This is how a marketing material for Minibond Series 2 looked like HERE. Based on a reasonable man basis, I assumed that the risk of the product is that if one of the mentioned entity defaults, there will be capital lost. This gave an impression that the product invests in America Express Company, Bank of American Corp, DBS Bank, HSBC Bank PLC, JP Morgan Chase, SingTel and Standard Chartered. These institutions are indeed strong and at this point of writing, none of these institutions have gone bankrupt. Yet the MiniBond Series 2 was only worth 44.5% of its par value as on 12 Sept. This was prior to the Lehman Brothers' collapse. If none of the 7 institutions have collapse, why is the product incurring such significant lost? It does not appear to be investing in equities also.

The most important part of the brochure lines in this line here: "This section is qualified in it’s entirely by, and should be read in conjunction with, the full text of the Base Prospectus and this Pricing Statement." Put it this way, there are more to read in the prospectus. Unfortunately the prospectus is written in complex financial jargon that people cannot understand. However there is one very important part of the prospectus  page 10 lines in these one statement: "Underlying Securities will be portfolio creditlinked notes (often termed as “synthetic collateralised debt obligation securities”). If the product is a simple plain vanilla fund that invests in merely 7 companies, why does the prospectus says it also invests in CDOs? What are these CDOs and how it works? What are the companies in these CDOs? Why these are not disclosed in the prospectus? Right now we know what these CDOs are. The most powerful government in the world has to set aside US$700 billion in taxpayer money to buy these toxic waste nobody wants them. In the meantime, retail investors who had bought into these CDOs may have to make do with their toxic waste. I doubt the US Treasury will buy these toxic waste from the man-in-the-street. Their intention is to save institutions from dying.

I was wondering - are investment brochures and marketing materials approved by the regulator? If it is approved by the regulator, the regulator has to bear some responsibility. If it is not the practice to approve/disapprove marketing materials, investors may like to examine the marketing materials that have been given to them to see whether has there been any misrepresentation.

In the meantime, it is a good time for financial advisers caught in this situation to examine yourself what had happened. If you had deliberately misrepresented, be prepared to meet your maker. If you yourself have been misrepresented because your training session misled you, I think you better get yourself a lawyer and complain to MAS that your employer has misled you. If you were too busy selling because of super high pressure quotas imposed, I suggest you get out before you can consumed by the toxic waste.

In summary,

• The investment brochure looks to good to be true
• Underlying investments are quite a different animal from the marketing brochures
• Financial advisers who were misled should take legal action against whoever misled them.

Some financial advisers may ask how do they ensure they will not be mislead? This is easy:

• If the product sounds too good to be true, than it must be toxic waste;
• If what the marketing brochures say is different from the “fine prints,” than it must be toxic waste;
• If your boss pressure you to sell to meet unreasonable quota, than your employer is a toxic waste. It is time you throw in the towel.