Civil Penalty Enforcement Action for False Trading
Singapore, 1 July 2011...The Monetary Authority of Singapore (MAS) has taken civil penalty enforcement action against Mr Wong Chow Lin @ Benjamin Wong for contravening the false trading provisions under section 197(1)(b) of the Securities and Futures Act (SFA). Mr Wong was an appointed representative and the head of business development for corporate broking in CIMB Securities Pte Ltd at the time of the contravention.
2 On 39 days between 1 August 2008 and 28 February 2009, Mr Wong bought between one and three lots of Heng Long International Ltd (HLI) shares near the close of trading, with the intention of marking the closing price of HLI shares to exceed the last traded price. As a result of Mr Wong’s trades, HLI shares closed at between one and 15 bids, or 1.8% and 36.4%, above the preceding traded price. While Mr Wong did not appear to have profited directly from his trades, he admitted that he intended to maintain or inflate the closing price of HLI shares so as to impress clients to whom he had promoted HLI shares during its Initial Public Offering and who had subscribed to the placement shares of the Initial Public Offering through him.
3 Mr Wong fully cooperated with MAS in the course of the investigations and admitted to civil penalty liability for contravening section 197(1)(b) of the SFA. He has paid a civil penalty of $50,000 to MAS without court action. MAS has issued a prohibition order to Mr Wong, prohibiting him from:
i) carrying on business in any regulated activity or acting as a representative in respect of any regulated activity for a period of one (1) year; and
ii) taking part in the management of any holder of a capital market services licence or any person exempt under section 99(1) of the SFA in Singapore for 2 years, both terms to run concurrently.
The matter was referred to MAS by the Singapore Exchange Securities Trading Ltd.
4 Mr Leo Mun Wai, Assistant Managing Director (Capital Markets), MAS, said, "MAS takes a serious view of trading for the purpose of creating a false and misleading appearance with respect to the market for or the price of securities. Such conduct is prohibited under our securities law, whether the trades were carried out for monetary gain or otherwise as it obstructs genuine price discovery and undermines market efficiency. MAS will not hesitate to take action against anyone who engages in such conduct.”
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 Part XII of the SFA, of a sum not exceeding
- three times the amount of the profit gained or loss avoided by that person, subject to a minimum of either $100,000 (if the person is a corporation) or $50,000 (if the person is not a corporation); or
- (where the contravention has not resulted in the person gaining a profit or avoiding a loss) $2 million, subject to a minimum of $50,000.
(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 do anything that is intended or likely to create a false or misleading appearance with respect to the market for or the price of securities.