MAS imposes civil penalty enforcement action for insider trading incident

The agency penalized Song Qing for purchasing 40,000 Bright World shares after reviewing the translation of draft legal documents regarding China Holdings’ voluntary conditional offer.

The Monetary Authority of Singapore (MAS) has taken civil penalty enforcement action against Mr Song Qing for contravening the insider trading provision under Section 218(2)(a) of the Securities and Futures Act (SFA).

Bright World Precision Machinery Ltd (Bright World), a company listed on the Singapore Exchange Securities Trading Ltd (SGX-ST), announced on 21 July 2008 that China Holdings Acquisition Corp (China Holdings) intended to make a voluntary conditional cash offer for all the issued ordinary shares of Bright World, at the price of $0.70 or $0.75 per share. After the announcement, Bright World’s share price closed at $0.665, an 80% increase over the preceding trading day’s closing price of $0.37, according to a MAS report. 

Messrs Shook Lin & Bok LLP was the legal adviser to Bright World’s majority shareholder for China Holdings’ voluntary conditional cash offer for Bright World shares. On 26 June 2008 and 8 July 2008, Mr Song, an employee with Messrs Shook Lin & Bok LLP, purchased a total of 40,000 Bright World shares when he was in possession of non-public price sensitive information concerning China Holdings’ voluntary conditional offer. Mr Song had obtained the information while reviewing the translation of draft legal documents regarding China Holdings’ voluntary conditional offer. As a result of his Bright World share purchases, Mr Song made a profit of about $1,000.

Mr Song has admitted to contravening Section 218(2)(a) of the SFA and has paid a civil penalty of $50,000 to MAS without court action. Mr Song has cooperated fully with MAS in the course of the investigations.