Law of Investement

These are some past year papers:-

Question 1

Explain the concept of indefeasible title in property law. Refer to relevant legislation and case law.

You may discuss either Australian law OR Singaporean law.

10 marks

Question 2

Tessia is a widow in her 70s. Tessia owns two houses and also has a deposit of $200,000, which she recovered recently from recent legal action. She has three adult children.

Her eldest child, Adam, is married and in comfortable circumstances with two children aged 8 and 10, both studying in private schools. Adam is employed as a property developer.

Her second child, Betty, is not married and does not have a regular income. She has had an ongoing gambling addiction since Pokie machines were introduced in Victoria, and she has always been irresponsible with money.

Her third child, Charles, is mentally impaired. He is a not employed and lives in a mental health facility.

Required:

You are employed as a financial advisor specialising in estate planning. Tessia has approached you for advices on the following issues:

a) Tessia wishes to provide for her children in the event of her death. What are the requisite formalities of a legal will?

b) Tessia is worried that if she dies without a will, all of her estate will go to the government. Is this correct? Explain.

c) Tessia has heard about testamentary trusts. She is not sure what they are, and wants to know if they would be suitable for her circumstances?

You may either discuss Australian law OR Singaporean law.

7+7+6= 20 MARKS

Question 3

(a) What are the main legal differences between administration and liquidation?

(b) Gunho pty ltd was wound-up in insolvency on January 15^th 2009 by one

of its unsecured creditors. A liquidator was appointed. Gunho has numerous unsecured creditors and insufficient assets to repay most of its debts.

The liquidator has discovered the following facts:

(i) In September 2008, Gunho paid David, the brother of its director Steven, the sum of $5,000 being fees for accounting services rendered by David in August 2008;

(ii) In October 2008, Gunho transferred a company car worth $80,000 to its director Steven who paid $30,000 for it .

REQUIRED:

Advise the liquidator about the legal status of these transactions.

You may either discuss Australian law OR Singaporean law.

8+6+6=20 MARKS

Question 4

58% of investors who complained about Lehman-linked products to be compensated
By Nicholas Fang/Valarie Tan/May Wong, Channel NewsAsia | Posted: 16 January 2009 1836 hrs

SINGAPORE: Over half of investors who complained about their investments in products linked to the collapsed Lehman Brothers will get some or all of their money back.

According to the Monetary Authority of Singapore (MAS), those who will be compensated had bought Lehman Minibonds, DBS High Notes 5 and Merrill Lynch Jubilee Series 3 products.

For several weekends last year, hundreds of affected investors gathered at the Speakers' Corner at Hong Lim Park to share their experience about the failed financial products.

About 5,400 of them complained to authorities about their investments in those products. Of these, 94 per cent have been addressed. The rest are still being investigated.

One quarter of the some 5,100 investors will get all their money back. A third will get only some of their investment back.

MAS said banks and institutions will take a few weeks to personally inform all investors individually about their cases.

Some 8,000 retail investors in Singapore had bought Lehman Minibonds worth S$375 million. About 350 investors had put S$23 million into the Merrill Lynch Jubilee Series 3 notes, while 1,400 investors had subscribed to S$103 million worth of DBS High Notes 5.

If individuals are still not happy about the compensation they receive, MAS said they can still turn to the Financial Industry Disputes Resolution Centre (FIDReC) for further mediation.

As of January 9, FIDReC has received 210 complaints - 40 were for DBS High Notes 5, 129 for Lehman Minibonds, 28 for Merrill Lynch Jubilee Series 3 and five for Morgan Stanley Pinnacle Series 9 and 10 Notes.

FIDReC said the majority of these are in the investigation and mediation stages.

Of the some 530 investors who bought Lehman Minibonds through stockbroking firms, only 3 per cent will be compensated.

"We will file our case to FIDReC first and hopefully FIDReC would be professional to do something about it," said a Lehman Minibonds investor. "If it doesn't work, we will definitely consider class action."

For cancer survivor "Rachel" (not her real name), who invested S$20,000 through Hong Leong Finance, she said: "I shall see how much is the percentage (of compensation) first. After that, I'll decide (what to do)."

MAS said investors will lose their compensation offer from the financial institutions if they go to FIDReC.

MP for Ang Mo Kio GRC, Inderjit Singh, said: "I would advise customers to think carefully before they reject. There were people who did not know what they were buying. And for such people, I hope banks will treat them fairly. But for those who are in the know and they lost their investment, I think they too want to accept.

"The processes that MAS has in place to control these things and also how these products are released are generally robust and perhaps in the execution is where we may have seen some problems.

"So, we maybe want to look at how the banks and the financial institutions are executing some of the rules that have been put in place, rather than to make drastic changes to the rules, because if you want to be a financial centre and attract other institutions to look at operations here, we cannot over control the environment.

"I personally think there has not been a significant problem in the rules, but how the rules were implemented and executed on the ground.

"One of the ways banks could change is to separate bank deposits areas from (places) where investment products were sold. This is something I would like to see the banks do, as what has happened was simply because many people in this case had thought the minibonds were an extension of deposits."

Mr Inderjit Singh will raise questions on the issue when Parliament sits on Monday.

MAS said it is not able to comment further as it is still investigating the selling practices and policies of banks and financial institutions. But it said a review on current regulations is underway and it would seek feedback from the public by the middle of March 2009.

- CNA/ir

REQUIRED:

Lehman Brothers issued minibonds - high risk investment products marketed as safe bonds. Discuss the legal issues arising from this news article. Explain the role of MAS and Fidrec in this case.

20 MARKS