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Singapore – The Invocation of a Civil Penalty Enforcement Action.

30 April, 2012

 

Legal News & Analysis – Asia Pacific – Singapore – Regulatory & Compliance

 

On 11 April 2012, The Monetary Authority of Singapore (MAS) announced that it took a civil penalty enforcement action against Mr Lau Kee Swan for contravening section 201(b) of the Securities and Futures Act (SFA), which prohibits the employment of manipulative and deceptive devices in connection with the subscription, purchase or sale of securities.

 
Under section 201(b) of the SFA, no person shall, directly or indirectly, in connection with the subscription, purchase or sale of any securities engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception, upon any person.
 
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 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, 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 $50,000 (if the person is not a corporation) or $100,000 (if the person is a corporation); or
  • (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.
 
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. Mr Lau was found to have knowingly:
 
(a) opened securities trading accounts with various brokerage houses for the purpose of trading on behalf of a third party; and
(b) conducted trades in those accounts for the benefit of the third party.
 
Mr Lau’s dealings with these brokerage houses had led them to believe that the accounts were opened and operated for Mr Lau himself.
 
“The case illustrates the danger of brokerage accounts being used for purposes other than bone fide dealings by the owner of the account,” said Marcus Chow, Partner, Corporate/Commercial practice group, ATMD Bird & Bird LLP.
 
“The case showcases the ability of MAS to use a civil enforcement in addition to criminal sanctions,” said Navin Joseph Lobo, Partner, Dispute Resolution practice group, ATMD Bird & Bird LLP.
 

 

For further information, please contact:
 

Marcus Chow, Partner, ATMD Bird & Bird

marcus.chow@twobirds.com

 

Navin Joseph Lobo, Partner, ATMD Bird & Bird

[email protected]

 

 

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