What are responsibilities of bookrunners when perpetuals fail?

SHOULD banks be held responsible for the fixed income securities that they underwrite? Justice Aedit Abdullah implied as much at the Hyflux hearing last week when he gave some broad hints that DBS Bank, the bookrunner for the perpetual capital securities and preference shares (PnP) issue, ought to be bearing some of the costs of the advisers' fees in Hyflux's rescue negotiations.

It was not right for retail investors to be marketed an investment and then left without advice when things go wrong, he said. Investors should receive adequate financial and legal advice, and these advisers should be paid, he added.

Water company Hyflux is undergoing a liabilities re-organisation process following a weakening of its finances, and Middle Eastern utility provider Utico has offered Hyflux a rescue package that includes some funds for PnP holders.