CMFAS RES 1A Market Conduct question: Yap to buy the company's shares ahead of a takeover announcement

CMFAS RES 1AMarket Conduct

Mr Tan, assistant to the CEO of an SGX-listed company, used trading accounts belonging to Mr Yap to buy the company's shares ahead of a takeover announcement and later to sell ahead of the withdrawal of the offer. Which of the following consequences followed? (a) A civil penalty on Mr Tan for insider trading under s.218. (b) A separate penalty on Mr Tan for employing a deceptive device under s.201, because the broker was misled into thinking the trades were for Mr Yap. (c) A penalty on Mr Yap for allowing his accounts to be used. (d) A term of imprisonment for Mr Tan.

A (a), (b), (c) and (d)
B (a), (b) and (c)
C (a) only
D (a) and (d)

Show the answer and explanation

Answer: B. (a), (b) and (c)

In the Mr Tan case (2014) MAS used the civil penalty route in s.232: a civil penalty for insider trading under s.218(2)(a) and (b), a further penalty for deceiving the broker through the use of a third party's account (s.201), and a penalty on the account holder who permitted the use. No criminal prosecution or imprisonment followed.

Common mistake

Using someone else's account adds a s.201 deceptive-device contravention on top of insider trading.

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