One of the prospective amendments, all of which come under part XII of the Securities and Futures Act (SFA), is to revise the civil penalty ceiling so that offenders who gained a profit after engaging in market wrongdoings can receive fines that are just as high as offenders who don’t enjoy a benefit.
The MAS proposes that the penalty for receiving a benefit from market misconduct would be “the greater of either S$2m ($1.4m, £930,000, €1.3m) or three times the amount of profit obtained”.
The body also seeks to give MAS’ civil penalty claims greater priority over private claims so that companies can be sued any sum, which can then be recovered in a similar fashion to the way debts are due to the government.
Persons who commonly invest
Another amendment looks to define the SFA phrase ‘persons who commonly invest’ to ensure the standard of market knowledge is reflective of most market participants, including retail investors.
Under the proposed rules, ‘persons who commonly invest’ would be defined as: “Members of the public who deal in securities, securities-based derivative contracts, or units in a collective investment scheme […] on a regular basis”.
Misleading disclosures
The proposals also aim to clarify that – in order to establish a case of false or misleading disclosure – there is no need to demonstrate that there has been a material impact on the market price.
This, the MAS said, is because false or misleading disclosures which wrongly influence investors to trade do not necessarily result in “observable significant price movements”, and could be the result of other market factors.
“It is MAS’ view that firm enforcement actions should be taken against insider trading in order to preserve investors’ confidence, particularly the confidence of retail investors, in the integrity of the Singapore capital markets,” the paper reads.
Criminal investigation powers
The consultation document also revealed that MAS officers would be given criminal investigation powers when investigating market misconduct offences. These powers include the ability to search and seize items from premises.
The proposed changes to the SFA are open for comment until the 23 September.
