Following a joint investigation by the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD), MAS has imposed a civil penalty of $70,000 on Tay Joo Heng for insider trading in the shares of GS Holdings 43A Limited (GHL).
GHL announced, on Nov 19, 2019, that it had entered into a conditional sale and purchase agreement to sell its wholly owned subsidiary, GreatSolutions Pte Ltd (GreatSolutions), to GSG Capital Pte Ltd (GSG Capital) for a consideration of $2 million.
This led to a spike in trading of GHL shares, with 915,600 GHL shares changing hands the next trading day, representing a 58% increase from the counter’s average daily traded volume one month prior.
As the sole shareholder and director of GSG Capital, Tay was approached by GHL as a potential buyer of GreatSolutions on Oct 2, 2019.
Due to the loss-making status of GreatSolutions, Tay expected the market to react positively to the news and anticipated a rise in GHL’s share price. Over a period of 13 days between Oct 4 and Nov 18 that year, Tay purchased a total of 515,000 GHL shares while in possession of material non-public information relating to GHL’s intended sale of its subsidiary GreatSolutions.
Tay has since admitted to contravening the insider trading provision under section 219(2)(a) of the Securities and Futures Act (SFA) and has paid MAS the civil penalty without court action.
Section 219(2)(a) prohibits a person who is not connected to any corporation but is in possession of materially price-sensitive information, which would have a material effect on the price or value of securities, from subscribing for, purchasing or selling, or entering into an agreement to subscribe for, purchase or sell these securities.
Tay has also given a voluntary undertaking to step down from his position as company director and his involvement in the management of a company for a period of two years.
