Thousands of investors here could be eligible for a cut of the US$20 million (S$26.1 million) settlement struck with American bank Morgan Stanley last week over claims that it sold rigged investment products that were "designed to fail".
But the settlement must be approved by a New York court and the investors' United States legal team has to be paid first. Taxes and costs of providing notice to investors also have to be paid.
Lawyers for a group of eight Singapore investors who launched the class action are seeking nearly US$7 million in fees and expenses incurred in the four-year-long legal battle. That means what is left for the investors, after taxes and costs, could come to around US$13 million.
As the case has been certified a class action, between 3,000 and 5,000 retail investors who bought certain Pinnacle Performance Notes between Jan 1, 2006, and Dec 31, 2010, may be eligible for restitution, even though some may already have received partial compensation through the Financial Industry Disputes Resolution Centre (Fidrec).
A Singaporean investor who wanted to be known as Mr Ho told The Straits Times that his family members lost close to $1 million investing in the product.
Mr Ho, 62, added that the settlement and legal fees were fair: "The lawyers could have wound up with nothing, if they had lost. Once the lawyers' take is satisfied, they won't pursue legal action further."
Mr Daniel Hume, a partner in US law firm Kirby McInerney, said his company wants reimbursement of up to US$950,000 that it advanced to investors.
Most of the expenses went to pay experts and discovery costs as well as flying several plaintiffs to New York to testify, he said. His firm also wants 30 per cent of the US$20 million settlement, or about US$6 million, awarded as attorneys' fees.
"This represents our legal fees for more than 15,000 hours worked on the case, most by senior lawyers," Mr Hume said.
"All that work was done at the risk of not getting paid at all. The investors risked none of their own money to pursue this case."
Under the settlement, the average distribution is estimated to be 28 US cents for every US$1 invested, before court-approved fees and expenses are deducted, according to the court papers.
The amount investors get will vary depending on the amount of notes bought, compensation already paid from other sources and the number of claims.
Once preliminary approval of the settlement has been given, investors will have 174 days to file claims. The court will then be asked to give final approval of the settlement and authorise distribution of funds to investors.
Payments may start by the middle of next year. Investors can get information at www.pinnaclenotesettlement.com by the end of this week.
Singapore distributors of the notes, including CIMB-GK Securities, DMG&Partners Securities, Kim Eng Securities, OCBC Securities, Phillip Securities, Maybank, UOB Kay Hian, DBS Vickers Securities, Hong Leong Finance and RHB Bank, are not eligible to claim.
Retiree S. K. Mak hopes to recover some of his $50,000 investment.
"The advertisement painted a very rosy picture. It said the notes were linked to the performance of five blue-chip companies."
"I was very sad when the notes went bust because, like me, a few of my sisters, also retirees, lost their investment. But at least they got partial compensation through Hong Leong," added Mr Mak, 72.
This article was first published on November 21, 2014.
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