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Singapore, 4 April 2006...The Monetary Authority of Singapore (MAS) announced that civil penalty enforcement action has been taken against Trek 2000 International Limited (Trek) for contravening the continuous disclosure provision under section 203 of the Securities and Futures Act (SFA).
2. The contravention by Trek, a company listed on the Mainboard of the Singapore Exchange Securities Trading Ltd (SGX-ST), was in relation to the company's failure to promptly announce an earnings projection, in breach of its disclosure obligations under the SGX-ST listing rules.
3. On 19 January 2006, Trek disclosed in an interview with Reuters that it expected sales and earnings to grow by 20% to 25% over the next three to five years. As the information was material and had not been publicly disseminated before the interview, SGX-ST listing rules required that it be promptly announced to the market via SGXNET. Trek failed to do this. The company only made the announcement after being alerted by SGX-ST on the morning of 20 January 2006. By this time, there had been sharp increases in the price and trading volume of its shares. On 14 February 2006, SGX-ST publicly reprimanded Trek for breach of its disclosure obligations under the listing rules.
4. Trek has admitted to contravening section 203(2) of the SFA by negligently failing to notify SGX-ST of the earnings projection. The company has paid a civil penalty of S$75,000 to MAS without court action.
5. Mr Shane Tregillis, Deputy Managing Director (Market Conduct), MAS, said, "Listed companies should ensure that they do not make selective disclosure of profits and earnings projections. If such information is inadvertently disclosed during briefings of analysts or meetings with groups of investors or the media, it must be promptly announced to the market. This is to ensure a fair market where investors can make informed trading and investment decisions."
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Notes to Editor:
A. Continuous Disclosure under Section 203 of the SFA
(i) Section 203(2), Part XII of the SFA provides statutory backing to the disclosure requirements under the listing rules of a securities exchange. The provision prohibits a listed company from intentionally, recklessly or negligently failing to notify the securities exchange of information that is required by the exchange's listing rules to be disclosed to the exchange for the purpose of making it available to the market.
(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 which continuous disclosure contravention is one), of a sum not less than $50,000 and not more than $2 million, where the contravention did not result in that person gaining a profit or avoiding a loss.
B. Disclosure Obligations under the SGX-ST Listing Manual
(i) Rule 703 of the SGX-ST Listing Manual requires an issuer to provide timely disclosure of material information.
(ii) Under Part II of Appendix 7.1 of the SGX-ST Listing Manual, paragraph 4 states that material information includes information known to the issuer concerning, inter alia, the issuer's financial condition and prospects. Paragraph 5 states that if an issuer releases material information to the media but did not announce it to the market via SGXNET, the issuer is in breach of Rule 703 of the listing manual.
(iii) In Practice Note 7.1 of the SGX-ST Listing Manual, paragraph 3.1(a) clarifies that SGX-ST does not prohibit issuers from conducting briefings with analysts and holding meetings with groups of investors and the media. Where an issuer inadvertently discloses material, non-public information during these briefings or meetings, the issuer must disseminate the information via SGXNET as promptly as possible.
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