MAS Takes Civil Penalty Action and Issues Prohibition Order Against Mr Teoh Teck Shin for Contravening Provisions to Prevent False Trading
Singapore, 28 August 2012...The Monetary Authority of Singapore (MAS) has taken civil penalty enforcement action against Mr Teoh Teck Shin for contravening section 197(1)(b) of the Securities and Futures Act (SFA) by intentionally creating a false or misleading appearance with respect to the price of securities.
2 Mr Teoh was a remisier with UOB Kay Hian Pte Ltd when the contravention took place. The trades in question were conducted using his personal trading account.
3 On three trading days between February 2008 and August 2008, Mr Teoh conducted trades which were intended to affect the share price of City Development Limited, Capitaland Limited and Sembcorp Marine Limited. This influenced the Designated Market Makers (DMMs) for the structured warrants over these shares to adjust their buy and sell quotes for the warrants. As a result, Mr Teoh’s earlier orders in the warrants were able to match the DMMs’ revised quotes. Through his actions, Mr Teoh had intentionally created a false or misleading appearance with respect to the price of the underlying shares in order to profit from his trades in the warrants.
4 Mr Teoh has admitted to civil penalty liability for contravening section 197(1)(b) of the SFA. Mr Teoh made a profit of about $29,000 and will pay a civil penalty of $73,000 to MAS without court action. MAS has also issued an order against Mr Teoh prohibiting him, for a period of 3 years, from:
i. conducting business in any regulated activity or acting as a representative in respect of any regulated activity; 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.
5 The matter was referred to MAS by the Singapore Exchange Securities Trading Ltd.
6 Mr Lee Chuan Teck, Assistant Managing Director for Capital Markets, MAS, said: “The trades in this case undermined the integrity of our markets as they were done with the purpose of manipulating the share price so as to profit from the corresponding price changes in the structured warrants. Such trades are prohibited under our securities law. MAS will take firm action against any market participant 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,
(a) 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
(b) (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) 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.