MAS releases investigation findings on the sale and marketing of structured notes linked to Lehman Brothers

The Monetary Authority of Singapore (MAS) has completed investigations into the sale and marketing of structured notes linked to Lehman Brothers (the Notes). Given the degree of public interest, MAS is releasing a report on our investigation findings.
MAS’ investigations found that the 10 financial institutions that distributed the Notes (see Annex 1) had policies, procedures and controls in place for the approval, sales and marketing of the Notes. However, the extent of the due diligence and level of internal controls differed among them. As a result, there were various forms of non-compliance with MAS’ notices and guidelines on the sale and marketing of investment products. The nature and extent of these failings and their potential impact on the sales process and customers differed for each institution. Some of the specific failings included:

a) risk ratings assigned by some financial institutions to some series of the Notes that were inconsistent with risk warnings stated in the prospectus and pricing statement;
b) insufficient steps taken by some financial institutions to ensure that all their financial advisory representatives were properly trained before marketing and selling the Notes; and
c) weaknesses in how some financial institutions ensured that their financial advisory representatives were properly equipped with accurate and complete information about the Notes.

The findings for each financial institution are specific to that institution and are not general findings.

MAS takes a serious view of all instances of non-compliance by the financial institutions with MAS’ notices and guidelines on the sale and marketing of investment products. In deciding on the appropriate regulatory action, MAS considered the nature and impact of the failings, the steps taken by the financial institutions to rectify these, and the extent to which they accepted responsibility and resolved investors’ complaints. Taking all these into account, MAS has imposed bans on the sale of structured notes by these institutions for periods ranging from a minimum of six months to a minimum of two years. In addition, MAS has issued formal directions to the financial institutions to rectify all the weaknesses identified by the investigations and to review and strengthen all internal processes and procedures for the provision of financial advisory services across all investment products. The financial institutions are also required to appoint an external person approved by MAS to review their action plan and report on its implementation, and appoint a member of the institution’s senior management to oversee compliance with MAS’ direction. The financial institutions will not be able to distribute structured notes until MAS is satisfied with the measures they have put in place.


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How to Sell Structured Settlements?

If you have a annuity payments that are slowly trickling in and want to sell your structured settlement, this guide will help you figure out how to find the most reputable investment company and what to expect throughout the process. Keep in mind that you are going to pay fees to the investment company that will be deducted from your sale. It usually is somewhere between 15-30% depending on the company and the amount of sale.
The longer the terms of your annuity, the larger the fee will be taken to cover inflation on future payments.
All structured settlement sales go through a court approval process in order to prevent you from getting scammed and to make sure that the deal is fair for both parties.

Decide how much of your structured settlement you want to sell. It's possible to sell only a few payments, half the payments, or the entire thing. When your deal goes in front of a judge (more on that below) the smaller the payment, the faster and more likely it will be approved. If you have something that you want to invest in that you know exactly what its cost is, or a large purchase to make, taking the smaller payments is probably a better idea.

Research structured settlement investors. Spend a good amount of time online researching different companies. Dig up as much dirt as you can without filling out the contact form on their website. Many of the websites are a front for sales lead companies. You fill out the contact info and they will sell it to large investment companies to contact you. After you click submit on the contact form, expect multiple phone calls from these companies. Only do this if you're ready to deal with the telemarketers.

Work towards approval of the deal. After you decide on an investment company, you're ready to sell structured settlement. It may be a good idea to have legal representation or a financial advisor with you to make sure that you get the best terms possible. After the first draft is completed you will go in front of a judge for approval. Most deals through reputable investment companies will be approved the first attempt. If the judge does not approve the transaction, it's the investment company's responsibility to draft another deal for approval.

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