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SINGAPORE: The Monetary Authority of Singapore (MAS) has imposed one of its heaviest civil penalties ever on the former financial controller of Cosco Corporation Singapore, Teo Chuan Teck, by fining him $320,000 for insider trading — acting on price-sensitive information that is not generally available to the investor-at-large.
Teo was punished for purchasing securities of Cosco on five occasions between Jan 15 and July 31 last year while he was its finance controller and in possession of price-sensitive information.
The price-sensitive information related to the company securing shipbuilding contracts and its financial results for FY2006 and the first and second quarters of FY2007.
Section 218(2)(a) of the Securities and Futures Act prohibits a person who is in possession ofmaterial price-sensitive information concerning a corporation (to which he is connected), which he knows is material price sensitive and not generally available, from subscribing for, purchasing, selling, or entering into an agreement to subscribe for, purchase or sell those securities of that corporation.
Teo’s purchases included over-the-counter (OTC) transactions in Contracts for Differences (CFDs) relating to the shares of Cosco. A CFD is an agreement to exchange the difference in price value of a particular share between the time at which a contract is opened and the time at which it is closed. The MAS did not disclose what Teo’s profits from the transactions amounted to.
Mr Shane Tregillis, Deputy Managing Director (Market Conduct), MAS, said: “The MAS will take enforcement action againstinsider trading, even where the dealings are transacted in OTC financial products, such as CFDs. Individuals should not think that they can avoid detection by dealing in such products rather than in the listed securities themselves.”
Teo, who left Cosco in March “for personal reasons”, is lucky to have escaped with a out-of-court settlement, for he could have been charged in court and fined and jailed with a criminal conviction hanging over his head.
The MAS recently explained that when deciding whether to undertake civil penalty enforcement action or refer a matter to the Commercial Affairs Department for criminal investigation, it takes into consideration the degree of seriousness of the misconduct, extent of impact of the misconduct on the market, the need for effective deterrence and other relevant characteristics of the case.
“For example, market misconduct cases involving fraud or conspiracy, breaches of other criminal law or multiple offences that caused significant market disruption would generally be more suitable for prosecution under the criminal regime,” the MAS added.
Teo is the first person to be fined by the MAS for insider trading this year. Last year, there were three cases involving total fines of $200,000. - TODAY/sh
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