Singapore, 10 September 2012, The Monetary Authority of Singapore (MAS) has taken civil penalty enforcement action against Mr Shi Jiangtao for contravening the insider trading provision under Section 218(2)(a) of the Securities and Futures Act (SFA).

2  On 4 April 2011, Minmetals Resources Limited (Minmetals)  announced its intention to make an all-cash takeover offer to acquire all the outstanding common shares in Equinox Minerals Limited (Equinox)  at C$7.00 per share. The offer price was at a 23% premium to the closing price of Equinox shares listed on the Toronto Stock Exchange (TSX) on 1 April 2011. After the release of the announcement, shares of Equinox listed on the TSX and the Australian Securities Exchange (ASX) closed at least 28.7% above the respective closing share price on 1 April 2011, while shares of Minmetals listed on the Hong Kong Stock Exchange (HKSE) closed at a 2.3% increase above the closing share price on 1 April 2011. 

3  Mr Shi was a department manager in the investment department of China Minmetals Non-ferrous Metals Company Limited (CMNMC), the parent company of Minmetals, when the contravention occurred.  He was a member of the project team formed by CMNMC to work on the proposed takeover of Equinox. Between 14 March and 1 April 2011, while in possession of non-public materially price-sensitive information concerning Minmetals’ proposed acquisition of Equinox, Mr Shi purchased 342,000 contracts for differences (CFDs) relating to Equinox shares, 206,000 CFDs relating to Minmetal shares, and sold 213,000 CFDs relating to Minmetals shares.  The trades took place in his personal trading account and his wife’s trading account opened and maintained with CMC Markets Singapore Pte. Ltd. (CMC Markets). The trades were subsequently cancelled by CMC Markets.

4  Mr Shi has admitted to contravening Section 218(2)(a) of the SFA and has paid a civil penalty of $100,000 to MAS without court action. Mr. Shi has cooperated fully with MAS in the course of the investigations.

5  Mr Lee Chuan Teck, Assistant Managing Director (Capital Markets), MAS, said: "This case demonstrates the resolve of MAS in pursuing insider trading perpetrators, including those residing overseas, or who trade in over-the-counter CFDs. Individuals should not think that they can avoid detection by dealing outside Singapore, even when dealing in over-the-counter products.”

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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 the SFA, Part XII, of a sum not exceeding three times the amount of the profit gained or loss avoided by that person, subject to a minimum of $50,000, where the contravention has resulted in the person gaining a profit or avoiding a loss.

(B) Insider Trading under section 218(2)(a) of the SFA

Section 218(2)(a) of the SFA prohibits a person who is in possession of materially price-sensitive information concerning a corporation (to which he is connected), which he knows is materially price-sensitive and not generally available, from subscribing for, purchasing, selling, or entering into an agreement to subscribe for, purchase or sell those securities of that corporation.

(C) Connected Person

Section 218(5) of the SFA provides that a person is connected to a corporation if, amongst others, he occupies a position that may reasonably be expected to give him access to information of a kind to which Section 218 applies by virtue of any professional or business relationship existing between himself (or his employer or a corporation of which he is an officer) and that corporation or a related corporation.

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