Letters to Editor
Published Date: 20 October 2012

Response to "Not as good as gold at all..." - ST Forum, 14 October 2012

20 October 2012

The Editor
ST Forum

Dear Editor

Mr Tan Sin Liang asks why gold trading companies such as Genneva were allowed to continue operating (‘Not as good as gold at all...’, ST Forum 14 October 2012.).

I would like to clarify that gold trading is not a regulated activity under the Securities and Futures Act administered by MAS. Like most other regulators, MAS does not regulate schemes that involve investors acquiring direct ownership of physical assets, such as property, gold, art or wine.  That said, MAS will continue to monitor market practices and investment trends, and refine the regulatory framework as necessary.

Deputy Prime Minister and MAS Chairman Tharman Shanmugaratnam noted in a written response to a question in Parliament on 16 October, that regulations cannot cover every type of investment; MAS has to judge where to draw the line on what we regulate, taking into account the scale of the investment activity, its role in financial markets and whether failure by a firm will pose broader risks to the system. However, regardless of whether these activities are regulated, an operator cannot operate fraudulent or deceptive schemes or breach any law. Some of the operators offering gold buy-back schemes are currently under investigation by the Commercial Affairs Department (CAD). If there is evidence of fraud or other breaches of the law, CAD will take firm and appropriate action.

In the current low interest rate environment, consumers may be easily tempted to put their money into schemes that claim to provide high returns with seemingly low risk. Consumers should exercise great care and vigilance before committing themselves to such schemes. We encourage consumers seeking financial services to deal only with firms that are regulated by MAS. Consumers can refer to the MAS website to check whether the entity that they are dealing with is regulated by the MAS, or is included on its Investor Alert list (IAL). The IAL is a list of unlicensed entities that are wrongly perceived to be licensed by MAS and have come to our attention.

Angelina Fernandez
Director (Communications)
Monetary Authority of Singapore