HK Lessons for enhancement of SGX enforcement powers

ON SEPT 17, 2014, the Singapore Exchange (SGX) issued a consultation paper with details of proposed measures and rule amendments to reinforce the SGX listings and enforcement framework. This was a follow-up to the joint consultation paper issued by the Monetary Authority of Singapore (MAS) and SGX in February 2014 on the review of the securities market structure and practices, including the listings and enforcement framework.

Currently, the range of enforcement powers available to SGX against issuers and their directors and management include, among other actions, the issuing of letters of advice, private warning letters, and public reprimands. SGX believes that "the current range of enforcement powers is inadequate in cases where the issuance of warning letters or reprimands is not severe enough, while the removal of an issuer from the Official List is too harsh". SGX is therefore seeking the power to impose "a greater range of sanctions, which are commensurate with the severity of the breach".

Even though SGX already has the power to issue public reprimands, it has used it only sparingly, based on regulatory actions published on the SGX website and newspaper reports. There were only eight cases of public reprimand of issuers or directors between 2001 and 2009, mostly for poor disclosures. The only directors who were reprimanded during that period were the late tycoon Khoo Teck Puat's two daughters, for failing to disclose their father's stake in several companies in which they were directors. That was in July 2005, after the court had already fined them for those offences and they had voluntarily undertaken to not take up any directorship in listed companies for five years. In that case, the public reprimand was arguably symbolic.