MAS obtains Civil Penalty Default Judgment against Mr Liao Chun-Te for Insider Trading
Singapore, 27 January 2022 … The Monetary Authority of Singapore (MAS) has obtained a default judgment against Mr Liao Chun-Te (Mr Liao) to pay a civil penalty of $164,750 for insider trading. Mr Liao had sold shares in Oceanus Group Limited (Oceanus) while in possession of non-public and materially price-sensitive information concerning a proposed rights issue by Oceanus.
2Oceanus, a company listed on the Singapore Exchange, had on 7 June 2013 announced a rights issue of new ordinary shares (Rights Shares). The issue price of $0.029 per Rights Share represented a discount of approximately 42% to the closing price per ordinary share on 6 June 2013.
3Before the announcement, Mr Liao had provided an irrevocable undertaking to Oceanus to subscribe for the Rights Shares under the rights issue, with knowledge that the Rights Shares would be issued at a discount. While in possession of such non-public and price-sensitive information, Mr Liao sold a total of 6 million Oceanus shares on three separate occasions, avoiding a loss of approximately $65,900.
4 MAS commenced the civil penalty action under section 219(2)(a) of the Securities and Futures Act (SFA) against Mr Liao for insider trading and served the court papers on Mr Liao, a foreign national, overseas. As Mr Liao failed to enter an appearance in Court, MAS obtained a default judgment against him on 26 October 2021.
(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 in 2004.
Under section 232(1) of the SFA, whenever it appears that any person has contravened any provision in Part XII of the SFA, MAS may, with the consent of the Public Prosecutor, bring an action in a court against him to seek a civil penalty order. If the court is satisfied on a balance of probabilities that the person has contravened the provision, the court may order the payment of a civil penalty of a sum not exceeding the greater of the following:
(a) three times the amount of the profit gained or loss avoided by that person, or
(b) $2 million, subject to a minimum of $100,000 (if the person is a corporation) or $50,000 (if the person is not a corporation).
(B) Insider Trading under Section 219(2)(a) of the SFA
Section 219(2)(a) prohibits a person who is not connected to any corporation but is in possession of materially price-sensitive information, which he knows or ought to know is materially price-sensitive and not generally available, and the information would have a material effect on the price or value of securities, from subscribing for, purchasing or selling, or entering into an agreement to subscribe for, purchase or sell these securities.