The Monetary Authority of Singapore (MAS) has imposed a civil penalty of S$120,000 on Dr Chua Han Boon Kenneth (“Dr Chua”) for insider trading in the shares of Singapore Medical Group Limited (“SMGL”), which was listed on the Singapore Exchange at the time.
2. On 13 September 2022, SMGL announced that it had received a voluntary conditional general offer (the “Offer”) by TLW Success Pte Ltd (the “Offeror”) to privatise SMGL. At the time, Dr Chua was a shareholder of SMGL and a doctor employed by one of SMGL’s subsidiary companies.
3. Prior to SMGL’s announcement of the Offer, Dr Chua was one of the few shareholders approached by the Offeror and informed of the privatisation plan for SMGL, as well as of the intention to expand SMGL’s operations. Dr Chua was also asked to sign an irrevocable undertaking in favour of the Offer. While in possession of this material information about the Offer that was not yet publicly available, Dr Chua purchased a total of 210,000 SMGL shares on 6 and 7 September 2022 at a cumulative cost of S$67,200.
4. Dr Chua admitted to contravening section 218(2)(a) of the Securities and Futures Act and has paid MAS the civil penalty without court action. Dr Chua has also given a voluntary undertaking not to be a company director or be involved in the management of a company for a period of two years.
5. This civil penalty action against Dr Chua was the result of a joint investigation conducted by the Commercial Affairs Department (“CAD”) and MAS. The investigation was initiated following a referral from Singapore Exchange Regulation Private Limited.
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Additional information
(A) The civil penalty regime
A civil penalty action is not a criminal action and does not attract criminal sanctions. The civil penalty regime, designed to complement criminal sanctions and provide a nuanced approach to combat market misconduct, became operational at the beginning of 2004.Under section 232 of the SFA, MAS may enter into an agreement with any person for that person to pay, with or without admission of liability, a civil penalty for contravening any provision of Part 12 of the SFA. The civil penalty may be up to three times the amount of the profit gained or loss avoided by that person as a result of the contravention, subject to a minimum of $50,000 (if the person is not a corporation) or $100,000 (if the person is a corporation).
(B) Insider Trading under Section 218(2)(a) of the SFA
Section 218(2)(a) of the SFA prohibits a person who is in possession of materially price-sensitive information concerning a corporation (to which he is connected), which he knows is materially price-sensitive and not generally available, from (whether as principal or agent) subscribing for, purchasing, selling, or entering into an agreement to subscribe for, purchase or sell those securities of that corporation.
