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
Comments
R Sivanithy
27 May 2015
Maybe it’s only me, but I’m not entirely comfortable with YuuZoo posting a positive research report about itself on SGX, especially when it paid for the research in the first place.
On 21 May, the epayments firm released a press statement headlined “New Edison Investment Research Report on YuuZoo Sees Significant Upside on Share Price, Puts Fair Value At Up To S$1.83 In View Of New Signed Agreements”. Given that the stock was trading at around S$0.22 at the time, I’m sure that many people would have seen the headline figure of S$1.83 and jumped to buy. As a result, the stock gained 50 per cent in a week.
In reality the report did not carry a formal investment recommendation - perhaps understandable given that it was commissioned by YuuZoo - and S$1.83 is based on the company’s business evolving very quickly, ie under the most optimistic business conditions which may or may not pan out in the future, the shares could reach that price. I have no issue with the contents of the report (even though I think the headline of the press release is overly optimistic) and it is stated on the bottom of page 1 that YuuZoo is a client of Edison’s, so the relationship was disclosed.
What I am questioning is whether companies can now post bullish reports about themselves as SGX announcements and if so, then will this become the norm going forward. I don’t think any listing or disclosure rules have been broken, so YuuZoo’s actions are entirely above board. But what if SGX itself one day posts a “strong buy” issued by a big investment bank on SGX? Would the investing public frown upon it as a pratice not to be encouraged? I’m sure it would. How many times for example, have we seen a top blue chip like say Singtel, SIA or Keppel issue an SGX release drawing attention to a very positive - even if independent - research report? In my 23 years as a journalist I’d have to say “never’.
However, for argument’s sake assuming there are no objections to the practice, then if the report was paid for by the issuer, should the rules be tweaked to make sure this fact is stated in the press release?
When I spoke to a market player about whether the above is good practice or not, the response was that the local market is so dead and lifeless that anything which could inject some action into it should be welcomed. “Don’t over-regulate” was essentially the response, which also came with the plea not to highlight this as an issue since any subsequent clampdown can only be bad as it might kill off the speculative buying.
I can see where he’s coming from but I don’t agree - surely if there is an issue worth discussing, it’s my job to raise it. Imay have gotten it wrong entirely and the majority of players might thing there’s absolutely nothing wrong. However, if by my raising the issue more rules and lower trading are the outcome, then too bad. Turning a blind eye to something which needs to be addressed just so that the status quo can be maintained is in my opinion, downright wrong.
In this case, I think it’s an interesting precedent which YuuZoo has set - should companies be permitted to make an announcement of a positive investment report on themselves? Or should such reports be left to their own websites and not SGX?