MAS issues prohibition orders against three traders after being convicted for insider trading

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The Monetary Authority of Singapore (MAS) has issued Prohibition Orders (“POs”) against three traders who were earlier convicted of insider trading.

The authority banned Mr E Seck Peng Simon, former representative of UOB Kay Hian Pte Ltd, and Mr Leong Chee Wai, former representative of First State Investments (Singapore), from the activity for 15 years. While Mr Toh Chew Leong, former representative of First State Investments (Singapore), got 13 years PO.

All three POs took effect from 13 August 2019, the authority added.

MAS also said that Mr E, Mr Leong and Mr Toh are prohibited from performing any regulated activity under the Securities and Futures Act (SFA). They are also prohibited from taking part in the management, acting as a director or becoming a substantial shareholder of any capital markets services firm under the SFA.

The authority said that the three individuals had engaged in a front-running arrangement over a period of 7 years and colluded to misuse confidential information obtained in the course of their work for personal gain. They were representatives of Capital Markets Services Licence holders when they committed the offences.

In July 2019, Mr Leong, Mr E and Mr Toh were convicted of insider trading offences and sentenced to 36 months, 30 months and 20 months imprisonment respectively. They were charged with a total of 333 counts of insider trading offences resulting in profits of S$8.07 million.

The State Court also ordered that the sums of approximately S$310,000, S$770,000 and S$1,350,000 be forfeited to the State from Mr Leong, Mr E and Mr Toh respectively. These monies, suspected to be criminal proceeds, were seized from the individuals in the course of investigations.

Mr Leong and Mr Toh were senior equity dealers with First State Investments (Singapore) (FSIS), where they were tasked to execute trading orders placed by FSIS’ portfolio managers.  Mr E was a remisier with UOB Kay Hian Pte Ltd (UOBKH).

Starting from March 2007, Mr Leong and Mr E colluded to profit from the price-sensitive confidential information that Mr Leong received on intended orders by FSIS. Under this arrangement, Mr Leong informed Mr E about FSIS’ intended orders and Mr E used his personal trading account to place orders in the same counters, ahead of FSIS’ orders, thus front-running FSIS’ orders.

As FSIS’ orders typically involved large quantities of shares, the orders had a significant price impact on the market. When FSIS’ orders generated favourable price movements, Mr E unwound his position by trading in the opposite direction of FSIS’ orders, which led to insider trading profits which were split equally between Mr Leong and Mr E.

Mr Toh joined FSIS’ dealing desk in July 2004 and subsequently joined Mr Leong and Mr E in the front-running arrangement from August 2008.  The profits generated from the insider trading were then split equally among the three of them.

Under the front-running arrangement, Mr Leong and Mr E made profits of about S$2,685,625 each, while Mr Toh made a profit of about S$2,365,040, from the trades in 100 counters listed on the SGX-ST and in overseas countries including Hong Kong and Australia.

In addition, Mr Toh and Mr E separately used the information on FSIS’ intended orders to trade in a contract for differences (CFDs) on the counters that FSIS was intending to trade-in. The CFDs trades were carried out in their own trading accounts and the profits from these trades were not shared with others.  Mr Toh made insider trading profits of about S$273,398 and Mr E, S$59,492.

The investigations conducted by MAS arose from a referral by the Singapore Exchange Securities Trading Ltd (SGX-ST).

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