Auston International Group Ltd v Public Prosecutor: Misleading Prospectus & Securities Act Violation

In Auston International Group Ltd v Public Prosecutor, the High Court of Singapore heard an appeal by Auston International Group Ltd against a $90,000 fine imposed by the District Court for violating s 253(1) of the Securities and Futures Act. The company's prospectus contained a false and misleading statement regarding its profit before taxation. The High Court, Lee Seiu Kin J, allowed the appeal, reducing the fine to $10,000, finding that a deterrent sentence was not warranted in this case.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeal allowed; fine reduced to $10,000.

1.3 Case Type

Regulatory

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Auston International Group Ltd was fined for a prospectus containing false information, violating the Securities and Futures Act.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Auston International Group LtdAppellantCorporationAppeal Allowed in PartPartialN Sreenivasan
Public ProsecutorRespondentGovernment AgencyLostLostLeong Wing Tuck

3. Judges

Judge NameTitleDelivered Judgment
Lee Seiu KinJudgeYes

4. Counsels

Counsel NameOrganization
N SreenivasanStraits Law Practice LLC
Leong Wing TuckAttorney-General's Chambers

4. Facts

  1. Auston International Group Ltd overstated its profit before taxation by $374,000 in its prospectus.
  2. The overstatement was due to the incorrect accounting treatment of university fees.
  3. The company's CEO, Yeo Poh Siah Ken, made the decision to disguise the expenses.
  4. Auston's board of directors allowed Yeo free rein of the company without proper oversight.
  5. Auston reported the irregularities to the Commercial Affairs Department.
  6. The company spent $139,975 on an investigation by Deloitte & Touche.
  7. The CEO and CFO were charged and dealt with for offences under the Penal Code and the SFA.

5. Formal Citations

  1. Auston International Group Ltd v Public Prosecutor, MA 38/2007, [2007] SGHC 219

6. Timeline

DateEvent
Auston International Pte Ltd incorporated in Singapore.
Auston International Pte Ltd changed its name to Auston International Group Ltd.
Auston made an invitation to the public to subscribe for shares, accompanied by a prospectus.
IPO for Auston took place.
IPO for Auston took place.
Auston listed on SESDAQ.
A legal representative acting for Auston lodged a report with the Commercial Affairs Department regarding irregularities in Auston’s accounts.
M/s Deloitte & Touche issued findings on the accounts of previous years.
The appellant company pleaded guilty in the District Court.
Judgment reserved.

7. Legal Issues

  1. False or Misleading Prospectus
    • Outcome: The court found that the company had published a prospectus containing a false and misleading statement.
    • Category: Substantive
    • Sub-Issues:
      • Overstatement of profit
      • Omission of expenses
  2. Manifestly Excessive Fine
    • Outcome: The court found that the initial fine of $90,000 was too high and reduced it to $10,000.
    • Category: Procedural

8. Remedies Sought

  1. Appeal against the quantum of the fine

9. Cause of Actions

  • Violation of s 253(1) of the Securities and Futures Act

10. Practice Areas

  • Commercial Litigation
  • Securities Regulation

11. Industries

  • Education
  • Financial Services

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Tesco Supermarkets Ltd v NattrassN/AYes[1971] 2 ALL ER 155N/ACited to determine which natural persons are to be treated as being the company for the purpose of acts done in the course of its business.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Securities and Futures Act (Cap 289, 2002 Rev Ed) s 253(1)Singapore
Securities and Futures Act (Cap 289, 2002 Rev Ed) s 253(4)(a)Singapore
Securities and Futures Act (Cap 289) s 255Singapore
Criminal Procedure Code (Cap 68, 1985 Rev Ed) s 178Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Prospectus
  • False or misleading statement
  • Overstatement of profit
  • Securities and Futures Act
  • Initial public offering
  • University fees
  • Academic cooperation fees
  • Due diligence
  • Deterrent sentence

15.2 Keywords

  • Securities
  • Prospectus
  • Misleading
  • Financial statements
  • Singapore
  • Appeal
  • Fine
  • Regulatory

16. Subjects

  • Securities Regulation
  • Corporate Law
  • Criminal Law

17. Areas of Law

  • Securities Law
  • Financial Markets Law
  • Regulatory Law