Response to "Tighten Checks on investment schemes" - ST Forum, 10 April 2013
16 April 2013
The Editor ST Forum
Mr Teo Swee Wei asks if schemes such as the property venture linked to former Sakae Holdings director should be required to register a prospectus with MAS and if wine, gold bullion and land banking investment schemes should be regulated (‘Tighten Checks on investment schemes’, ST Forum, 10 April 2013).
2 Under the Securities and Futures Act, any person making an offer of securities will be required to issue a prospectus that is lodged with and registered by MAS, unless the offer falls within one of the available exemptions, such as where the offer is not made to retail investors. When we receive information on possible breaches of our laws, such as the “investment scheme” referred to by Mr Teo, MAS will investigate and may refer the matter to the Commercial Affairs Department (CAD) for investigation of suspected criminal offences.
3 In the current persistent, low interest rate environment, we have seen an increasing number of unregulated schemes that purport to be alternative investments. These typically do not involve an offer of securities, but retail investors take a direct interest in physical assets such as property, gold, art or wine. MAS currently does not regulate these and is reviewing whether there is a need to refine our regulatory framework to enhance consumer protection, taking into account changes in the investment landscape. In its review, MAS is mindful that the right balance will have to be struck between providing consumers with adequate protection and the costs of extending its regulatory ambit. An overly-regulated environment will stifle legitimate businesses and innovations that may well be in consumers’ interests.
4 Regardless of whether an entity is regulated by MAS, it is an offence under the law to operate a fraudulent or deceptive scheme. Where there is evidence of criminal wrongdoing or fraud, MAS will refer the matter to the CAD.
5 Consumers should also bear in mind that regulation cannot ensure the sustainability or viability of an investment scheme. We encourage consumers to do the necessary due diligence before committing themselves to schemes that claim to provide high returns with seemingly low risk.
Angelina Fernandez Director (Communications) Monetary Authority of Singapore