Public Prosecutor v Cheong Hock Lai: Late Trading, Securities Industry Act, and Deterrent Sentencing
In Public Prosecutor v Cheong Hock Lai, the High Court of Singapore heard an appeal by the Public Prosecutor against the sentences imposed on Cheong Hock Lai, Low Li Meng, and Chow Foon Yuong for engaging in late trading, a practice that deceived MIL Corporate Services (Singapore) Ltd, in violation of s 102(b) of the Securities Industry Act. The District Judge had sentenced the respondents to fines. Yong Pung How CJ dismissed the Prosecution’s appeal, finding that the fines were not manifestly inadequate and were sufficient to achieve both specific and general deterrence.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal dismissed.
1.3 Case Type
Criminal
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal against sentence for late trading under the Securities Industry Act. The court considered deterrent sentencing and market misconduct.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Public Prosecutor | Appellant | Government Agency | Appeal dismissed | Lost | James Lee of Deputy Public Prosecutor |
| Cheong Hock Lai | Respondent | Individual | Fined $100,000 | Partial | |
| Low Li Meng | Respondent | Individual | Fined $50,000 | Partial | |
| Chow Foon Yuong | Respondent | Individual | Fined $30,000 | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Yong Pung How | Chief Justice | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| James Lee | Deputy Public Prosecutor |
| Subhas Anandan | Harry Elias Partnership |
| Howard Cheam Heng Haw | Rajah and Tann |
4. Facts
- Respondents pleaded guilty to engaging in a practice that operated as a deceit upon MIL Corporate Services.
- Respondents were employees of Alliance Capital Management (Singapore) Ltd.
- Respondents backdated applications to purchase units in feeder funds.
- Backdating allowed respondents to determine the movement of the feeder funds with accuracy.
- Respondents profited through late trading.
- Respondents made full restitution before their trial commenced.
5. Formal Citations
- Public Prosecutor v Cheong Hock Lai, MA 27/2004, MA 28/2004, MA 29/2004, [2004] SGHC 122
6. Timeline
| Date | Event |
|---|---|
| Respondents traded in feeder funds between July and October. | |
| Respondents traded in feeder funds between July and October. | |
| New York Attorney-General instituted action against Canary Capital Partners. | |
| The Business Times reported MAS actions to prevent late trading. | |
| Judgment delivered. |
7. Legal Issues
- Late Trading
- Outcome: The court upheld the fines imposed for late trading, finding them sufficient for deterrence.
- Category: Substantive
- Deterrent Sentencing
- Outcome: The court held that a deterrent sentence need not always take the form of a custodial term and that the fines imposed were sufficient for deterrence.
- Category: Procedural
- Market Misconduct
- Outcome: The court considered precedents in other market misconduct cases but distinguished them from the present case, as the respondents traded on their own accounts.
- Category: Substantive
8. Remedies Sought
- Custodial Sentence
- Fines
9. Cause of Actions
- Violation of s 102(b) of the Securities Industry Act
- Deceit
10. Practice Areas
- Criminal Law
- Securities Regulation
11. Industries
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Tan Koon Swan v PP | High Court | Yes | [1986] SLR 126 | Singapore | Cited for the principle that an appellate court may only interfere with the sentence meted out by the trial judge under specific circumstances. |
| Ong Ah Tiong v PP | High Court | Yes | [2004] 1 SLR 587 | Singapore | Cited for the principle that an appellate court may only interfere with the sentence meted out by the trial judge under specific circumstances. |
| Peh Bin Chat v PP | High Court | No | Magistrate’s Appeal No 15 of 1998 | Singapore | Cited to distinguish the present case from one involving unauthorized trading on another's account, where a custodial sentence was deemed appropriate. |
| Syn Yong Sing David v PP | High Court | Yes | Magistrate’s Appeal No 266 of 1998 | Singapore | Cited as an example of a case where a custodial sentence was imposed for offences under s 102(b) of the SIA. |
| Teo Kian Leong v PP | High Court | Yes | [2002] 1 SLR 147 | Singapore | Cited as an example of a case where a custodial sentence was imposed for offences under s 102(b) of the SIA, involving abuse of trust and confidence. |
| Shapy Khan s/o Sher Khan v PP | High Court | Yes | [2003] 2 SLR 433 | Singapore | Cited as an example of a case where a custodial sentence was imposed for offences under s 102(b) of the SIA, involving unauthorized trading. |
| PP v Kwek Swee Heng | District Court | No | District Arrest Cases Nos 28926, 3045 and 3046 of 2003 | Singapore | Cited as a market rigging case where a fine was imposed, and distinguished from the present case. |
| PP v Gwee Yow Pin | District Court | No | District Arrest Case No 1738 of 2001 | Singapore | Cited as a market rigging case where imprisonment was imposed, and distinguished from the present case. |
| Chia Kah Boon v PP | High Court | Yes | [1999] 4 SLR 72 | Singapore | Cited for the principle that a deterrent sentence may take the form of a fine if it is high enough to have a deterrent effect. |
| Rupchand Bhojwani Sunil v PP | High Court | No | [2004] 1 SLR 596 | Singapore | Cited by the Prosecution to argue that only a custodial sentence was appropriate to achieve general deterrence, but distinguished by the court. |
| Lim Choon Kang v PP | High Court | Yes | [1993] 3 SLR 927 | Singapore | Cited as the genesis of the passage in Rupchand, regarding the imposition of custodial sentences for offences on a considerable scale. |
| Chua Kim Leng Timothy v PP | High Court | No | [2004] SGHC 74 | Singapore | Cited as a case where Rupchand was applied, involving an elaborate scam. |
| Lim Teck Chye v PP | High Court | No | [2004] SGHC 72 | Singapore | Cited as a case where Rupchand was applied, involving an elaborate scam. |
| State of New York v Canary Capital Partners | New York Supreme Court | No | State of New York v Canary Capital Partners, LLC | United States | Cited as an example of how late trading is dealt with in the United States, by way of a civil penalty action. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Securities Industry Act (Cap 289, 1985 Rev Ed) s 102(b) | Singapore |
| Securities and Futures Act (Cap 289, 2002 Rev Ed) s 201(b) | Singapore |
| Securities Industry Act s 104 | Singapore |
| Penal Code (Cap 224, 1985 Rev Ed) s 409 | Singapore |
| Criminal Procedure Code (Cap 68, 1985 Rev Ed) s 11(3) | Singapore |
| Criminal Procedure Code s 117(4) | Singapore |
| Criminal Procedure Code s 11(7) | Singapore |
| Prevention of Corruption Act (Cap 241, 1993 Rev Ed) s 6(b) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Late Trading
- Feeder Funds
- Unit Trusts
- Securities Industry Act
- Deterrent Sentence
- Market Misconduct
- Backdating
- Net Asset Value
- Operating Memorandum
15.2 Keywords
- Late Trading
- Securities Industry Act
- Market Misconduct
- Deterrent Sentencing
- Singapore Law
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Market Misconduct | 95 |
| Late Trading | 90 |
| Securities Fraud | 85 |
| Sentencing | 70 |
| Criminal Procedure | 60 |
| Company Law | 40 |
| Litigation | 30 |
16. Subjects
- Securities Regulation
- Criminal Law
- Financial Law