IN the first "front running" case being prosecuted for insider trading here, the Monetary Authority of Singapore (MAS) slapped more than 300 charges on two dealers from First State Investments Singapore (FSI) and a remisier with UOB Kay Hian for alleged offences involving counters listed in Singapore and abroad.
The charges mark the second MAS-led criminal prosecution since the joint-investigation regime by the regulator and the Commercial Affairs Department was launched in March last year to strengthen enforcement against market misconduct.
Corporate lawyer Robson Lee of Gibson, Dunn & Crutcher, describing this as a landmark case, said it will give Singapore courts the chance to decide whether the practice of front running is an insider-trading offence under the Securities and Futures Act.
Front running is the practice of a stockbroker trading a security in his own account by taking advantage of advance knowledge of pending orders from other parties.
FSI dealers Leong Chee Wai and Toh Chew Leong and UOB Kay Hian remisier E Seck Peng Simon were charged with 115, 111 and 107 offences respectively under the Securities and Futures Act.
If found guilty, they may be fined up to S$250,000 and/or jailed up to seven years.
Based on the charge sheets, the alleged offences were committed on 49 Singapore-listed counters including Allgreen Properties, CapitaLand, City Developments Ltd, DBS Group and Keppel Corp; another 51 counters listed abroad (including in Australia, Taiwan, Malaysia and Hong Kong) were also involved.
Under the first charge, Leong, 47, was accused of possessing price-sensitive inside information on FSI's intended trades and procuring Simon to purchase 548,000 and short sell 290,000 Allgreen Properties shares through Simon's personal trading account in UOB Kay Hian.
This happened between July 4, 2007 and Feb 21, 2008, before the fund manager (FSI) had completed its intended order.
Allgreen Properties is the Singapore property arm of tycoon Robert Kuok; it was listed on the Singapore Exchange in 1999 and taken private in 2011.
In another charge, Leong is alleged to have possessed inside information on FSI's intended trades in Allgreen Properties' shares and conspired with Toh to procure Simon to purchase 743,000 and short sell 2.23 million shares in the property counter through Simon's trading account between Aug 28, 2008 and Aug 17, 2009. Bail amounts were fixed at S$300,000 each for Leong and Simon and S$250,000 for Toh.
Mr Lee of Gibson, Dunn & Crutcher said: "There has been considerable public debate in other financial markets, such as in Wall Street, whether front running, while unethical, is illegal."
Amendment note: In an earlier version of the story, the name of the law firm was misspelled as Gibsun, Dunn & Crutcher. It has since been corrected.