Yahoo Finance 
Money Choice: I was blinded by my greed
By Francis Kan
Even professional investors can sometimes fall victim to greed, leading them to make risky decisions. Lisa Teo,43, tells her story.
I have worked in wealth management serving high net worth clients for almost two decades, and in that time, I’ve come across many investment opportunities.
About 10 years ago, I met a client, K, who had started a company in Singapore develop in artificial intelligence software for foreign exchange trading. At that time, there was growing interest in algorithm-based trading technology, and investors were snapping up shares in companies in that space. By 2010, K’s company had raised millions, and several banks had expressed interest in using his company’s software.
This led my boss and I to consider investing in K’s company. Taking a closer look at the business, we noticed that the company’s initial investors included a range of professionals, from a retired lawyer to a successful entrepreneur, as well as a Japanese fund. He had also been our client for several years, and we thought we knew him quite well. That gave us some assurance. In 2013, we decided to put our own money into the company.
I invested a total of S$450,000 in what is known as “pre-IPO” shares. The aim was to cash out once the company went for a public listing. But just six months later, there were signs of trouble. We heard from people inside the company that K had not paid some of his employees. It was the first sign of cash flow problems, and we decided to dig further.
It turned out that the Rolls Royce K drove was actually leased, and the apartments he claimed to own, were rented. On hindsight, I also realised that K had never offered to foot the bill for any of the meals we had had together.
When we probed K for answers, he denied having any problems, and offered to pay us dividends to allay our fears. The catch was that the dividends would come from the issuance of more shares. He also played to a common human instinct – greed – assuring us that we had much to gain from the eventual IPO.
As suspicious as I was, I wanted to believe that he wasn’t lying to us. And while I am ashamed to admit it, I was kept in place by my own greed.
In 2014, everything felt apart. K left the country and vanished. The investors considered suing, but how can you sue someone who cannot be found?
What made it worse was that my boss and I had introduced K to our friends and clients, some of whom were retirees who invested their life savings, and they lost their money a swell. That was what hit us hardest.
I can talk about it now, but it took me two years to get over the experience. I had always considered myself a fairly sophisticated investor, and I still maintain that K had a good business model and a real product. The problem was that the man himself was crooked. He was raising money and spending it on himself.
There were also many other lessons here: not to invest in anything I didn’t fully understand, or let greed take over. On hindsight, and given the risk of losing everything, I also should have spread out my investment over different assets to mitigate the risk. I am now very cautious.
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