May 16--SINGAPORE -- For 10 months starting September 1998, during the Asian financial crisis, about 172,000 Singaporean investors did not know how to react or fight back. The Malaysian government led by the then Prime Minister Mahathir Mohammed had decided to freeze the Central Limit Order Book (CLOB) shares of Singaporean investors worth around $4.47 billion.
Singapore residents had been using CLOB, an over-the-counter-market set up in 1990 that enabled them to trade in companies listed on other exchanges, to buy Malaysian shares. The Singapore government and its exchange refused to intervene.
Among those affected was David Gerald , a lawyer, former magistrate and prosecutor, whose broker had put all the $5,000 he had set aside to invest in shares, into Malaysian companies.
When Gerald formed the Securities Investors Association (Singapore), or SIAS, to take on the Malaysian government on the CLOB shares issue, he remembered what his mentor David Marshall, a criminal lawyer who led the early political struggle for Singapore's independence, had told him: "Whatever case you are involved in, fight with it with fire in your belly."
Malaysia, which was severely affected by the Asian financial crisis, imposed capital controls after it froze CLOB shares as its government tried to prevent money from being transferred out of the country. Some Malaysian businessmen, encouraged by the government, offered to buy out CLOB shares at 50% of their value and about 359 Singaporean investors accepted the deal for fear of losing everything, Gerald said.
With support from local businessman Arumugam A. Munisamy, who had lost over $500,000 when CLOB shares were frozen, Gerald began engaging the Malaysian government. Over 50,000 Singaporean investors joined SIAS, and the organization decided to approach Malaysian courts to free up CLOB shares.
At the same time, the Singapore government also said it would take this dispute to the World Trade Organization. After a year of discussions, CLOB shareholders, through SIAS, reached a settlement with the Malaysian authorities.
"Singaporeans got back their shares, but many lost value. The shares of some of the companies never reached the prices they were at, before they were frozen," he said.
The end of the CLOB saga also posed a fresh challenge for SIAS and Gerald -- should he disband the organization as it had achieved its goal?
"I was at a crossroads and was thinking if I should get back to law. When I had been campaigning on the CLOB issue, I found that retail investors had very little knowledge of the shares and companies they invested in, and it was like gamble for them," he said.
He then decided to get into investor education and increase awareness on investment processes and opportunities. SIAS also ventured into helping individuals with financial planning.
Simultaneously, the organization also entered its next phase of representing minority shareholders in their disputes with companies -- a space where it has made its mark since 2000.
Born in Johor, Malaysia, Gerald's father had sent the family back to Jaffna in Sri Lanka in 1946 after World War II. He spent about 13 years there and life took a turn in 1958 when Sri Lanka had its first racial riots.
"When my father came to visit us, trains did not want to enter Jaffna due to racial tensions and he had had to walk the last part of the journey. He was distressed with the situation in Sir Lanka and took us back to Singapore," Gerald said.
As a student leader in the university when doing his law in Singapore, Gerald said fellow students and he were initially opposed to the policies of then Prime Minister Lee Kuan Yew, who is considered the founding father of the city-state. He became a convert.
"As students, we failed to see the big picture. We were concerned that employee rights such as minimum wages and powers by unions to strike were not being extended to citizens after the British left. We failed to see that 148,000 Singaporeans lost their jobs when the British left. Lee Kuan Yew was focused on only one thi