Enforcement Actions
Published Date: 10 July 2019

Court Convicts Three Individuals for Insider Trading and Orders Forfeiture of Criminal Proceeds

Singapore, 10 July 2019… Mr Leong Chee Wai, Mr E Seck Peng Simon and Mr Toh Chew Leong were today convicted and sentenced to 36 months, 30 months and 20 months imprisonment respectively. They were charged with a total of 333 counts of insider trading offences. The individuals had carried out a front-running arrangement over a period of 7 years resulting in profits of S$8.07 million. This is the first case of front-running prosecuted as an insider trading offence in Singapore, which carries a more severe penalty.   

2   The State Court also ordered that the sums of approximately S$310,000, S$770,000 and S$1,350,000 be forfeited to the State from Mr Leong, Mr E and Mr Toh respectivelyUnder Section 364(2) of the Criminal Procedure Code.. These monies, suspected to be criminal proceeds, were seized from the individuals in the course of investigations conducted by the Monetary Authority of Singapore (MAS).

3   Mr Leong, Mr E and Mr Toh, were representatives of Capital Market Services Licence holdershttps://www.mas.gov.sg/regulation/capital-markets/Capital-Markets-Services-CMS-Licence when they committed the offences.  In light of the convictions, MAS served notices of its intention to impose Prohibition Orders (POs) on the three individuals from performing regulated activities under the SFA. MAS seeks to ban Mr Leong and Mr E for a period of 15 years, and Mr Toh for a period of 13 years. The lengths of the proposed POs take into account the duration of misconduct, as well as the amount of illicit profits made and surrendered.

4   Ms Loo Siew Yee, Assistant Managing Director (Policy, Payments & Financial Crime), MAS, said, “The three individuals had colluded to misuse confidential information for personal gain, thereby undermining market integrity. MAS will pursue insider trading charges against individuals involved in front running in appropriate cases and ensure that those guilty of such misconduct are kept out of the industry as warranted.”  

Background of the case

5   Mr Leong and Mr Toh were senior equity dealers with First State Investments (Singapore) (FSIS)Mr Leong was a representative of FSIS from 28 December 2002 to 16 May 2014 while Mr Toh was a representative of FSIS from 12 July 2004 to 16 May 2014., where they were tasked to execute trading orders placed by FSIS’ portfolio managers.  Mr E was a remisier with UOB Kay Hian Pte Ltd (UOBKH)Mr E was a representative of UOBKH from February 2002 to 1 October 2014.

6   Starting from March 2007, Mr Leong and Mr E colluded to profit from the price-sensitive confidential information that Mr Leong received on intended orders by FSIS. Under this arrangement, Mr Leong informed Mr E about FSIS’ intended orders and Mr E used his personal trading account to place orders in the same counters, ahead of FSIS’ orders, thus front-running FSIS’ orders. As FSIS’ orders typically involved large quantities of shares, the orders had significant price impact on the market. When FSIS’ orders generated favourable price movements, Mr E unwound his position by trading in the opposite direction of FSIS’ orders. This led to insider trading profits which were split equally between Mr Leong and Mr E. 

7   Mr Toh joined FSIS’ dealing desk in July 2004, and subsequently joined Mr Leong and Mr E in the front-running arrangement from August 2008.  The profits generated from the insider trading were then split equally among the three of them. 

8   Under the front-running arrangement, Mr Leong and Mr E made profits of about S$2,685,625 each, while Mr Toh made a profit of about S$2,365,040, from the trades in 100 counters listed on the SGX-ST and in overseas countries including Hong Kong and Australia.
 
9   In addition, Mr Toh and Mr E separately used the information on FSIS’ intended orders to trade in contract for differences (CFDs) on the counters that FSIS was intending to trade in. The CFDs trades were carried out in their own trading accounts and the profits from these trades were not shared with others.  Mr Toh made insider trading profits of about S$273,398 and Mr E, S$59,492.

10   The investigations conducted by MAS arose from a referral by the Singapore Exchange Securities Trading Ltd (SGX-ST).  In the course of MAS’ investigations, we had also obtained the assistance of The Australian Securities and Investments Commission.  Please refer to Annex A for details of the charges against the three individuals and Annex B for the relevant regulations and laws.

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Annex A: Charges against the three individuals

Mr Leong was charged with a total of 115 charges of insider trading, comprising 22 charges for insider trading under section 219 (2)(b) SFA and another 93 charges for conspiracy to conduct insider trading under section 219(2)(b) of the SFA read with section 109 of the Penal Code.  He pleaded guilty and was convicted on 37 of the charges, with the remaining charges taken into consideration for the purpose of sentencing.  

Mr Toh was charged with a total of 111 charges of insider trading, comprising 18 charges for insider trading under section 219(2)(a) SFA and another 93 charges for conspiracy to conduct insider trading under section 219(2)(b) of the SFA read with section 109 of the Penal Code.  He pleaded guilty and was convicted on 37 of the charges, with the remaining charges taken into consideration for the purpose of sentencing.  

Mr E was charged with a total of 107 charges for insider trading offences under section 219(2)(a) SFA.  He pleaded guilty and was convicted on 35 of the charges, with the remaining charges taken into consideration for the purpose of sentencing.  

Annex B – Applicable Regulations and Laws

(A)   Front Running – Priority of customers’ orders under Regulation 44 of the Securities and Futures (Licensing and Conduct of Business) Regulations

Regulation 44 prohibits a representative of a holder of a capital markets services licence, when acting on his own account or on behalf of a person associated with him or connected to him, from entering into a transaction for the purchase or sale of shares of a counter if a customer of the holder or the representative had instructed him to purchase or sell shares in that same counter and he had not complied with those instructions. 

The penalty for a contravention of Regulation 44 upon conviction is a fine not exceeding $100,000 or imprisonment for a term not exceeding 12 months or both.

(B)   Insider Trading under Section 219(2)(a) of the Securities and Futures Act (Cap 289)

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.

(C)   Insider Trading under Section 219(2)(b) of the Securities and Futures Act (Cap 289)

Section 219(2)(b) 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 procuring another person to subscribe for, purchase or sell, or to enter into an agreement to subscribe for, purchase or sell these securities.

The penalty for a contravention of section 219 of the SFA upon conviction is a fine not exceeding $250,000 or imprisonment for a term not exceeding 7 years or both.

(D)   Section 109 of the Penal Code (Cap 224)

Section 109 of the Penal Code provides that anyone who abets an offence shall be punished with the punishment for the offence abetted if the Penal Code has no expressed punishment set out.

Resources

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