By Mak Yuen Teen
In the report “SIAS calls on Hyflux board to step aside after criminal probe brings credibility into question” on CNA yesterday, June 3 (https://www.channelnewsasia.com/news/business/hyflux-criminal-probe-sias-calls-on-board-to-step-aside-12800426), I made a comment about the possibility of civil liability action by the Monetary Authority of Singapore (MAS) on behalf of investors. This is incorrect. Civil liability in the SFA under Part XII Market Conduct is provided for in section 234 and there is no provision for MAS to sue on behalf of investors.
I had confused the power of MAS to take civil liability actions here with those in other countries – Australia, Hong Kong and UK in particular. In these countries, the securities regulator has the standing to obtain compensation on behalf of investors. However, this is not the case in Singapore. In Hong Kong, this is provided for in the Securities and Futures Ordinance (the equivalent of the SFA). Here’s an article in Hong Kong about this: https://www.twobirds.com/en/news/articles/2018/hong-kong/sfc-obtained-statutory-relief-for-investors-in-relation-to-a-listed-companys-misconduct. As we can see, the HK SFC has used this power.
In Malaysia, the Capital Markets and Services Act (CMSA) provides for civil liability and civil penalty actions. Civil liability actions can be taken by investors. What is interesting is that the CMSA explicitly provides for civil penalties recovered by the Securities Commission to compensate investors, after the Commission has recovered the costs of the investigation and proceedings. This is provided by sections 200 and 211 (the latter for derivatives-related offences). Here’s an example where the Securities Commission has taken action in relation to an investment scam and recovered RM30 million which was to be used to compensate investors (https://www.sc.com.my/regulation/regulatory-faqs/swisscash-investment-scam-settlement-faqs)
So, I am sorry if I gave Hyflux and other investors the wrong impression and false hope. However, perhaps we ought to now ask: Why do these provisions not exist here, when they exist in these other countries? How important do our authorities really feel about investor protection? Why shouldn’t the SFA empower MAS to take civil liability actions on behalf of investors and/or to use civil penalties recovered to compensate investors?
Also, on the calls for the Hyflux board to step aside, here are some reports from last year where SIAS has called for Olivia Lum to step down:
https://www.businesstimes.com.sg/companies-markets/olivia-lum-should-give-up-role-as-hyflux-chair-during-restructuring-says-sias
https://www.channelnewsasia.com/news/business/hyflux-gets-letter-of-intent-for-possible-s-400m-injection-11477756
Here’s an article I posted April last year where I called on the entire board to step down. I think it’s way overdue.
