Singapore authorities raided a number of brokerages in a probe of possible breaches of the securities law, while the stock exchange reported several cases related to alleged insider trading and market manipulation as the city sought to protect its reputation as a financial centre.
The Monetary Authority of Singapore and the Commercial Affairs Department are investigating possible contraventions of the Securities and Futures Act and have obtained documents and items from several broking firms and trading representatives, the MAS said on Friday.
Singapore has worked to restore confidence in the stock market after a penny-stock rout in 2013 that prompted the city’s largest securities-fraud probe, with Singapore Exchange chief executive officer Loh Boon Chye making it his top priority. In that case, three companies suffered an unexplained free-fall that wiped out S$8bn ($5.9bn) during three trading days in October 2013, after the stocks had surged by as much as 1,000% over the preceding nine months. “It helps the image of Singapore as they clamp down on practices such as insider trading or market manipulation,” Bernard Aw, market strategist at IG Asia, said by phone on Friday. “To some extent, this will help restore individual investor confidence on the market, if this relates to trading privileged information then it’s unfair to the individual investors.”
Investigations are ongoing, the country’s central bank and market regulator said in a statement on the latest probe, without providing further details. In a separate statement, the Singapore Stock Exchange, or SGX, said “in the January to March quarter, we referred nine cases to MAS of which three were related to insider trading and six to market manipulation.” The MAS declined to say if the raids were linked to the SGX cases referred to it in the first quarter. “As a matter of policy, MAS does not comment on its supervisory dealings with specific financial institutions,” the central bank said in an e- mailed response to questions.
DBS Vickers Securities Singapore, Maybank Kim Eng Holdings, OCBC Securities and Phillip Securities were among at least four brokerages raided by the MAS and the CAD earlier in the week, the Singapore newspaper Business Times reported earlier Friday, citing unidentified market sources.
“It shows the firm, decisive action that Singapore’s regulators are willing to take on weeding out illegal market conduct,” said Robson Lee, a capital markets lawyer at Gibson Dunn & Crutcher in Singapore. “It’s a clear, consistent message that the regulators want to send. Yes, sentiment is down and we’ve not quite come out of the woods from the previous episode but this is for the longer haul to ensure the integrity of the Singapore market.” The newspaper said people were taken in for questioning, who were believed to be remisiers, referring to securities trading representatives who are usually paid on a commission basis.
The authorities also took the mobile phone and laptop of a remisier at OCBC Securities, according to a person with direct knowledge of the matter. An OCBC bank spokesman said later in an e-mail to Bloomberg that a remisier, who was not an employee, was assisting with investigations, and no OCBC Securities employees were involved.
DBS Vickers said in an e-mailed statement that “based on facts currently available, we believe that DBS Vickers is not under investigation.” Maybank Kim Eng said its securities unit itself was not the subject of the probe and it would render the fullest cooperation to the authorities. SGX shares fell 0.5% to S$7.76 at the Singapore close, extending Thursday’s 3.1% decline and posting their biggest two-day slump in more than two months.