Singapore, 11 May 2006...The Monetary Authority of Singapore (MAS) has taken civil penalty enforcement action against Mr. Frank Kuhn Swi Wha for contravening the false trading provisions under Section 197(1)(b) of the Securities and Futures Act (SFA).
2. On 4, 16 and 27 May 2005 and 18 July 2005, Mr. Kuhn carried out purchases in the shares of ASA Group Holdings ("ASA") just before the close of trading. His intention was to boost the market closing price of ASA shares in order to maintain or increase the value of the ASA shares in his margin account
to avoid margin calls. As a result of these purchases, the price of ASA shares closed at six or more bids, or between 13% and 23%, above prevailing market prices.
3. Mr. Kuhn has admitted to civil penalty liability for contravening section 197(1)(b) of the SFA and will pay a civil penalty of S$50,000 to MAS without court action. Mr. Kuhn cooperated fully with MAS and responded in a timely manner to our requests.
4. Mr. Shane Tregillis, Deputy Managing Director (Market Conduct), MAS, said, "Confidence in the financial system and effective intermediation of financial flows require that capital markets be fair, efficient and transparent. Trading conducted with the aim of artificially setting the price of securities distorts the
market and undermines its efficiency because such prices do not reflect the forces of genuine supply and demand. This amounts to false trading and is prohibited under our securities law. MAS will not hesitate to take action against anyone who engages in such activities."
5. This matter was referred to MAS by SGX-ST. Civil penalty investigations were carried out by MAS into the matter in accordance with 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) False trading under Section 197(1)(b) of the SFA
Under Section 197(1)(b) of the SFA, a person must not create or doing anything that is intended or likely to create a false or misleading appearance with respect to the market or the price of securities.
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