TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issu...
Comments
R Sivanithy
19 March 2013
Some six weeks ago, this column warned of the strong likelihood that with the fever in penny stock punting threatening to boil over dangerously, local broking houses faced with rising credit risks or over-exposure to a huge speculative bubble would surely act to protect themselves by imposing trading curbs on many of the stocks involved (Broker-imposed trading curbs - how to manage?, BT Hock Lock Siew, Feb 7).
This has now occurred - over the past few days, at least one large broker is said to have slapped limits on trading on the entire penny sector. Precise details are not known but it is thought that clients' exposure to each non-marginable stock is now limited to $50-100,000 depending on trading limits, and $300,000 in total.
Whatever the specifics, the effect has been painful - segment leader Rowsley Holdings, for example, has crashed from 51 cents just over a week ago to 39.5 cents now - a loss of 23 per cent that is bound to hurt those caught at the top when volume was much larger than now. Similarly, many other low-priced issues like SingHaiyi and WE Holdings that had been speculatively ramped up in the recent penny push have also seen their shares tumble in recent days, either as a direct consequence of trading restrictions or because of sympathetic selling from curbs on other stocks.
The point stressed in that earlier column was that while it is fine for houses to look after their own interests, the announcement of trading curbs has to be better managed as it is a material, market-moving development that could in theory benefit parties who had advance knowledge of their introduction.
We wrote then: "Since trading curbs have the potential to influence sentiment and affect many stocks simultaneously, it would ... be a good idea to figure out how best to handle such announcements. They are, after all, as material as company announcements but are thus far unregulated."
As it stands now, houses are free to slap curbs on trading whenever they see fit, and the announcement of such measures often in the middle of trading tends to catch the market by surprise, leading to panic selling and widespread speculation as to what these curbs are and which stocks might be affected.
The market's frontline regulator, the Singapore Exchange (SGX), must therefore take the initiative and examine ways of levelling the playing field in such instances.
Possibly the best way to accomplish this is for houses contemplating curbs to be required to first inform SGX of their intention to introduce such measures. Once this is done, the information can be disseminated to the public only after trading has ended for that day either via SMS notification to clients or postings on SGX's and the broker's websites, or both.
Announcements have to be clear and concise, and must include details of exactly what measures are to be imposed and which stocks are involved. There should be no room for ambiguity, and at the same time, there should be an estimate of the duration for which the restrictions are to remain in place.
In short, the means of communicating curbs must ensure as far as possible that everyone receives notification at the same time and that no parties are in a position to profit unfairly from advance knowledge.