MAS v Lew Chee Fai Kevin: Insider Trading, Securities and Futures Act, Material Non-Public Information

In Monetary Authority of Singapore v Lew Chee Fai Kevin, the High Court of Singapore ruled in favor of the Monetary Authority of Singapore (MAS), finding Kevin Lew Chee Fai, a former senior employee of WBL Corporation Limited, liable for insider trading under the Securities and Futures Act. The court determined that Lew possessed material non-public information regarding WBL's impending losses and an impairment charge on Wearnes Precision (Thailand) Limited (WPT), and that he sold his WBL shares based on this information. The court found that MAS had proven the elements of insider trading under s 218 of the SFA against Lew.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The High Court found Kevin Lew Chee Fai liable for insider trading under the Securities and Futures Act, for selling WBL shares based on material non-public information.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Monetary Authority of SingaporePlaintiffGovernment AgencyJudgment for PlaintiffWon
Lew Chee Fai KevinDefendantIndividualClaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Lai Siu ChiuJudgeYes

4. Counsels

Counsel NameOrganization
Cavinder BullDrew & Napier LLC
Gerui LimDrew & Napier LLC
Yarni LoiDrew & Napier LLC
Thio Shen YiTSMP Law Corporation
Charmaine KongTSMP Law Corporation
Leow Yuan An Clara VivienTSMP Law Corporation

4. Facts

  1. Lew was a senior employee of WBL Corporation Limited.
  2. Lew sold 90,000 WBL shares on 4 July 2007.
  3. Lew attended a GMC Meeting on 2 July 2007 where WBL's financial forecasts were discussed.
  4. WBL was forecasting a loss for Q3 FY 2007.
  5. WBL needed to take a full impairment for WPT in Q3 FY 2007.
  6. Swee Hong advised Lew that the information discussed at the GMC Meeting was price-sensitive.
  7. WBL issued a profit warning on 17 July 2007.
  8. WBL announced an attributable loss for Q3 FY07, including an impairment charge on WPT.

5. Formal Citations

  1. Monetary Authority of Singapore v Lew Chee Fai Kevin, Suit No 71 of 2009, [2010] SGHC 166

6. Timeline

DateEvent
WBL announced a net attributable profit for Q1 FY 2006.
WBL announced a net attributable profit for the first half of FY 2006.
WBL announced a net attributable profit in the third quarter of FY2006.
Audit Committee meeting was held to discuss WPT’s performance.
WBL announced a net attributable profit for all of FY06.
Audit Committee meeting was held to discuss WPT’s performance.
WBL announced a net attributable profit for the first quarter of FY 2007.
Audit Committee meeting was held to discuss WPT’s performance.
WBL announced a net attributable profit for the second quarter of FY 2007.
Financial Group Management Council Meeting was held.
Lew sold 90,000 WBL shares.
Lew informed Swee Hong about the sale of his WBL shares.
Swee Hong responded to Lew stating that his actions might be construed as insider trading.
M-Flex announced that it had suffered an unanticipated decline in revenue for Q3 FY07.
WBL released M-Flex's announcement on the SGX website.
MFS issued an announcement to warn that it was expecting a net loss in Q3 FY07.
WBL issued a profit warning.
Lew resigned from WBL with immediate effect.
M-Flex announced a net loss of US$6.7m.
WBL announced that it suffered an attributable loss for Q3 FY07.
Suit No 71 of 2009 was commenced.
Judgment reserved.
The appeal to this decision in Civil Appeal No 123 of 2010 was dismissed by the Court of Appeal.

7. Legal Issues

  1. Insider Trading
    • Outcome: The court found that Lew possessed inside information, that the information was not generally available, and that it would have a material effect on the price of WBL shares. The court ruled against Lew.
    • Category: Substantive
    • Sub-Issues:
      • Possession of inside information
      • Information not generally available
      • Material effect on price of securities
      • Knowledge of non-availability and material effect
    • Related Cases:
      • [2012] SGCA 12
      • [2001] NSWCCA 191
      • 463 US 646 (1983)
      • [2000] NSWCCA 503
      • [2007] FCA 963
      • [2004] NSWCCA 7
      • 426 US 438
      • [2009] WASCA 62
      • 485 US 224
      • 525 F Supp 2d 72
      • [2006] NSWCCA 373

8. Remedies Sought

  1. Civil Penalty

9. Cause of Actions

  • Insider Trading
  • Contravention of s 218 of the Securities and Futures Act

10. Practice Areas

  • Commercial Litigation
  • Regulatory Law

11. Industries

  • Finance
  • Manufacturing

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Monetary Authority of Singapore v Lew Chee Fai KevinCourt of AppealYes[2012] SGCA 12SingaporeThe Court of Appeal dismissed the appeal to this decision.
R v FirnsNew South Wales Criminal Court of AppealYes[2001] NSWCCA 191AustraliaDiscusses the interpretation of 'generally available information' in the context of insider trading.
Dirks v Securities Exchange CommissionUS Supreme CourtYes463 US 646 (1983)United StatesDiscusses the role of market analysts and the need to preserve a healthy market.
R v HannesNew South Wales Court of Criminal AppealYes[2000] NSWCCA 503AustraliaDeals with the type of information considered 'not generally available' and the cumulative effects of separate elements of information.
Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4)Federal Court of AustraliaYes[2007] FCA 963AustraliaDiscusses whether information would have had a material effect at the time of the alleged insider trade.
R v RivkinNew South Wales Court of Criminal AppealYes[2004] NSWCCA 7AustraliaDeals with the materiality of information and the source of the information.
TSC Industries Inc v Northway IncUS Supreme CourtYes426 US 438United StatesDefines the materiality threshold for information in securities cases.
Jubilee Mines NL v RileyCourt of Appeal of Western AustraliaYes[2009] WASCA 62AustraliaDiscusses the materiality of information and its effect on share price.
Basic Inc v LevisonUS Supreme CourtYes485 US 224United StatesAdopted the ruling in TSC in relation to Rule 10b-5 in the context of insider trading.
United States of America v Kevin HeronUS District Court for Eastern District of PennsylvaniaYes525 F Supp 2d 72United StatesObservations of the US District Court for Eastern District of Pennsylvania in United States of America v Kevin Heron 525 F Supp 2d 72
Hannes v DPP (Cth) (No 2)New South Wales Court of Criminal AppealYes[2006] NSWCCA 373AustraliaFurther, the probative value of such evidence will undoubtedly vary from case to case and will depend in part on which element or elements of the charge the evidence may support.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Securities and Futures Act (Cap 289, 2006 Rev Ed)Singapore
s 218 of the Securities and Futures ActSingapore
s 232(2) of the Securities and Futures ActSingapore
s 214 of the Securities and Futures ActSingapore
s 215 of the Securities and Futures ActSingapore
s 216 of the Securities and Futures ActSingapore
s 9A of the Interpretation Act (Cap 1, 1999 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Insider trading
  • Material non-public information
  • Securities and Futures Act
  • Impairment charge
  • Profit warning
  • Group Management Council
  • Forecasted loss
  • Connected person
  • Generally available information
  • Material effect
  • WBL Corporation Limited
  • Wearnes Precision (Thailand) Limited
  • SGX

15.2 Keywords

  • Insider trading
  • Securities
  • Futures
  • Monetary Authority of Singapore
  • WBL Corporation
  • Lew Chee Fai Kevin
  • Material information
  • Non-public information

17. Areas of Law

Area NameRelevance Score
Insider Trading95
Securities Fraud75
Company Law60
Financial Forecasts40
Contract Law30
Corporate Law30
Commercial Disputes25
Corporate Litigation20

16. Subjects

  • Securities Regulation
  • Financial Law
  • Corporate Governance