Investors who shorted SIA stock through SocGen to receive one-time goodwill payment

SocGen said it will pay 30 Singapore cents per certificate, the French bank wrote in a letter to investors on May 12. “The goodwill payment amount is not intended to compensate investors for all loss given the risks investors assumed in purchasing these structured products,” it said.

A price movement of more than 20% within 15 minutes on May 6 led to one of SocGen’s products shorting the stock -- DLC SG5xShort SIA -- losing all its value after a so-called airbag trigger was activated, the bank said in a statement on Friday. A 5x Short certificate moves inversely to the underlying asset price by a factor of five.

See also: Leveraged SocGen product shorting SIA stock now worth zero

Structured-product investors have faced billions in losses during the global stock rout in March, which was exacerbated by traders taking on more leverage. The Business Times wrote in a report some users of SocGen’s leveraged products for shorting Singapore Airlines have protested against perceived lack of timely disclosure and unfair pricing.

See also: SIA share prices surge highest since 1987 on easing lockdown restrictions

Singapore Exchange has begun an investigation into the circumstances leading to the SocGen adjustment announcement, the bourse said in response to Bloomberg queries.

“In respect of the adjustment announcement, our regulatory focus is centred on ensuring timely disclosure. We require that adjustments be announced once it is determined, but in no event later than the market day prior to the effective date,” a spokeswoman for the exchange said in an email.

A SocGen spokesperson declined to comment on the probe.

Singapore Airlines shares closed 27 cents lower, or 6.3% down, at $4.02 on Wednesday.