MAS PROHIBITS KENNETH TOH SOON HENG FROM PROVIDING ANY FINANCIAL ADVISORY SERVICE RELATING TO STRUCTURED NOTES FOR A YEAR

1 MAS has prohibited Kenneth Toh Soon Heng, a financial adviser’s representative of Kim Eng Securities Pte Ltd (“KESPL”), from providing any financial advisory service relating to structured notes (as defined under regulation 2(1) of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005) and from providing any financial advisory service by taking part, directly or indirectly, in the management of any financial adviser in Singapore, for one year with effect from 9 July 2010.

2 KESPL holds a capital markets services licence under the Securities and Futures Act (Cap. 289). It is exempted from holding a financial adviser’s licence in Singapore in respect of any financial advisory service pursuant to section 23(1)(d) of the Financial Advisers Act (Cap 110) (“FAA”).

3 As the Vice-President of KESPL’s Equity Derivatives & Structured Products Department Mr Toh prepared and emailed to all of KESPL’s trading representatives on 3 August 2006, 15 January 2007 and 16 April 2007 write-ups on certain series of structured notes linked to Lehman Brothers issued by Minibond Ltd and Jubilee Global Finance Ltd (the “Notes”). These contained a number of inaccurate or misleading statements that were inconsistent with the prospectuses and pricing statements of the Notes. These included statements that:

• the Notes were of very low risk and a low risk alternative to term deposits, which was inconsistent with the prospectuses which stated that the Notes were sophisticated instruments and can involve a high degree of risk.

• investors would be able to receive the promised coupons and recover their investment principal in the Notes as long as none of the reference entities experienced a credit event during their respective tenures, without mentioning other circumstances where investors could lose their entire or substantial amount of their investment principal as described in the prospectuses;

• the proceeds from the subscription of the Notes would be invested in a portfolio of credit issues linked to the basket of reference entities. This was materially false and inconsistent with the pricing statements of the Notes which stated that the proceeds would be invested into a portfolio of credit-linked notes or synthetic collateralised debt obligations. 

4 MAS views Mr Toh’s performance as unsatisfactory.  Pursuant to section 59(1)(b) read with sections 19(2)(b)(i) and 11(1)(l)(ii) of the FAA, MAS has issued a prohibition order against Mr Toh.

Customers expect licensees and their representatives to provide clear and accurate information about investment products. Licensees and their representatives must exercise all due care and skill to ensure, in all communications with customers, that statements made about investment products are clear and accurate.