MAS Takes Civil Penalty Enforcement Action

Singapore, 22 September 2005...The Monetary Authority of Singapore (MAS) announced that it has taken civil penalty enforcement action against Mr. Yang Yomin for contravening the insider trading provisions under section 219(2)(a) of the Securities and Futures Act (SFA).

2   On 8 January 2004, Nucleus Electronics Limited (Nucleus), a corporation whose shares were then listed for quotation on the SGX-SESDAQ and are now listed on the Mainboard of the SGX, announced that it was proposing to raise capital by way of a placement of 32.5 million new shares on a discounted basis.  UOB Kay Hian Private Limited (UOBKH) was engaged as the placement agent for the transaction.

3   Prior to the announcement by Nucleus on 8 January 2004, Mr. Yang received information concerning the impending placement from a dealer of UOBKH who was marketing the placement to him. The information concerning the impending placement was at that time, not generally available. In anticipation that the announcement of the placement would result in a fall in Nucleus share prices, Mr. Yang sold a total of 2.141 million shares in Nucleus on 7 January 2004 and made a gain of approximately S$16,000.   

4   Mr Yang has admitted to civil penalty liability for contravening section 219(2)(a) of the SFA and has paid a civil penalty of S$50,000 to MAS without court action. Throughout the investigations, Mr. Yang cooperated with MAS.

5   Based on the evidence obtained from MAS' investigations, UOBKH did not contravene the insider trading provisions in connection with this matter.

6   Mr. Shane Tregillis, Deputy Managing Director (Market Conduct), MAS, said, "MAS has alerted all relevant financial institutions that when marketing placements, they should have appropriate procedures to ensure that those receiving the price sensitive information know that the information is confidential and for the purpose of subscribing to the placement. Market participants should also know that other than for the purposes of the placement, trading in the relevant securities based on the information received amounts to insider trading."

7   This matter was referred to MAS by the Singapore Exchange Securities Trading Ltd. Civil penalty investigations were carried out by MAS into the matter in accordance with its standard operating procedures.

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Notes to Editor:

A. The civil penalty regime

(i) A civil penalty action is not a criminal action and does not attract criminal sanctions. The civil penalty regime, designed to complement criminal sanctions and provide a nuanced approach to combat market misconduct, became operational at the beginning of 2004.

(ii) Under section 232 of the SFA, MAS may enter into agreements with any person for that person to pay, with or without admission of liability, a civil penalty for a contravention of any provision of the SFA, Part XII, of a sum not exceeding three times the amount of the profit gained or loss avoided by that person, subject to a minimum of $50,000, where the contravention has resulted in the person gaining a profit or avoiding a loss.

(iii) In determining the quantum of civil penalties to seek in such actions, MAS takes into consideration all facts and circumstances relating to the contravention and the contravening person.

(iv) MAS takes into consideration the degree of seriousness of the misconduct, the extent of impact of the misconduct on the market, the need for effective deterrence and other relevant characteristics of the case when deciding to undertake civil penalty enforcement action.

B. Insider Trading under section 219(2)(a) of the SFA

Section 219(2)(a) of the SFA prohibits a person who is in possession of material price sensitive information concerning any securities, which he knows is material price sensitive and not generally available, from subscribing for, purchasing, selling, or entering into an agreement to subscribe for, purchase or sell those securities.