S$70K civil penalty imposed on Singapore businessman for insider trading

SINGAPORE: The Monetary Authority of Singapore (MAS) has imposed a civil penalty of S$70,000 on businessman Tay Joo Heng for insider trading.

MAS and the Commercial Affairs Department of the Singapore Police Force (CAD), which had conducted a joint investigation into the incident, announced this in a statement on Monday (July 1).

Insider trading is the intentional trading of a public company’s stock or other securities based on relevant information about the company that has not been made public.

Mr Tay has since paid the fine without court action.

The statement says that GS Holdings Limited (GHL) announced in November 2019 that it had entered into a conditional sale and purchase agreement of GreatSolutions, a subsidiary of the company, to GSG Capital Pte Ltd (GSG Capital) for a consideration of S$2 million.

After the announcement, the trade of GHL shares rose dramatically, as 915,600 GHL shares changed hands the next trading day, marking a 58 per cent increase from the average daily traded volume the month before.

Mr Tay, the sole shareholder and director of GSG Capital, had been approached by GHL as a potential buyer of GreatSolutions on Oct 2, 2019.

“As GreatSolutions had been loss-making, Mr Tay held the view that the market would react positively to the news and anticipated that GHL’s share price would rise,” MAS and CAD’s statement read.

From Oct 4 to Nov 19, Mr Tay purchased a total of 515,000 GHL shares while he was in possession of non-public information about GHL’s intended sale of GreatSolutions.

The statement says that Mr Tay has admitted to contravening the insider trading provision under section 219(2)(a) of the Securities and Futures Act (SFA).

Moreover, he has paid MAS the civil penalty without court action. He has voluntarily undertaken not to be a company director or be involved in a company’s management for two years.

Section 219(2)(a) is the law prohibiting someone who is not connected to any company but is in possession of materially price-sensitive information, which 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.

Under Singapore law, MAS may take up a civil penalty action against the wrongdoer with the concurrence of the Public Prosecutor.

The court may order the payment of a fine amounting to three times the amount of profit gained or loss avoided due to the wrongdoer’s act. /TISG

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