Singapore has a tough message for financiers running afoul of its rules.
“Why are people coming here? Because they trust our financial system,” said Peggy Pao, head of the enforcement department at the Monetary Authority of Singapore. “You want a welcoming industry for sure, but that doesn’t mean you go light.”
The financial watchdog’s focus on enforcement is crucial to the country’s ambition to be a trusted global financial hub where investors park trillions of dollars, the bulk from overseas. Singapore attracted a record $448 billion of new money in 2021, based on the latest available figures from the MAS.
The city-state’s reputation is also on the line, especially given the high-profile scandals that have hit investors with losses in recent years.
The number of announced enforcement actions ranging from a reprimand to criminal prosecution have risen steadily in recent years, reflecting the regulator’s increased focus and the city’s growing level of activity.
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Getting Tough | MAS penalties on financial misconduct
Pao, an ex-public prosecutor, is looking for experienced investigators and accountants to join her department as it beefs up efforts to detect and punish wrongdoing.
Singapore’s enforcement scene had several milestones last year, including the highest number of punishment meted out for financial misconduct. A mastermind behind the island’s largest stock manipulation was jailed for 36 years.
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The former chief executive of water treatment firm Hyflux was charged for breaching accounting rules after tens of thousands of retail investors were hit. Authorities also drew a line under a multiyear probe into commodity trader Noble Group Ltd. with a record fine. There has been criticism that the financial penalties meted out by Singapore authorities are paltry in comparison with the losses incurred. Pao said higher amounts in corporate malfeasance cases is a “consideration” when a large number of investors are impacted. Still, she added: “We do have to think about whether penalizing the company means doubly penalizing the shareholders.”
The MAS is looking into proposals such as an ombudsman, a market conduct tribunal as well as a procedure for class-action lawsuits to protect investors’ rights. The regulator is also “actively studying” investor compensation and wants to hold security issue managers and auditors accountable for disclosure breaches, Pao said.
“Disclosure is going to be an area of continuing priority for us,” she said.
The MAS centralized its enforcement functions under the unit which Pao now heads. The authority sped up the time it took to complete its reviews and investigations. Criminal cases now take nine months and civil penalty cases are concluded in 19 months, down from two years previously.
There’s no target to make it even shorter, Pao said. It is more important “to be fair, to be thorough, to be meticulous. If we have to sacrifice that to achieve certain timelines, it is not justice.”
