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 issue manager
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A criminal case against Citic Pacific directors who oversaw huge losses would be far harder for the authorities to pursue than civil action
Shirley Yam
13 September 2014
Former Citic Pacific chairman Larry Yung Chi-kin and the company’s then-directors are unlikely to face criminal prosecution for telling the market its finances were in good shape as it suffered a HK$15 billion trading loss in 2008.
That’s the unwritten message from the Securities and Futures Commission’s civil action against the princeling and his four former subordinates.
And that’s not sheer guess work, but laid out in the law.
The Secretary for Financial Services and the Treasury Chan Ka-keung told the Legislative Council in 2010 in regard to the Citic investigation that if a criminal prosecution was not to be pursued, the SFC would be advised on whether the case should be referred to a Market Misconduct Tribunal (MMT).
“The sequence is important since the Securities and Futures Ordinance makes clear that a person cannot be prosecuted for a criminal offence … at the same time as he is being subjected to civil proceedings for the same conduct before the MMT,” Chan said, talking about the so-called “double jeopardy” provision.
The decision by the SFC to bring Citic Pacific’s alleged distribution of “materially false or misleading information” before the tribunal is therefore tantamount to an announcement that the five men will not face criminal prosecution on the same matter.
Mind you, to begin the MMT proceeding, the SFC has to secure the consent of the Secretary for Justice. The only reason that the latter can say no is that he or she knows a criminal proceeding on the same matter is under way.
In short, Yung will not face jail.
The big question is why. Doesn’t the law say one should not provide misleading or false information to the regulators and market?
To the 4,500 investors who bought Citic Pacific shares before the massive loss was acknowledged, this is a fair question to ask, given the following facts:
On September 7, 2008, Citic became aware of the exposure arising from its bet on the Australian dollar.
On September 12, 2008, its circular on the acquisition of a car dealership said: “The directors are not aware of any adverse material change in the financial or trading position of the group since December 31, 2007.”
On October 20, 2008, the company issued a profit warning for the massive loss arising from the currency bets.
Cynics can easily point to Yung’s background as the son of late vice-president Rong Yiren. Politics or not is anybody’s guess. One thing for sure is that pursuit by the MMT is less demanding than pursuing a criminal case.
In a criminal prosecution, the regulator would have to prove that Yung and the four directors had authorised or issued the September 12 circular “knowing” it was false or misleading or were reckless in that regard.
Whereas, to convince the MMT, the regulator will only have to prove that they “negligently” issued or authorised the circular.
If the MMT is convinced that the five are liable for the misleading statement, then the regulator will have grounds to demand HK$1.9 billion compensation from them to pay off the 4,500 investors.
So after six years’ pursuit, the authorities have apparently settled on a financial penalty.
Not all regulators share that view, however. In 2004, a court in Singapore sent the chief executive of another state-backed enterprise to jail for a strikingly similar mistake.
Like Citic, Singapore-listed China Aviation Oil (Singapore) made a wrong bet. In 2004, its traders gambled that the price of oil would go down, but instead it went up. Like Citic, the oil company did not tell. It reported a US$550 million loss six months later after failing to secure a rescue from Beijing.
In making the ruling, the Singapore judge said appropriate sentences were “necessary to drive home the message that transgressions that adversely affect the integrity and reputation of … Singapore as a commercial city and financial centre will not be tolerated”.
Which speaks louder? Money or jail?