Adverse market conditions, unexpected economic events and political crises are among factors that could significantly dent the value of investment portfolios, causing many to sustain financial losses.
Occasionally, corporate honchos and structurers are behind the collapse of ostensibly viable companies and safe financial instrument because of deceitful intents.
There are countless examples of delinquent publicly listed companies that have gone belly-up. With complex corporate manoeuvres, financial manipulations and accounting irregularities, the culprits would devise deceptive strategies that could bankrupt the companies and render the shares and bonds worthless.
Convicted offenders should face severe punishment to deter potential fraudsters.
Curbing such acts of duplicity is not easy for auditors, independent directors and governing bodies.
Setting up an avenue for whistle-blowers to expose wrongdoings is a laudable move by the Singapore Exchange (SGX).
And it is commendable that SGX and the regulatory authorities are taking further action (SGX's regulatory arm tightening market oversight; and More support for retail investors in bond defaults, both on Aug 8).
Control frauds, in which those in important positions subvert the organisations they founded or managed at the expense of investors, are not uncommon. Because it takes time to build public confidence and establish credibility, reprehensible exploits are contrived years after a company is publicly listed or bonds are successfully launched.
Malpractices and wilful misconduct will persist despite enhanced controls and increased oversight. But they should not deter people from allocating some savings to portfolio investments for higher returns than interest earned on fixed deposits.
However, it is necessary to perform proper due diligence and exercise prudence and care when considering investments in financial products that promise attractive yields.
Do not be tempted by high-yield products and quick-profit schemes. (MAS warns of 'highly misleading' website soliciting investments, Aug 17).
It is important to be vigilant. Investors must also consider their risk appetite and heed advice to maintain a diverse portfolio, understand the risk-return spectrum and set an investment horizon to minimise exposures to losses in unforeseen circumstances and market volatility.
Lim Kheng Yee
