So, who is going to be compensating me?

It's not the minibond holders' fault that Lehman collapsed, and they really had no way of knowing that it would. So, good for them, they are going to be compensated. But it wasn't my fault that the Hang Seng Index collapsed either, and I lost a load of money when it did. So I'm wondering who to write nasty letters to in order to see if I can get compensation too.

My first thought is my broker. I mean, he sold me the stocks in the first place. And I don't remember him saying anything about the fact that my stocks might not go up in value. If the minibond holders were not informed of the potential risks of minibonds, I reckon I can make a case that I wasn't informed of the potential risk of the stock market.

But there's no point in trying to get compensation out of my broker, he hardly has any money himself. He spent most of what he had on an apartment in Mid-Levels, which lost a lot of value.

Then again, he probably bought his apartment through a real estate agent. And I bet that real estate agent didn't write my broker a very clear letter pointing out that property might go down in value. And that agent probably earned a sales commission when he duped my broker into buying that apartment.

I will suggest to my broker that he write an angry letter to his real estate agent demanding compensation. Of course his real estate agent probably spent the commission some time ago at the Jockey Club. He's apparently quite keen on horses and has no doubt gambled most of his money away, and so won't be able to grant compensation to my broker.

But there's no sign at the teller windows that says that gambling is risky and that you may lose your money. Outrageous. How could my broker's real estate agent be expected to know that? He doesn't have a good knowledge of statistics and probability. He should have been informed clearly of the risks and the conflict of interest. He should be writing a nasty letter too.

I am of course being unfair. Everyone knows that stocks lose value sometimes and so do apartments and of course your horse isn't always going to win. But Lehman minibonds were different.

The distributors of minibonds really ought to have told their customers about the risks. More specifically, they ought to have told them that there was an inherent risk that the entire global financial system could collapse. During this financial collapse, if one or two of the biggest names in finance were to go bankrupt and not benefit from a government bailout, then this would adversely affect the value of the minibonds. And this is particularly relevant if Lehman itself were to collapse and not be rescued.

How were the purchasers of Lehman minibonds to know that? They wouldn't have read it in the paper as there were very few articles on the risk of this massive collapse. There wasn't much on TV about it, and although one or two economists did point out this risk, they were in the substantial minority among thousands who didn't.

Now, if minibond holders had invested in a hedge fund, or in commodities, or real estate or practically anything else, then they'd be on their own. But they trusted the banks and bought these minibonds with the lurking risk that the financial system might collapse, and so they obviously ought to be compensated.

And it turns out, the more they trusted the banks, the more compensation the minibond holders get. Other than the possibility that older folks have more difficulty reading fine print, the only sensible interpretation of the fact that investors over 65 will receive better compensation must be that the older investors were more trusting.

I'm guessing that most of the sales teams at the banks distributing these things were in their 20s. And as everybody knows, people over 65 completely trust people in their 20s. So these older investors were obviously less likely to ask difficult questions like: 'And what would be the impact on the swap and collateral arrangements for this product were the over-supply of low-quality mortgage instruments in the US financial system to cause a systemic failure of the credit system and thereby reduce the value and liquidity of all financial assets?'

Only professional investors could have been expected to ask that obvious question, and that's why under the proposed scheme professional investors don't get compensation. And why should they? There was a huge financial crisis, everyone lost money on everything, some lost homes, some jobs and no one saw it coming.

A small subset, of a relatively small group, who bought a specific product, linked to a specific risk, who just happened to be living in a certain city, who happened to lose money on just one of the myriad of collapsed investment schemes that were impacted - as if anyone would think they should be compensated.

Contact Alan Alanson at [email protected]