THERE's more than one way of looking at people who had invested in 'great' deals, like Minibonds, once offered by financial giants.

These 9,700 retail investors had either 'stepped into a hidden trap' or they had 'shot themselves in the foot' when they chose to go hunting for big bucks with the big boys.

Whatever the angle, the net effect upon the losers is the same.

But how you see them makes a difference to what taxpayers are now prepared to pay to save these investors from their bad move.

Collectively, the investors are not exactly babes in the woods, having put up $500 million for the structured products.

But some claim they were not told enough about the products by the sellers.

In Parliament yesterday, Minister for Trade and Industry Lim Hng Kiang, who is also the deputy chairman of the Monetary Authority of Singapore (MAS), said both financial institutions (FIs) and investors have to bear responsibility. (See report on facing page.)

Where then should the buck stop? And what's fair compensation for investors?

The New Paper put the questions to Members of Parliament and financial experts.

SCENARIO 1

INVESTORS LOSE EVERYTHING

Should investors just swallow the bitter medicine and stomach their losses?

After all, no one forced them to buy and buyers must be aware of the risks.

But none of the experts or MPs The New Paper spoke to said investors should be left high and dry.

MP for Jurong GRC Halimah Yacob, who had fielded questions about the Minibonds issue, said: 'Considering that so many of them are elderly retirees, the money they invested is a significant amount to them.

'It's difficult to say what they should get back. But the amount should be fair and reasonable because the kind of investment products that were sold to them don't suit their risk profile at all.'

SCENARIO 2

BUY BACK AT MARKET PRICE

Hong Kong banks have agreed to buy back Minibonds from investors at market price.

Like Singapore, many of the Hong Kong investors are pensioners who invested their life savings in the structured products.

Former NTUC Income chief Tan Kin Lian, who has taken up the cause of the consumers, said: 'It is not clear how the market value is to be determined. If it is less than 20 per cent of the original investment, it would not be favourable and would not be fair to the investors.'

MP Halimah Yacob agreed that following in Hong Kong's footsteps is not the ideal solution.

'Buying back at market price would also mean huge losses for investors. Though it's better than not getting any money back at all, it's not an ideal solution.'

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, thinks Singapore should not rush into adopting the Hong Kong solution.

He noted: 'It's still not clear whether investors will have redress after the buy-back at market value. If it's buy back and no redress, it's no good.'

SCENARIO 3

FI AND INVESTOR SHARE LOSS

Mr Tan Kin Lian said: 'I suggest (for most cases) that the amount paid can be the current value plus half of the difference. That is, the investor and distributor share the loss equally.

'A fair approach is for the loss to be shared by all the relevant parties, that is, the FI (financial institution) that created the product, the FI that distributed the product and the retail investors.

'The retail investors should not be expected to shoulder the entire loss as they were not given the correct information about the structured product.'

Mr Tan hopes buyers can get back '50 to 80 per cent' of the money invested.

Jurong GRC MP Halimah Yacob and Nominated MP Siew Kum Hong said Mr Tan's suggestion is feasible.

Mr Siew added: 'I think the commission that the distributors made from the sales of the product should now go back to the investors.'

Mr Ben Fok, CEO of Grandtag Financial Consultancy (Singapore), said: 'No one knows exactly how much is left after the crisis, but it doesn't look good. My personal guess is 30 to 40 per cent. Investors should be happy with 50 per cent - that is their share of the responsibility.'

SCENARIO 4

INVESTORS GET ALL THEIR MONEY BACK

None of the experts or MPs we spoke to was in favour of this.

Madam Halimah Yacob said: 'No 100 per cent compensation, but it's also not fair that they bear the bulk of the responsibility.'

But NMP Siew Kum Hong feels that vulnerable investors should get back all of their investment capital, especially if they have been mis-sold the product.

'What's a bit less clear are the sophisticated and educated investors because some of them might have gone ahead and bought the high-risk product anyway,' he said.

Financial analyst Leong Sze Hian said: 'People who have lost their life savings, rightly or wrongly, the ones who lost practically all of what they have and are old and retired should be given priority and should be compensated more.

'Clearly, there is not enough to go around for everyone.'

This article was first published in The New Paper on October 21, 2008.