MAS wins $2.97m judgment against insider trader

Civil penalty meted out.

The Monetary Authority of Singapore (MAS) commenced civil penalty court action against Mr Norman Phua Chun Han and has been awarded a default judgment of $2,965,414.75 against Mr Phua, comprising a civil penalty amount of $2,865,414.75, for insider trading under Section 218(2)(a) and/or Section 218(2)(b) of the Securities and Futures Act (SFA), and $100,000, for the employment of manipulative and deceptive devices in connection with the purchase and sale of securities under Section 201(b) of the SFA.

On 18 February 2008, OCBC Bank Ltd announced that Asia Pacific Links Ltd (APL) intended to make a voluntary conditional cash offer for all the issued ordinary shares of Jade Technologies Holdings Ltd (Jade) at 22.5 cents per share and that APL, together with Mr Anthony Soh Guan Cheow, then the Chief Executive of Jade held approximately 46.54% Jade shares (Takeover Announcement). After the release of the Takeover Announcement, the shares of Jade closed at 22 cents, 12.8% above the last traded price prior to the announcement. On 5 April 2008, Jade announced that APL had written to the Securities Industries Council for consent to withdraw the takeover offer and that the offer was withdrawn with immediate effect (Withdrawal Announcement). After the release of the Withdrawal Announcement, the shares of Jade closed at 6.5 cents, a 70% decline from the last traded price prior to the announcement.

Between November 2007 and April 2008, Mr Phua was the assistant to Mr Anthony Soh. While in possession of non-public and materially price-sensitive information concerning the proposed takeover of Jade, Mr Phua used securities trading accounts maintained by Mr Ng Yu Jin with OCBC Securities Pte Ltd (OSPL) on 31 January, 5 February and 13 February 2008 to purchase a total of 2,650,000 shares of Jade, for his own benefit. Mr Phua made a profit of $50,160/90 from these trades. Subsequently, while in possession of non-public and materially price-sensitive information concerning the withdrawal of the offer, Mr Phua used Mr Ng’s securities trading accounts maintained with OSPL on 31 March and 1 April 2008 to sell a total of 7,071,000 shares of Jade, for his own benefit. Mr Phua avoided a loss of approximately $1,096,005 from these trades. By using Mr Ng’s trading accounts held with OSPL to trade in the shares of Jade, Mr Phua had also deceived OSPL into believing that the accounts were opened and operated for the benefit of Mr Ng, in contravention of Section 201(b) of the SFA.

Mr Ng has separately admitted to contravening Section 201(b) of the SFA and paid a civil penalty of $50,000 to MAS without court action. The Attorney-General’s Chambers represented MAS in this action.