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MAS, CAD to jointly investigate market misconduct

Decision to pursue civil or criminal action to be decided after probe is concluded
Wednesday, March 18, 2015 - 05:50
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Ties between the Singapore police and the nation's financial regulators are set to become closer, with a new framework to merge investigations of market misconduct.

Singapore

TIES between the Singapore police and the nation's financial regulators are set to become closer, with a new framework to merge investigations of market misconduct.

The Monetary Authority of Singapore (MAS) and the Singapore Police Force's Commercial Affairs Department (CAD) will jointly investigate market misconduct from now on, in an effort to streamline and strengthen enforcement, the two agencies announced on Tuesday.

MAS and CAD previously worked independently in their probes into insider trading and market manipulation, based on an initial assessment of the nature of the offence; MAS tackled cases likely to result in a civil penalty, and CAD, those likely to entail criminal prosecution.

Now, both agencies will investigate potential misconduct together right from the start. The decision on whether to pursue civil or criminal action will be decided after investigations are concluded.

The burden of proof for civil penalty actions is typically lower than for criminal charges, requiring the regulator to show wrongdoing only on a balance of probabilities. Criminal charges must be proven beyond reasonable doubt.

MAS and CAD will consolidate their investigative resources and expertise for such cases. MAS officers taking part in joint investigations will be gazetted as CAD officers, giving them the same criminal powers of investigation as officers from the police white-collar crime unit. No changes to the existing law are necessary, MAS said.

The Securities Investors Association of Singapore (SIAS) welcomed the change. Its president David Gerald said: "This, to me, is a good thing for the market because I would expect investigations to be expeditious and it strengthens the process of investigations. When there's coordination and collaboration, there'll be better resources for investigations."

Lawyer Wendell Wong of Drew & Napier said that the change should also improve consistency. He hoped that it would help in setting sanctions between the civil and criminal regimes. "There should be a calibrated approach in terms of appropriate sanctions or punishments."

The joint investigations bring CAD closer to another regulator of Singapore's financial markets. Singapore Exchange (SGX) had announced on Feb 27 that current CAD director Tan Boon Gin would become its chief regulatory officer in June.

Those moves came about 1.5 years after the October 2013 penny stock rout, when a crash in the prices of a number of stocks, including Asiasons Capital, Blumont Group and LionGold Corp, wiped out billions of dollars of market value.

CAD began an investigation into that event in April 2014; the probe is ongoing.

Asked about the status of the investigation, MAS referred to a November 2014 statement that MAS and the police were "working closely in the investigation, and committed to completing it expeditiously".