On 26 May 2023, three persons were convicted and sentenced to fines ranging from $100,000 to $150,000 for insider trading offences under the Securities and Futures Act (“SFA”).
Shae Toh Hock, aged 62, was convicted for one count of an offence under Section 219(3)(a) of the SFA, for communicating non-public and material information (“Inside Information”) to his sister, Shae Hung Yee. The Inside Information concerned a proposed acquisition of DuluxGroup Limited (“DuluxGroup”) by Nippon Paint Holdings Co. Ltd (“Nippon Paint Holdings”). DuluxGroup was listed on the Australian Securities Exchange at that time.
Shae Hung Yee, aged 59, and her husband Siew Boon Liong, aged 62, were each convicted for one count of an offence under Section 219(2)(a) of the SFA read with Section 109 of the Penal Code, for purchasing shares of DuluxGroup while in possession of Inside Information received from Shae Toh Hock and before the proposed acquisition was announced.
The trio committed the insider trading offences in April 2019. Shae Toh Hock was a Senior Vice President of Corporate Planning and Development at a Nippon Paint Holdings subsidiary in Singapore, and his team was tasked to conduct a due diligence on DuluxGroup as part of the acquisition plan. By virtue of his role, Shae Toh Hock knew in advance that Nippon Paint Holdings would likely acquire DuluxGroup and would likely make an offer of around 30% premium over DuluxGroup’s existing share price.
On 7 April 2019, Shae Toh Hock told Shae Hung Yee and Siew Boon Liong about Nippon Paint Holdings’ intent to acquire DuluxGroup. Over the next few days, Shae Toh Hock further told his sister that Nippon Paint Holdings would likely offer a premium of around 30% over DuluxGroup’s prevailing share price.
Shae Hung Yee and Siew Boon Liong decided to purchase DuluxGroup shares after hearing about the likely proposed acquisition from Shae Toh Hock. The duo knew that the proposed acquisition had not been made known publicly then and that the proposed acquisition might have a material effect on the price of DuluxGroup’s shares once it has been made public. Pursuant to their agreement, Siew Boon Liong opened a new securities trading account to purchase Australian shares on 8 April 2019. The duo then jointly purchased 40,000 shares of DuluxGroup on 12 April 2019.
On 17 April 2019, Nippon Paint Holdings and DuluxGroup announced the proposed acquisition. On the day of the announcement, a total of 15.7 million DuluxGroup shares were traded. This represented an 865% increase from the average daily traded volume in the one-month preceding the announcement. Additionally, Dulux’s share price rose 27.1% from its previous day’s close.
Shae Hung Yee and Siew Boon Liong sold all 40,000 of their DuluxGroup shares between 17 April and 9 May 2019. In total, the duo made a profit of more than S$75,000.
Shae Toh Hock pleaded guilty to communicating non-public material information to another person in contravention of Section 219(3)(a) of the SFA. He was fined $100,000.
Shae Hung Yee and Siew Boon Liong pleaded guilty to purchasing shares of DuluxGroup while in possession of non-public material information in contravention of Section 219(2)(a) of the SFA read with Section 109 of the Penal Code. Shae Hung Yee and Siew Boon Liong were fined $150,000 each.
The trio’s convictions were a result of a joint investigation conducted by the Commercial Affairs Department of the Singapore Police Force and the Monetary Authority of Singapore, with assistance from the Australian Securities and Investments Commission. This investigation stemmed from the analysis of Suspicious Transaction Reports and showcases the usefulness of financial intelligence in detecting criminal activities in Singapore. Any knowledge or reasonable suspicion of criminal conduct should be reported to the authorities as soon as reasonably practicable.
SINGAPORE POLICE FORCE
26 May 2023 @ 4:00 PM