LawFlash

Singapore Joint Investigations Arrangement to Cover More Financial, Regulatory Offences

March 13, 2018

In a development that significantly broadens the scope of the Monetary Authority of Singapore and Commercial Affairs Department’s investigatory authority, the Joint Investigations Arrangement has been extended to cover offences under the Securities Futures Act and Financial Advisers Act. These institutions’ officers will now have police powers of search and seizure and powers to compel the production of documents when conducting investigations of such offences.

The Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) of the Singapore Police Force announced 13 March that they will extend the CAD-MAS Joint Investigations Arrangement (JIA) to cover all offences under the Securities Futures Act (SFA) and the Financial Advisers Act (FAA). Prior to this, the JIA only encompassed market misconduct offences under Part XII of the SFA, such as market manipulation and insider trading activities.

Under the JIA, which was launched in March 2015 following the October 2013 penny stock crash, the CAD and MAS consolidate their investigative resources and expertise and co-investigate financial crimes. Before the JIA was implemented, MAS and CAD conducted investigations of financial crimes independently, based on an initial assessment of whether the offence was likely to constitute a civil penalty or a criminal prosecution case, with the former falling under the auspices of the MAS, and the latter, the CAD. Under the JIA arrangement, the institutions jointly investigate matters and only determine whether a matter will be dealt with as a civil penalty or a criminal prosecution after the investigation is complete.

Since the launch of the JIA, three individuals have been convicted for various offences including defrauding providers of contract for differences, insider trading in the shares of Qualitas Medical Group and Leeden Limited, and false trading in the shares of Wilton Resources Corp. There are ongoing cases which involve the alleged manipulation of shares in other listed companies.

Notably, MAS officers taking part in joint investigations are gazetted as CAD officers and have the same criminal powers of investigation as CAD officers. By extending the JIA to include all offences under the SFA and FAA, CAD and MAS officers now have police powers of search and seizure and powers to compel the production of documents when conducting investigations of any offences under the SFA and FAA. This applies not only to the more significant market manipulation offences but also to regulatory offences such as a failure by a corporation to disclose a director or a substantial shareholders’ interest, and failure of a financial adviser to furnish information in relation to his or her appointment as an appointed representative for financial advisory services. In addition, MAS and CAD officers may access computer data, order financial institutions to monitor customer accounts, and compel the attendance of witnesses for examination.

Corporations and financial advisers in Singapore should take note of this development, which significantly broadens the scope of the authorities’ investigative powers where there is a suspected offence under the SFA or FAA. The extended JIA also highlights the authorities’ emphasis on ensuring swifter, more sophisticated, and more comprehensive probes into financial and regulatory offences, in line with the authorities’ approach to meting out more deterrent enforcement actions to protect Singapore’s capital markets.

CONTACTS

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Singapore
Bernard Lui
Daniel Chia
Annette Liu