Lew Chee Fai Kevin v MAS: Insider Trading, Securities and Futures Act - Appeal on Liability
In Lew Chee Fai Kevin v Monetary Authority of Singapore, the Singapore Court of Appeal dismissed an appeal by Kevin Lew Chee Fai against his conviction for insider trading under Section 218 of the Securities and Futures Act (SFA). Lew was found to have sold shares of WBL Corporate Private Limited while in possession of non-public, price-sensitive information acquired at a General Management Council meeting. The Court clarified the interpretation of 'generally available' information and the test for materiality under the SFA, ultimately upholding the trial judge's decision and dismissing Lew's appeal.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal against insider trading conviction. Court of Appeal clarifies 'generally available' information and materiality under SFA. Appeal dismissed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Lew Chee Fai Kevin | Appellant | Individual | Appeal Dismissed | Lost | Thio Shen Yi, Leow Yuan An Clara Vivien, Charmaine Kong |
| Monetary Authority of Singapore | Respondent | Government Agency | Appeal Dismissed | Won | Cavinder Bull, Yarni Loi, Gerui Lim |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Sek Keong | Chief Justice | No |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | Yes |
| V K Rajah | Justice of the Court of Appeal | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Thio Shen Yi | TSMP Law Corporation |
| Leow Yuan An Clara Vivien | TSMP Law Corporation |
| Charmaine Kong | TSMP Law Corporation |
| Cavinder Bull | Drew & Napier LLC |
| Yarni Loi | Drew & Napier LLC |
| Gerui Lim | Drew & Napier LLC |
4. Facts
- Lew was a senior employee at WBL.
- Lew sold 90,000 WBL shares on 4 July 2007.
- Lew possessed non-public information from a 2 July 2007 GMC meeting.
- Information included WBL's forecast loss for 3Q FY07.
- Information included the prospect of a significant impairment charge on WPT.
- Swee Hong advised Lew against selling shares.
- WBL issued profit warnings in July and released financial statements in August 2007.
5. Formal Citations
- Lew Chee Fai Kevin v Monetary Authority of Singapore, Civil Appeal No 123 of 2010, [2012] SGCA 12
- Monetary Authority of Singapore v Lew Chee Fai Kevin, Suit No 71 of 2009, [2010] 4 SLR 209
- WBL Corporation Ltd v Lew Chee Fai Kevin, Civil Appeals Nos 149 and 150 of 2010, [2012] SGCA 13
6. Timeline
| Date | Event |
|---|---|
| Lew joined WBL as Group Financial Controller | |
| WBL instituted General Management Council meetings | |
| WPT's problems and need for asset impairment were discussed | |
| Audit Committee discussed monitoring WPT's performance | |
| GMC meeting discussed WPT's performance | |
| Audit Committee presented options to deal with WPT's losses | |
| Lew acquired inside information at GMC meeting | |
| Lew sold 90,000 WBL shares | |
| Lew emailed Swee Hong about the transaction | |
| Swee Hong replied, suspecting insider trading | |
| Lew replied, explaining the share sale reason | |
| Lew submitted notices to exercise share options | |
| Swee Hong advised against repurchasing shares | |
| WBL issued profit warning for M-Flex | |
| C S Tan asked Lew for a statement | |
| Lew was suspended from duty | |
| Soh retired from WBL | |
| MFS issued a profit warning | |
| WBL issued its profit warning | |
| WBL lodged a suspicious transaction report | |
| Lew resigned from WBL | |
| WBL released its financial statement for 3Q FY07 | |
| MAS examined Lew | |
| Appeal dismissed by the Court of Appeal |
7. Legal Issues
- Insider Trading
- Outcome: Appeal dismissed; Lew found liable for insider trading.
- Category: Substantive
- Sub-Issues:
- Possession of non-public information
- Material effect on price or value of securities
- Knowledge of non-availability of information
- Materiality of Information
- Outcome: Loss forecast and impairment prospect were material.
- Category: Substantive
- Sub-Issues:
- Impact on reasonable investor's decision-making
- Significance in the total mix of information
- General Availability of Information
- Outcome: Information possessed by Lew was not generally available.
- Category: Substantive
- Sub-Issues:
- Readily observable matter
- Information made known to investors
- Deductions, conclusions, or inferences from available information
8. Remedies Sought
- Civil penalty under s 232(2) of the Securities and Futures Act
9. Cause of Actions
- Insider Trading
10. Practice Areas
- Commercial Litigation
- Securities Law
11. Industries
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Monetary Authority of Singapore v Lew Chee Fai Kevin | High Court | Yes | [2010] 4 SLR 209 | Singapore | Decision under appeal. |
| WBL Corporation Ltd v Lew Chee Fai Kevin | Court of Appeal | Yes | [2012] SGCA 13 | Singapore | Related suit regarding specific performance of share options. |
| Public Prosecutor v Choudhury | Court of Criminal Appeal | Yes | [1979–1980] SLR(R) 766 | Singapore | Interpreted 'information' under the Companies Act. |
| R v Rivkin | New South Wales Court of Criminal Appeal | Yes | [2004] NSWCCA 7 | Australia | Insider trading case interpreting 'information' under Australian law. |
| Commissioner for Corporate Affairs v Green | Supreme Court of Victoria | Yes | [1978] VR 505 | Australia | Information need not be 'factual knowledge of a concrete kind'. |
| Hooker Investments Pty Ltd v Baring Bros Halkerston & Partners Securities Ltd & Ors | Supreme Court of New South Wales | Yes | (1986) 10 ACLR 462 | Australia | Information may include rumour. |
| TV Media Pte Ltd v De Cruz Andrea Heidi and another appeal | Court of Appeal | Yes | [2004] 3 SLR(R) 543 | Singapore | Deference to trial judge's findings of fact. |
| Tan Chin Seng v Raffles Town Club Pte Ltd | Court of Appeal | Yes | [2003] 3 SLR(R) 307 | Singapore | Deference to trial judge on witness credibility. |
| Hannes v Director of Public Prosecutions (Cth) (No 2) | Supreme Court of New South Wales Court of Criminal Appeal | Yes | (2006) 60 ACSR 1 | Australia | Importance of particularising information. |
| R v Firns | Supreme Court of New South Wales Court of Criminal Appeal | Yes | (2001) 51 NSWLR 548 | Australia | Interpretation of 'readily observable matter'. |
| Australian Securities and Investments Commission v MacDonald and others (No 11) | Supreme Court of New South Wales | Yes | (2009) 71 ASCR 368 | Australia | Cited Firns on readily observable matter. |
| PP v Ng Chee Keong | Unknown | Yes | [1999] 2 SLR(R) 1176 | Singapore | Overruled on intent to use inside information. |
| Public Prosecutor v Chua Seng Huat | Sarawak High Court | Yes | [1999] 3 MLJ 305 | Malaysia | Definition of 'reasonable investor'. |
| R v Evans & Doyle | Supreme Court of Victoria | Yes | [1999] VSC 488 | Australia | Information assessed at the time of the transaction. |
| Basic Incorporated, et al, Petitioners v Max L Levinson et al | US Supreme Court | Yes | 485 US 224 (1988) | United States | Information altering the total mix. |
| TSC Industries, Inc, et al, Petitioners, v Northway, Inc | US Supreme Court | Yes | (1976) 426 US 438 | United States | Test for materiality. |
| Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited (No 4) | Federal Court of Australia | Yes | [2007] FCA 963 | Australia | Market impact as materiality factor. |
| Securities and Exchange Commission v John F Mangan Jr | Unknown | Yes | 598 F Supp 2d 731 | United States | No share price change, information immaterial. |
| In re Burlington Coat Factory | Unknown | Yes | 114 F 3d 1410 (3rd Cir, 1977) | United States | No market effect, information immaterial. |
| United States of America v Paul A Bilzerian | Unknown | Yes | 926 F 2d 1285 (1991) | United States | Market fluctuation not determinative of materiality. |
| United States of America v Kevin Heron | Unknown | Yes | 525 F Supp 2d 729 (2007) | United States | Limitations of market impact evidence. |
| Catena v Australian Securities and Investments Commission (No 2) | Federal Court of Australia | Yes | [2010] FCA 865 | Australia | Information better than market rumours. |
| Catena v Australian Securities and Investments Commission | Federal Court of Australia | Yes | [2011] FCAFC 32 | Australia | Affirmed Catena v ASIC (No 2). |
| R v Hannes | New South Wales Court of Criminal Appeal | Yes | [2000] 36 ACSR 72 | Australia | Test for 'generally available' information. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Securities and Futures Act (Cap 289, 2006 Rev Ed) s 218 | Singapore |
| Securities and Futures Act (Cap 289, 2006 Rev Ed) s 232(2) | Singapore |
| Securities and Futures Act (Cap 289, 2006 Rev Ed) s 215 | Singapore |
| Securities and Futures Act (Cap 289, 2006 Rev Ed) s 216 | Singapore |
| Companies Act (Cap 185, 1970 Rev Ed) s 132A(1) | Singapore |
| Securities Industry Act (Cap 289, 1985 Rev Ed) s 103 | Singapore |
| Securities and Futures Act s 221 | Singapore |
| Securities and Futures Act s 232(5) | Singapore |
| Securities and Futures Act s 214 | Singapore |
| Securities and Futures Act s 220 | Singapore |
| Securities and Futures Act s 231 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Insider trading
- Price-sensitive information
- Generally available information
- Material effect
- Connected person
- Impairment charge
- Profit warning
- Common Investor
- Market Impact Evidence
- Securities and Futures Act
15.2 Keywords
- Insider trading
- Price-sensitive information
- Generally available information
- Material effect
- Connected person
- Impairment charge
- Profit warning
- Common Investor
- Market Impact Evidence
- Securities and Futures Act
16. Subjects
- Securities Law
- Financial Regulation
- Corporate Law
17. Areas of Law
- Securities Regulation
- Insider Trading
- Civil Procedure