A reader expressed an interest in buying a CD from Millennium Bank that appears to be a very high yielding product.
The reader wonders whether I would buy something like this and then why or why not. While I did not read the fine print, the main page is very clear that there is no getting your money out early. They are not saying if you break the CD you pay a penalty, they are saying you cannot get to the money, period.
As a matter of philosophy I don't like to lock up money in this way. This is not a comment on investing but personal preference and so probably does not offer much value. I prefer to keep options open to me, not just financially.
I can't say that the reader should or should not but the CD I am just saying this is not for me.
Wikinvest Wire
5 comments:
from a reader via email
It actually doesn't look that great at all. Look at INGDirect, for example:
http://home.ingdirect.com/products/products.asp?s=OrangeCD
Slightly higher yields, availability much shorter minimum terms, no minimum deposit, and you can take your money out.
Or look at EmigrantDirect.
http://www.emigrantdirect.com/index.php
4.50% for a money market account - no minimum term at all and no minimum deposit. f course the flip side of is that they can lower the rate if and when interest rates fall.
Hi Roger,
Actually, the Millennium CD I was interested in is the Premium 3 Yr CD with a $100,000 minimum investment.
http://www.mlnbank.com/prem_cds.html
Compounded rate is 6.75%. They are NON-REDEEMABLE. Like you, I am weary of any investment which is non-redeemable for 3 years - irrespective of wether you pay a penalty.
However, @ 6.75%, it sounds very tempting indeed.
The "About Us" tab on the site indicates "Millennium Bank is a subsidiary of United Trust of Switzerland, SA, a Swiss-registered private trust company that has been in business for over seven decades."
I will dig further for more details on this. Interim, any input would be appreciated. Any input on the risk aspect of a non FDIC insured product? I mean Money Market accounts with brokers are non-FDIC insured.
I could care less about tieup the money and not being able to withdraw it @ 7.70% All i want to know is are they reputable and afe and wil I get the money at the end of the term?
Found on the Net!!!!
Millennium Bank – how secure?
Investment International asks David Morgan about the much criticised Millennium Bank & Trust and St Vincent & Grenadines
Question: Has the Organisation for Economic Cooperation and Development or the Eastern Caribbean Central Bank or the St Vincent Offshore Finance Association make any written comment pertaining to Millennium Bank & Trust?
Answer: We are not aware of any publicly available written comments by the OECD, ECCB, or SVOFA about Millennium Bank and Trust. Similar to the FATF, these organizations likely have policies, procedures and formal channels covering disclosure of their business to the public.
Q: Could you point me in the right direction so that I can check whether audits from the organisations have taken place?
A: We are not aware of any publicly available written documentation of the audits of Millennium Bank and Trust by the SVOFA, ECCB, or OECD. Nevertheless, within several press releases by the OECD, a reader can likely assemble the evidence that the entire St. Vincent financial services industry, including domestic banks, private banks, and associated firms, would be audited prior to the FATF Plenary meeting scheduled for June 18 – 20, 2003.
We believe that the SVOFA will confirm that Millennium Bank and Trust received an on-site audit by the OECD during the OECD’s audit of the St. Vincent Financial Services sector.
The OECD is scheduled to present the results from the June 18 – 20, 2003 Plenary meeting to the public on June 20, 2003.
We also believe that the SVOFA will confirm that the ECCB participated in the audits of all private banks in St. Vincent during the last 12 months.
We encourage you to contact the SVOFA at 784-456-2577.
[Response from Louise Mitchell of the St Vincent Offshore Finance Association:
"All offshore banks have been subject to onsite inspections by the [St Vincent] Offshore Finance Association and the ECCB within the last 12 months. The OECD has not done an audit of Millennium Bank. The FATF paid a visit to the Bank, it did not conduct an audit".]
Q: Your auditor - a subsidiary of a 'big four' firm of accountants, whose name you have asked us not to disclose - tells us that the fact it has acted as your auditor (it has not confirmed it will do so this year) offers absolutely no protection whatsoever to investors/depositors. Against this, you claimed that your relationship with this (secret) firm of auditors is a factor of security for potential investors. So is your auditor failing to tell the truth?
A:Please refer to your email dated June 16, 2003, in which you stated:
“Would [the fact the identity of your auditors’ is not disclosed publicly] not be a factor of security for any potential investor?
Also, please refer to the answer to this question provided by Millennium Bank and Trust, in which we stated:
“We understand your point and agree that being audited by one of the world’s leading accounting firms does provide an additional degree of security to clients.”
Through our response, we were recognizing that your question was an inference or suggestion that MB&T should disclose the name of our auditors as this information could provide potential clients with a factor of security. And, we simply agreed with your inference or suggestion that being audited by one of the world’s leading accounting firms could provide a factor of security for a potential investor.
Q: Are Equity Trust, SA, Arno Arndt, Eric Schworer and Werner Stoffel de Thalwill associated with United Trust of Switzerland and were they ever associated with Omnicorp or Trans-national (SVG companies now facing severe difficulties)?
A: We are not aware of any business transactions between Equity Trust SA and United Trust of Switzerland or Millennium Bank and Trust.
Arno Arndt was a director of United Trust of Switzerland. In July, 2002, Arno Arndt was replaced as a director by Eric Schworer. Subsequently, Eric Schworer was replaced as a director by Werner Stoffel.
To the best of our knowledge, Arno Arndt sold a company to the owners of Omnicorp Trust, SA. To the best of our knowledge, Arno Arndt sold a company to the owners of Trans-National. To the best of our knowledge, the sale of these companies, which became Omnicorp Trust and Trans-National, are the only associations between Arno Arndt and the owners/operators of Omnicorp and Trans-National.
To the best of our knowledge, Eric Schworer was and is not associated with Omnicorp and Trans-National.
To the best of our knowledge, Werner Stoffel was and is not associated with Omnicorp and Trans-National.
Q: If there are connections, then does that not give you any cause for concern - even if your own directors have the very best reputations?
A: Although we are not aware of any criminal complaints or civil proceedings against Arno Arndt, Eric Schworer, and Werner Stoffel, the allegations made in the internet message boards do cause Millennium Bank and Trust to be concerned.
As a result, Millennium Bank and Trust has and continues to plan and execute appropriate actions, including the resignation of Arno Arndt as director and vice president of United Trust. Additionally, United Trust is in the process of replacing Werner Stoffel as a Director.
Q: Do you think - as a matter of good financial practice - that people should give significant assets to an entity in a jurisdiction that is rated as uncooperative on money laundering by the Financial Action Task Force or, indeed, to one that is said to have 'low' levels of financial regulation according to the Financial Stability Forum?
A: Each individual’s investment decisions should be based on the assessment of many variables. The variables associated with an individual’s investment decision are unique. Therefore, we can not, and should not, make any broad generalisations about the suitability of a particular investment decision.
The status of a jurisdiction does not reflect the practices, policies, prudence, etc. of a financial services firm domiciled within the jurisdiction.
The frequency of financial scandals within the United States suggests a jurisdiction’s regulatory regime is not a proxy for the practices, policies, prudence, etc. of corporations and individuals domiciled in the jurisdiction.
We also point out that, during the past year, St Vincent has enacted legislation that complies with the OECD’s “Forty Recommendations.”
Q: Is it sensible to give one's assets to a bank (in such a jurisdiction) that keeps the identity of its auditors private and, presumably, does not publish reports and accounts that are part-attributed - in final format - to a firm of auditors?
A: With all due respect, we do not see the connection between how a firm manages the identity of its auditors and the suitability of the products and services offered by the firm. Similarly, we do not see the connection between publishing reports and accounts and the suitability of the products and services.
As stated earlier, each individual’s investment decisions should be based on the assessment of many variables. The variables associated with an individual’s investment decision are unique. Therefore, we can not, and should not, make broad generalizations regarding investment decisions.
Finally, an investment decision is a choice or decision made by an individual. A company’s primary goal is to design and deliver products and services that satisfy a consumer’s needs, desires, or demands.
When a match exists between a consumer’s needs, desires, or demands and the offering of a company, then the individual and company initiate a relationship.
In summary, market forces will always define a product or service offering. The choices made by individuals validate the accuracy of a company’s assessment of market needs and define revisions to product or service offerings. Ultimately, the consumer makes the decision.
Q: Finally, MB&T is only three years old. That's a very young bank. Your auditor also described MB&T as a 'small bank'. That smacks of even more insecurity, no?
A: With all due respect, we do not see the connection between the age or size of a company and security. For example, following the logic proposed within your question, J.P. Morgan, Mr. Goldman, Mr. Sachs, Bill Gates and many others should not have endeavored to build the firms that exist today. We are confident that you can appreciate that nearly every great company has humble beginnings.
Good call on avoiding this product. Millennium Bank was an offshore ponzi scheme. SEC press release can be found here: http://www.sec.gov/news/press/2009/2009-68.htm.
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