Singapore, 3 October 2013… The Monetary Authority of Singapore (MAS) has obtained a default judgment for $100,000 against Mr Ong Beng Hock for contravening sections 197 and 198 of the Securities and Futures Act (SFA), which prohibit false trading and market manipulation respectively.
2 On 29 December 2006 and 26 April 2007, Mr Ong executed a total of 12 wash trades in two of his trading accounts. These were purchases and sales of shares of Ipco International Ltd and Goldtron Ltd which did not involve any change in beneficial ownership. MAS’ case was that the wash trades were intended or likely to create a false or misleading appearance with respect to the market for, or the price of, the shares in the two corporations. Mr Ong had also engaged in the wash trades to push up the last traded price of the shares to his desired target selling price, with the intent to induce other buyers to purchase the shares from him at that price. MAS commenced civil penalty court action against Mr Ong for a sum of $100,000 for the contraventions. As Mr Ong did not contest the action, the court awarded a default judgment of $100,000 to MAS.
3 This matter was referred to MAS by Singapore Exchange Securities Trading Limited.
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Notes to Editor
(A) The civil penalty regime
(i) 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.
(ii) 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 an order for a civil penalty in respect of that contravention. If the court is satisfied on a balance of probabilities that the person has contravened a provision in this Part which resulted in his gaining a profit or avoiding a loss, the court may make an order against him for the payment of a civil penalty of a sum:
(a) not exceeding three times the amount of the profit gained or loss avoided by that person, subject to a minimum of either $100,000 (if the person is a corporation) or $50,000 (if the person is not a corporation); or
(b) (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.
(iii) Notwithstanding the above, MAS may also 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.
(iv) 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.
(v) MAS takes into consideration the degree of seriousness of the misconduct, the extent of impact of the misconduct on the market, the need for effective deterrence and other relevant characteristics of the case when deciding to undertake civil penalty enforcement action.
(B) Sections 197(1)(b) and 197(2) of the SFA
Under section 197(1)(b) of the SFA, a person must not create or do anything that is intended or likely to create a false or misleading appearance with respect to the market for, or the price of, securities. Section 197(2) of the SFA prohibits maintaining, inflating, depressing or causing fluctuations in the market price of any securities by means of wash sales.
(C) Section 198(1) of the SFA
Under section 198(1) of the SFA, a person must not effect, take part in, be concerned in or carry out, directly or indirectly, 2 or more transactions in securities of a corporation, being transactions that have, or are likely to have, the effect of raising, lowering, maintaining or stabilising the price of securities of the corporation on a securities market, with intent to induce other persons to subscribe for, purchase or sell securities of the corporation or of a related corporation.