MAS Imposes Civil Penalty of $336,000 on Mr Tham Wai Mun Raphael for Insider Trading
Singapore, 4 June 2019… The Monetary Authority of Singapore (MAS) has imposed a civil penalty of $336,000 on Mr Tham Wai Mun Raphael for insider trading. He had sold shares in Auhua Clean Energy PLC (ACE), a company listed on the Alternative Investment Market of the London Stock Exchange, while in possession of non-public and price-sensitive information concerning the company.
2 Mr Tham, who was the Non-Executive Vice Chairman of ACE, has admitted to contravening the insider trading prohibition under section 218(2)(b) of the Securities and Futures Act, and has paid MAS a civil penalty of $336,000 without court action. The penalty represented 2.5 times the losses that Mr Tham had avoided from the sale of his shares. Mr Tham has also given MAS a voluntary undertaking not to be a company director or be involved in the management of a company for a period of two years with effect from 5 June 2019.
3 The case was referred to MAS by the Financial Conduct Authority (FCA) of the United Kingdom, which provided assistance in the investigation.
4 Ms Loo Siew Yee, Assistant Managing Director (Policy, Payments & Financial Crime), MAS, said, “The civil penalty action against Mr Tham, a Singaporean who engaged in insider dealing of shares listed in the United Kingdom, reflects our commitment to pursue offenders who commit market misconduct, regardless of whether the securities are listed in Singapore or overseas. The successful action is a result of the close cooperation and information sharing arrangements MAS has with foreign regulators like the FCA, to help fight financial crimes that transcend borders.”
Background of the case
5 On 16 June 2015, ACE announced that it was considering a share placement at a substantial price discount to raise approximately £1.5 million. Following the announcement, the price of ACE shares fell by 45% to close at 7.75 pence.
6 On 19 June 2015, ACE furnished more information on the share placement by announcing that it had placed out 38 million shares, representing 30% of the enlarged share capital to raise £1,724,500 at 4.5 pence per share. The placement price represented a 44% discount from the previous day’s closing price. The price of ACE shares fell by another 30% to close at 5.625 pence after the second announcement.
7 At the time, Mr Tham, who was based in Singapore, was the Non-Executive Vice Chairman of ACE. On 12 June 2015, he used Foxtrox Holdings Limited (Foxtrox), an investment holding company, to sell 569,745 ACE shares while he was in possession of the non-public and price-sensitive information concerning the share placement. Mr Tham held authority over Foxtrox’s trading account when the trades took place. The share sale allowed Foxtrox and Mr Tham to avoid a loss of £76,203, or $134,186, when compared to ACE’s closing price of 5.625 pence on 19 June 2015.
(A) The civil penalty regime
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.
Under section 232 of the SFA, MAS may enter into an agreement with any person for that person to pay, with or without admission of liability, a civil penalty for contravening any provision of Part XII of the SFA. The civil penalty may be up to three times the amount of the profit gained or loss avoided by that person as a result of the contravention, subject to a minimum of $50,000 (if the person is not a corporation) or $100,000 (if the person is a corporation).
(B) Insider Trading under Section 218(2)(b) of the SFA
Section 218(2)(b) of the SFA prohibits a person who is in possession of materially price-sensitive information concerning a corporation (to which the person is connected), which the person knows is materially price-sensitive and not generally available, from (whether as principal or agent) procuring another person to subscribe for, purchase, sell, or enter 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.
MAS today launched a public consultation on its proposal to streamline the regulatory framework for fund managers. Specifically, the existing Registered Fund Management Companies (RFMCs) regime will be repealed, and existing RFMCs that are in operation will be approved as Licensed Fund Management Companies upon application.
MAS has issued prohibition orders against five persons for engaging in unlawful sub-agency activities, where appointed representatives had arrangements with unlicensed individuals to perform financial advisory services on their behalf.
Mr Kee Rui Xiong, Executive Director (Corporate Finance & Disclosures Department) spoke about three key issues confronting the financial advisory industry – Technology, Training and Trust.