(July 11): Singapore’s main financial regulator said it’s just seen the first-ever convictions for front-running prosecuted as an insider-trading offense in the city-state, one the world’s most sophisticated financial hubs.
Leong Chee Wai, E Seck Peng Simon and Toh Chew Leong, who were charged with a total of 333 counts of insider trading offenses, were convicted and sentenced to 36 months, 30 months and 20 months imprisonment respectively, the Monetary Authority of Singapore said in a statement. Their front-running arrangement had yielded profits of $8.1 million over seven years, it said in a statement Wednesday.
The three “colluded to misuse confidential information for personal gain, thereby undermining market integrity,” Loo Siew Yee, assistant managing director for policy, payments and financial crime, said in the statement. “MAS will pursue insider-trading charges against individuals involved in front running in appropriate cases and ensure that those guilty of such misconduct are kept out of the industry.”
Front-running is the practice of buying or selling a security using advance knowledge of pending orders to wrongfully benefit from the trade.
Leong and Toh were senior equity dealers at First State Investments (Singapore), where they were asked to execute trading orders placed by the firm’s portfolio managers, according to the MAS statement. E. was a remisier at UOB Kay Hian, who colluded with Leong and Toh about First State Investments’ intended orders, it said.
As FSIS’ orders typically involved large quantities of shares, orders had a significant price impact on the market, and when the orders generated favourable movements, E. unwound his position by trading in the opposite direction, the MAS said. This led to insider-trading profits, according to the statement.
The offenses dated from 2007, MAS said.
