http://www.tremeritus.com/2014/02/23/gic-continues-to-use-officers-involved-in-insider-trading/
[h=2]GIC continues to use officers involved in insider trading[/h]
February 23rd, 2014 |
Author: Editorial
A reader has written in to let TRE know of a case where GIC officers caught for insider trading were allowed to continue to work in GIC.
The insider trading case involved 3 GIC staff in 2003: Lim Kee Chong, Teng Cheong Thye and Choo Yong Cheen. The case surfaced in 2004 and was reported by international media when the Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC) of Japan reported the matter to the central bank of Japan.
The Associated Press reported the incident on 21 Oct 2004 [Link]:
According to the 2004 statement from FSA website [Link], the 3 GIC staff did “insider trading involving Japanese securities market”. It said that the kind of insider trading committed is called “cross border transaction” which is a securities transaction in a Japanese securities market by a foreign resident.
FSA further said, “The enforcement action by MAS has come as a result of our request of investigation into and providing information of a suspicious case of insider trading, which was detected by the Securities and Exchange Surveillance Commission of Japan (SESC), based on the bilateral Memorandum of Understanding (MOU) with MAS on the sharing of information on securities matters.”
Excerpt of the statement has been screen captured by TRE and appears below:
The TRE reader wrote:
Choo Yong Cheen is part of the GIC Investment Groups (Special Investments). He is currently in-charge of direct investments in Asia as well as funds and co-investments in Asia and the emerging markets:
The TRE reader further added:
CFA Institute [Link], is a global association of investment professionals. The organization offers the Chartered Financial Analyst (CFA) designation, the Certificate in Investment Performance Measurement (CIPM) designation, as well as the Claritas Investment Certificate.
On its website, the CFA Institute has a section which lists individuals who, since 1 January 2000, are currently serving public disciplinary sanctions for violations of the CFA Institute Code of Ethics and Standards of Professional Conduct or have resigned their memberships while under investigation for industry-related misconduct.
Public sanctions for industry-related conduct may include the followings [Link]:
It’s not known if Lim voluntarily disclosed his past insider trading case to the CFA Institute in 2010 or the CFA Institute found out about it 7 years later.
It’s also not known if the MAS knew about the CFA Institute’s hearing of Lim Kee Chong case in 2010, 7 years after the insider trading incident.
The delay of 7 years to come to the attention of CFA Institute remains a mystery.
[h=2]GIC continues to use officers involved in insider trading[/h]
The insider trading case involved 3 GIC staff in 2003: Lim Kee Chong, Teng Cheong Thye and Choo Yong Cheen. The case surfaced in 2004 and was reported by international media when the Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC) of Japan reported the matter to the central bank of Japan.
The Associated Press reported the incident on 21 Oct 2004 [Link]:
Singapore’s central bank said Thursday it has fined three employees of the government’s secretive investment fund for insider trading involving shares of a Japanese financial company.
Lim Kee Chong, Teng Cheong Thye and Choo Yong Cheen were fined a total of 710,000 Singapore dollars (US$422,700; euro 346,000) for the offense, the Monetary Authority of Singapore said in a statement.
The employees of the Government of Singapore Investment Corp., or GIC, sold the shares of Sumitomo Mitsui Financial Group Inc. last year after obtaining confidential information that the company planned to issue new shares, the statement said.
When news of the issue was made public, investors sold the stock due to fears that the additional supply would reduce the value of Sumitomo Mitsui’s existing shares. By selling the shares before the announcement, the employees avoided a loss of S$710,000 for the GIC – the same amount they were fined.
Singapore’s Securities and Futures Act imposes fines of up to three times the profit – or loss avoided – from insider trading. The GIC wasn’t penalized and the employees will not face criminal charges, the statement said.
TRE was not able to find the said statement on MAS website anymore. However, we were able to find an old statement on FSA website. FSA is the Japanese government organization responsible for overseeing banking, securities and exchange, and insurance in order to ensure the stability of the financial system of Japan. The agency operates with a commissioner and reports to the Minister of Finance. It also oversees the Securities and Exchange Surveillance Commission (SESC) and, the Certified Public Accountants and Auditing Oversight Board.Lim Kee Chong, Teng Cheong Thye and Choo Yong Cheen were fined a total of 710,000 Singapore dollars (US$422,700; euro 346,000) for the offense, the Monetary Authority of Singapore said in a statement.
The employees of the Government of Singapore Investment Corp., or GIC, sold the shares of Sumitomo Mitsui Financial Group Inc. last year after obtaining confidential information that the company planned to issue new shares, the statement said.
When news of the issue was made public, investors sold the stock due to fears that the additional supply would reduce the value of Sumitomo Mitsui’s existing shares. By selling the shares before the announcement, the employees avoided a loss of S$710,000 for the GIC – the same amount they were fined.
Singapore’s Securities and Futures Act imposes fines of up to three times the profit – or loss avoided – from insider trading. The GIC wasn’t penalized and the employees will not face criminal charges, the statement said.
According to the 2004 statement from FSA website [Link], the 3 GIC staff did “insider trading involving Japanese securities market”. It said that the kind of insider trading committed is called “cross border transaction” which is a securities transaction in a Japanese securities market by a foreign resident.
FSA further said, “The enforcement action by MAS has come as a result of our request of investigation into and providing information of a suspicious case of insider trading, which was detected by the Securities and Exchange Surveillance Commission of Japan (SESC), based on the bilateral Memorandum of Understanding (MOU) with MAS on the sharing of information on securities matters.”
Excerpt of the statement has been screen captured by TRE and appears below:
The TRE reader wrote:
The leader, Mr Lim Kee Chong, settled the civil suit against him. Two others, Teng Cheong Thye and Choo Yong Cheen, were also found guilty in the civil suit then. They accepted the civil suit and were fined various amounts and were also suspended from work.
They remained in GIC. Teng left GIC in late 2012. Both Lim and Choo are Managing Directors of GIC now. In fact, Lim is the Group Deputy Chief Investment Officer.
A check by TRE on GIC website [Link] confirmed this. Indeed, Lim Kee Chong is now the Deputy Group Chief Investment Officer:They remained in GIC. Teng left GIC in late 2012. Both Lim and Choo are Managing Directors of GIC now. In fact, Lim is the Group Deputy Chief Investment Officer.
Choo Yong Cheen is part of the GIC Investment Groups (Special Investments). He is currently in-charge of direct investments in Asia as well as funds and co-investments in Asia and the emerging markets:
The TRE reader further added:
Based on the MAS’s Guidelines on Fit and Proper Criteria (revised on 7 August 2012), one of the factors that is relevant to the assessment of the honesty, integrity and reputation of a relevant person is in clause 13(i) of the Guidelines: has had any civil penalty enforcement action taken against it or him by MAS or any other regulatory authority under any law in any jurisdiction.
He then asked the following questions:
Have Lim and the other two been subjected to the same standards of test that I am told every financial industry practitioner is put through?
If not, why?
If so, does it mean they were wrongly punished by the 2003 civil penalty?
In fact, further checks by TRE revealed that Deputy Group Chief Investment Officer Lim Kee Chong’s name was in the industry-related sanction list of the US-based CFA Institute.If not, why?
If so, does it mean they were wrongly punished by the 2003 civil penalty?
CFA Institute [Link], is a global association of investment professionals. The organization offers the Chartered Financial Analyst (CFA) designation, the Certificate in Investment Performance Measurement (CIPM) designation, as well as the Claritas Investment Certificate.
On its website, the CFA Institute has a section which lists individuals who, since 1 January 2000, are currently serving public disciplinary sanctions for violations of the CFA Institute Code of Ethics and Standards of Professional Conduct or have resigned their memberships while under investigation for industry-related misconduct.
Public sanctions for industry-related conduct may include the followings [Link]:
- Censure
- Suspension from the CFA Program
- Suspension of membership
- Suspension of the right to use the CFA designation
- Permanent prohibition/suspension from the CFA Program
- Revocation of membership
- Revocation of the right to use the CFA designation
- Summary suspension
It’s not known if Lim voluntarily disclosed his past insider trading case to the CFA Institute in 2010 or the CFA Institute found out about it 7 years later.
It’s also not known if the MAS knew about the CFA Institute’s hearing of Lim Kee Chong case in 2010, 7 years after the insider trading incident.
The delay of 7 years to come to the attention of CFA Institute remains a mystery.
