All That Glitters Is Not Gold

In today's forum page, a certain Ms Grace Tan wrote on MAS's handling of the gold buyback firm Genneva in which she supported MAS's hands-off policy in monitoring the activities of such firms instead of outright banning their questionable activities.

She further says that "it does not seem right to hold the authorities responsible and blame regulatory laxity. The government cannot arrest anyone who looks like a crook unless the person commits a crime."

I fear she is wrong. And the fact that her letter is printed in the Straits Times forum page shows that the powers that be who are behind the paper, ie: the government is sympathetic to her views.

I wonder if she would continue to hold such views if she or her daughter is about to be raped and the police did nothing until after the rape had actually occured because until it had occured, the rapist is not a rapist yet! Also, would the government wait for a terrorist to plant and explode a bomb first before taking action? Why then did they arrest Mas Selamat and his fellow JI members? All they did was talk and take a few videos. Why not just list them on the police website as potential troublemakers and be done with it?

The thing is MAS is the financial regulator. The public has a reasonable expectation that any company that deals in financial products would first have already passed MAS's scrutiny and obtained their permission before being allowed to operate in Singapore. It is not as though these companies are operating out of a makeshift table in some dark alley in Geylang. They could be operating out of offices in the financial district itself.

Yes, an investor should do their homework and decide on the risk of any investments. Not everyone is as diligent and sophisticated an investor as Ms Tan. But this does not mean that MAS can wash its hands of its regulatory responsibilities by merely publishing on its website that such-and-such a company is of dubious repute.

Investors should be doing due diligence on the investment products/instruments. MAS should be doing due diligence on the companies selling such investments. Any company that doesn't pass the smell test should not be allowed to operate. Let me ask you: If a safety barrier on a flyover is missing, should LTA just post a warning sign about its absence and consider its job done? After all, if you are a motorist, it is your responsibility to drive carefully.