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1. Contents of the SESC’s Recommendation
Pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency (“FSA”), on December 2, 2013, the Securities and Exchange Surveillance Commission made a recommendation to the Prime Minister and the Commissioner of the FSA that an administrative monetary penalty payment order be issued in regard to an insider trading by MAM PTE. LTD. (“MAM”). This recommendation is based on the findings of the investigation into the insider trading, whereby the following violations of laws and ordinances were identified.
2. Summary of the Findings regarding Violations of the Laws and Ordinances
MAM is a private limited company incorporated under the Companies Act of the Republic of Singapore. MAM was empowered to make investment management decision on the assets of a Cayman domiciled unit trust, Ubiquitous Master Series Trust Class G Fund, based on the discretionary investment management agreement with the trustee of the fund. X and Y, fund managers at MAM, were in charge of investment management of the assets of the fund.
On July 27, 2010, X and Y were tipped by an employee A of a securities company material information that the executive decision-making body of Nippon Sheet Glass Co., Ltd. (“NSG”) made a decision to launch a follow-on public offering of its shares, which at first another employee B and other employees of the securities company learnt through the negotiation of the underwriting agreement, and which later A learnt in the course of A’s duties. From July 27 to August 24, 2010, prior to the publication of the material information on August 24, 2010, X and Y sold a total of 3,478,000 shares of NSG for 751,568,206 yen based on the discretionary investment management agreement. Among the sales, for the accounts of executive officers and other members of MAM (“Officers”), X and Y traded in 7.47 percent and 6.22 percent thereof, which were equivalent to the contribution ratio of Officers to the fund as of July and August 2010 respectively.
It was concluded that the conduct of MAM above was “a person has conducted, on his/her own accounts, Purchase, Sale and others, set forth in Article 166(1) in violation of the provisions of the Article(1) or (3)” as stipulated under Article 175(1) of the Financial Instruments and Exchange Act (“FIEA”).
3. Calculation of the Amount of the Administrative Monetary Penalty
The amount of the administrative monetary penalty applicable to the violation above pursuant to the FIEA is 8,040,000 yen.
Details of the calculation are presented in the Attachment.
4. Others
This matter was reported to the SESC by the securities company mentioned in Section 2 above as it was found in the course of its voluntary examination. The securities company has thereafter continued to cooperate with the SESC in the investigation.
Also, we appreciate the assistance of the Monetary Authority of Singapore in this matter.
Attachment
- Method of Calculation of the Amount of the Administrative Monetary Penalty
(1) Pursuant to Article 175(1)(i) of the FIEA, for the case of Sale on his/her account in violation of the provisions of Article 166(3), the amount of the administrative monetary penalty shall be calculated as follows:
(The price of the sales) x (Number of the shares sold)
- (The lowest price of shares during the two weeks after the publication of material information) x (Number of the shares sold)
In this case, the lowest price of NSG shares during the two-week period following the publication of the material information was 181 yen per share on August 27, 2010.
Also, in this case, pursuant to Article 175(1)(i) and (10)(ii) of the FIEA, and Article 1-23(2)(iii) of the Cabinet Office Ordinance on Administrative Monetary Penalty Provided for in Chapter VI-II of the FIEA, the amount of the administrative monetary penalty shall be calculated by deeming, out of the transactions which MAM conducted as investment management of the assets of the fund based on the discretionary investment management agreement, the contribution ratio of Officers of MAM to the fund (7.47 % as of July 2010 and 6.22 % as of August 2010 respectively) as MAM itself conducted sales on its own account.
Therefore, the amount of the administrative monetary penalty in this case shall be calculated as follows:
The amount concerning the sales during July 2010
(217,250,010 yen - 181 yen x 1,000,000 shares) x 7.47% = 2,707,875 yen
The amount concerning the sales during August 2010
(534,318,196 yen - 181 yen x 2,478,000 shares) x 6.22% = 5,336,772 yen
2,707,875 yen + 5,336,772 yen = 8,044,647 yen
(2) Pursuant to the provisions of Article 176(2) of the FIEA, the fraction less than ten thousand yen in the amount calculated (1) above shall be rounded down.
