion. (These numbers reflect notional amounts outstanding.) Notably, an expanded use of interest rate swaps helped to push non-exchange traded interest rate derivative product outstandings above $450 trillion, a rise of 17% over the last half-year. It would be helpful to know whether, and to what extent, pensions' use of Liability-Driven Investing strategies influenced the numbers. Click to access "Table 1: The global OTC derivatives market."

Since June, a lot has happened in the global market place. Until BIS reports updated figures, it is hard to quantify how various players have responded to increased volatility with respect to their use of OTC instruments such as swaps, options and structured products. One might logically assume that valuation and liquidity concerns will reflect themselves in lower numbers for H2-2008. On the other hand, uncertainty could encourage hedging, in which case both OTC and exchange-traded activity might see a boost.

In the meantime, I asked a few financial market participants for their feedback. Here is what they had to say in answer to the following query.

Do You Think More Regulations Will Inhibit the Use of OTC Derivatives by Institutional Investors?

• A director at a non-U.S. financial organization advises regulators not to throw the baby out with the bath water, adding that "Regulation should be framed to drive generic flows into more efficient 'plumbing' systems, while allowing custom-built trades to proceed when standardized terms don't make sense. Unless the market volunteers solutions, one must fear that knee jerk regulation will fail to differentiate, and therefore deprive end-users access to these undeniably valuable risk management tools."

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Many people are getting litigation structured settlements, but probably aren't even sure what the details of the deal are, or why they're entitled to it.

f you or a family member has been the victim of injury or wrongful death caused by another individual or company, you are entitled to financial compensation for your suffering. As part of the lawsuit or legal process, a litigation structured settlement is awarded to the victim(s), so that they are taken care of. Money may not be able to repair injuries or bring back the dead, but it can offer some solace by relieving financial stress.

Litigation structured settlement options are growing in popularity. Every year, hundreds of thousands of Americans are awarded these settlements as a result of their injuries or the death of a family member. Rather than paying one lump sum, many lawyers and judges are in favor of periodic payments through structured settlements, so that people can live the rest of their lives with money, rather than spending it all at once. read more

Hong Kong lawmakers voted late on Wednesday to invoke special powers for a probe into alleged misconduct by banks who sold investors failed Lehman Brothers investments, as pressure built on such banks for compensation.

The city's legislature voted after a marathon half-day debate to invoke sweeping and rarely used powers to investigate 21 banks alleged to have misled investors over failed Lehman Brothers investments, which could force top bankers and officials to testify, and banks to disclose commercially sensitive information.

Around 40,000 Hong Kong investors ploughed nearly $2.5 billion into failed Lehman-linked structured products and mini-bonds, with many accusing the banks of duping them into buying what they thought were low-risk products. read more

In September of 2008, ten international homeschool leaders joined HSLDA’s annual National Homeschool Leadership Conference. The following is an update from Terry Harding, who presented his work with the Australian Christian Academy at the conference. This update describes the history, current practice and legal climate, and projected future of homeschooling in Australia.

History of Education in Australia

Australia is a nation of 22 million people. It covers a land area equivalent to the United States. The Australian indigenous people inhabited the continent prior to English settlement in 1788.

The first formal education in Australia commenced in 1788 in three homes. Later, education became the domain of the Christian church, with the Anglican, Roman Catholic and Presbyterian Churches seeking to establish their denominational education systems. From 1872 to the 1880s, the governments of what are now the six Australian States established “compulsory, free and secular” Education Acts, and since then, governments and government schooling has grown to become the dominant factor in Australian education.

Reasons for Homeschooling

With the rise of an aggressive atheism on the Australian educational landscape in the 1960s–1980s, home education has experienced a significant resurgence. Research (Harding, 1997) has demonstrated that parents have chosen to educate their children at home for the following reasons: (i) religious reasons; (ii) parenting reasons, in that parents wanted to create close bonds with their children; (iii) social reasons, as parents wanted to promote positive socialisation in their children’s lives; (iv) academic reasons, as parents sought to secure their children’s academic success; (v) practical reasons where private schooling was unattainable, or for travelling families and (vi) for the special educational or health needs of children, which would be best met by home education.

Home Education in Practice

Australian home educators choose one of three methods of home education (Barratt-Peacock, 1997; Harding, 2006a, Thomas, 1998). They can use a structured program similar to what is used in schools, or they use an eclectic approach, accessing books and courses from a variety of sources, or some use a natural learning/unschooling approach, with little formal structure. The key factor common to each method is that parents are practicing their chosen form of education with their own children, in their own homes.

Australian home educators practice either homeschooling, where the education is the total responsibility of the parents, with little or no structured outside help; or government or non-government distance education, where a structured program is provided to the family, with some teacher assistance provided on a for-fee basis.

It is difficult to determine the numbers of home educated children in Australia, and estimates range from 20,000 to 60,000 children. Governments tend to underestimate the numbers, whilst some home educators seem to take the opposite approach.

The Australian Christian Academy was the first official homeschooling support institution appearing on the modern Australian homeschooling terrain. Commencing from six families in October 1982, it now supports over 4,000 children and their families, and remains the largest quantifiable home education group in Australia, supporting both homeschool and distance education families.

Legal Climate

Home education has flourished during the 1970s to the present, despite oppressive legislation and practices from the governments of all six states and two territories. These laws usually require homeschooled children to be registered and monitored by the state. While many families are happy to comply with such laws, many others have practiced civil disobedience with respect to homeschooling laws. In Queensland, for example, it was estimated (Queensland Government, 2003) that 85% of home educators did not comply with state requirements of registration and monitoring of students. Despite these draconian laws, most Australian home educators are practicing home education in freedom in remote areas, regional towns and in suburban and urban centres. read more

Mirvac Group (MGR) reiterated its latest earnings guidance of 13.4c per stapled security for fiscal 2009. The company said it had completed a detailed review of its earnings as the magnitude of the change in economic circumstances became clear.

Chairman James MacKenzie told shareholders at the company's AGM the revised development earnings reflected a conservative assessment of forecast residential settlements and sales based on the new market conditions.

"Negative consumer sentiment and low home ownership affordability are very real challenges for Mirvac," Mr MacKenzie said.

"Notwithstanding, we are starting to see, what we hope are early signs that the residential market and consequent demand for Mirvac product being stimulated by the Rudd Government's First Home Owners grant scheme."

He added that the NSW Rees Government's announcement last weekend of a $3,000 increase in the grant for First Home Owners, falling interest rates along with rising residential rents and the general undersupply of housing were also positive.

Mr MacKenzie said they were early signs, not factored in to Mirvac's projections, but nonetheless cause for some cautious optimism and hopefully some good news in the not too distant future. read more

The National Football League this week announced its own economic stimulus package.

Because of "the economic challenges facing fans," the league is cutting the cost of playoff tickets by an average of 10 percent. Wahoo!

Last season the average price of a playoff ticket was $121. Based on that figure, a family of four can go to a wild-card or division-round game on the cheap this season. Just about $435.60. Wahoo! Again.

The news only gets better if your team keeps winning.

A trip to Raymond James Stadium in Tampa for Super Bowl XLIII in February could end up being a real bargain. Of the 65,857 seats available at the facility, the league is pricing 1,000 of them - yes 1,000 of them - at $500. That's a $300 reduction off the original price! Too bad for the other 64,857 slobs who have to pay full price.

It won't be long now before those $8 cups of beer are down to $7.25. How about a throwback jersey? Those are being slashed from $175 to a measly $163.35.

Anybody out there get a 10 percent break on their parking on Route 1 last night?

I haven't seen bargains like these since I decided to have my carpets installed next day by Empire Today. Or was it National Floors Direct? Either way, I saved 60 percent off the other guy's 50 percent off offer. I think. read more

U.S. bank sales of fixed annuities were an estimated $9.2 billion in third quarter, 2008, according to new data from the Beacon Research Fixed Annuity Premium Study (1). The quarter's sales were 80% above third quarter, 2007, and up 4% from the prior quarter. On a year-to-date basis, estimated sales were $24.9 billion, 90% ahead of results in the first three quarters of 2007 (2).

Amid the current financial crisis, at least one thing is going up in value: the U.S. dollar.

For American artists on the road overseas, the dollar's sudden strength against the euro, the British pound and the Canadian and Australian dollars means that local costs like food and lodging are cheaper. But depending on how they structured their deals with promoters, artists could wind up taking home less than they would have months ago.

They can protect themselves from the dollar's surge to some extent by negotiating tour guarantees in dollars rather than in local currency. But they'll still lose money to currency fluctuations if their percentage of tour profits is calculated in local currency, as is common.

For promoters, currency fluctuations inject an additional level of uncertainty to an already risky game. Bill Zysblat, partner at RZO Productions and co-producer of the worldwide Police reunion tour, warns that "anyone who put tickets on sale in Europe and the U.K. a couple of months ago, and then budgeted their tours accordingly, is in for conversion shock." read more

What should a “new Bretton Woods” involve? This article argues that the major task at hand is reorganising international economic institutions rather than tackling regulatory details. The G7, International Monetary Fund, and Financial Stability Forum are falling behind because they are not structured for the roles we need them to play.

A “New Bretton Woods” is the name given to a summit this weekend of leaders of the world’s top economies to map out a response to the global financial crisis. The meeting received this label because it aims to reconsider the structure and the role of international economic institutions such as the G7, the International Monetary Fund (IMF), and the Financial Stability Forum (FSF).

Priorities: Institutions not rules

The goal of this meeting should be to redesign the international financial architecture. Namely, to:

• Rethink the tasks assigned to the international bodies involved in the regulation of financial institutions, in the monitoring of the international financial system and in the management of crises; and
• Spell out the information flows and the lines of command that should regulate the relationship among the various institutions, e.g. IMF, FSF, Bank for International Settlements, etc.

The goal should not be writing new rules for these markets.

Focus on IMF, G7, FSF and ECB

What should the summit aim to achieve? It should focus on redesigning institutions, namely the IMF, conceived in 1944 when western leaders met in Bretton Woods and set out a new financial order, the G7, the FSF and even the European Central Bank.

G7. This institution still bears the imprint of the Second World War. Why are large countries such as China, India, Mexico and Brazil not members of the G7, while others such as Italy are? Shouldn’t the Eurozone countries have only one, heavyweight representative in international economic summits? If the G7 wants to be something more than a photo opportunity for European and North American politicians, it needs a major restructuring. Otherwise it will become even more irrelevant than it already is. The G7 should be transformed into a “New G8” whose membership should include a limited number of systemically important countries/regions, such as: US, Japan, UK, Euro area, China, Brazil, Russia and some representation from the Middle East. read more

WHILE financial institutions (FIs) ought to focus on the vulnerable group of retiree investors who sank money into Lehman-linked products, they should also look at less clear-cut cases, said Mr Goh Chok Tong yesterday.

The Senior Minister said these cases might involve heavily invested professionals or people who have invested only a part and not their entire savings.

'For other, less clear-cut cases, the financial institutions may also want to think of ways to retain their customers' trust and confidence,' he said at a grassroots event.

'Such gestures will go a long way to maintaining customer loyalty, and pay off in the long term.'

He noted how some 10,000 Singaporeans had invested over $500million in structured products linked to the collapsed US investment bank Lehman Brothers. read moreSource:http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_292307.html