Madhavan Peter v PP: Directors' Duties, Disclosure, & Insider Trading
In Madhavan Peter v Public Prosecutor, the Singapore High Court heard appeals by Madhavan Peter, Chong Keng Ban, and Ong Seow Yong against their convictions under the Securities and Futures Act for offenses related to Airocean Group Limited. The charges included misleading disclosure, non-disclosure of information, and insider trading. The High Court allowed the appeals in part, setting aside the convictions for misleading disclosure and non-disclosure charges for Madhavan and Chong, and Ong. However, the conviction for insider trading against Chong was upheld, with the sentence adjusted from imprisonment to a fine. The court also upheld the disqualification order against Chong.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal allowed in part; convictions for non-disclosure and misleading disclosure charges set aside; conviction for insider trading upheld with adjusted sentence.
1.3 Case Type
Criminal
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court judgment on directors' duties, disclosure obligations, and insider trading under the Securities and Futures Act.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Madhavan Peter | Appellant | Individual | Appeal Allowed in Part | Partial | Davinder Singh, Wendell Wong, Jaikanth Shankar, Pardeep Singh Khosa, Krishna Elan, Vishal Harnal, Chan Yong Wei |
| Public Prosecutor | Respondent | Government Agency | Appeal Dismissed in Part | Partial | Jeffrey Chan Wah Teck, Peter Koy, Navin Thevar |
| Chong Keng Ban @ Johnson Chong | Appellant | Individual | Appeal Allowed in Part | Partial | Subramanian Pillai, Rasanthan Sothynathan, Luo Ling Ling |
| Ong Seow Yong | Appellant | Individual | Appeal Allowed | Won | Michael Hwang, Thong Chee Kun, Istyana Putri Ibrahim |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Sek Keong | Chief Justice | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Davinder Singh | Drew & Napier LLC |
| Wendell Wong | Drew & Napier LLC |
| Jaikanth Shankar | Drew & Napier LLC |
| Pardeep Singh Khosa | Drew & Napier LLC |
| Krishna Elan | Drew & Napier LLC |
| Vishal Harnal | Drew & Napier LLC |
| Chan Yong Wei | Drew & Napier LLC |
| Subramanian Pillai | Colin Ng & Partners LLP |
| Rasanthan Sothynathan | Colin Ng & Partners LLP |
| Luo Ling Ling | Colin Ng & Partners LLP |
| Michael Hwang | Michael Hwang Chambers |
| Thong Chee Kun | Rajah & Tann LLP |
| Istyana Putri Ibrahim | Rajah & Tann LLP |
| Jeffrey Chan Wah Teck | Attorney-General's Chambers |
| Peter Koy | Attorney-General's Chambers |
| Navin Thevar | Attorney-General's Chambers |
4. Facts
- Airocean was a holding company of a group of air cargo logistics companies.
- Thomas Tay, Airocean's CEO, and three officers were questioned by CPIB regarding suspected corruption.
- Tay admitted to CPIB that he had instructed Simon Ang to offer assistance to Chooi of Jetstar.
- CPIB officers searched Airocean's office and seized documents.
- Chong and Madhavan were informed of the CPIB investigations.
- Airocean sought legal advice from Mr. Chelva Rajah SC of Tan Rajah & Cheah.
- Tay was arrested and released on bail; his passport was impounded.
- Airocean released an announcement on 25 November 2005 clarifying a Straits Times article.
- CAD started investigations into alleged disclosure contraventions by Airocean on 2 December 2005.
- Chong sold Airocean shares between 26 and 28 September 2005.
5. Formal Citations
- Madhavan Peter v Public Prosecutor and other appeals, Magistrate's Appeals Nos 1, 10 and 13 of 2011, [2012] SGHC 153
6. Timeline
| Date | Event |
|---|---|
| Tay and three officers questioned by the Corrupt Practices Investigation Bureau. | |
| Chong attempted to convene a meeting of Airocean’s board of directors. | |
| Tay was placed under arrest and released on bail; passport impounded. | |
| Chong chaired a meeting of Airocean’s board to review the events concerning the CPIB Investigations. | |
| Chong sold 1,000,000 Airocean shares. | |
| Chong sold 500,000 Airocean shares. | |
| Chong sold 515,000 Airocean shares. | |
| The Straits Times published an article with the caption “Airocean’s chief executive [Tay] under CPIB probe”. | |
| Airocean released the 25/11/05 Announcement. | |
| Lorraine Chay sent an e-mail to Ang on 28 November 2005 asking six questions in relation to the announcement. | |
| TRC sent Airocean a written advice dated the same day. | |
| Winston Seow sent Chay Airocean’s response. | |
| Chay and two of her colleagues met Tay and Madhavan at SGX’s premises. | |
| Madhavan, Ong CH and Ong met Chay and her colleagues at SGX’s premises without the presence of Airocean’s management. | |
| Airocean made the 1/12/05 Announcement. | |
| CAD started investigations into alleged contraventions of the disclosure provisions in the SFA by Airocean. | |
| Airocean made the 2/12/05 Announcement. | |
| The DJ convicted Chong and Madhavan of the Non-disclosure Charges. | |
| Decision Date |
7. Legal Issues
- Misleading Disclosure
- Outcome: Convictions set aside due to insufficient evidence that the announcement was misleading in a material particular and likely to stabilize the market price.
- Category: Substantive
- Sub-Issues:
- Omission of material facts
- Likelihood of stabilizing market price
- Non-disclosure of Material Information
- Outcome: Convictions set aside due to insufficient evidence that the information was likely to materially affect the price of shares and that the failure to disclose was reckless.
- Category: Substantive
- Sub-Issues:
- Reckless failure to notify SGX
- Material effect on price or value of shares
- Insider Trading
- Outcome: Conviction upheld; sentence adjusted from imprisonment to a fine.
- Category: Substantive
- Sub-Issues:
- Possession of non-public information
- Material effect on price or value of securities
- Connected person
- Disqualification of Directors
- Outcome: Disqualification order upheld for Chong Keng Ban.
- Category: Procedural
- Sub-Issues:
- Offences connected with company management
- Recklessness
- Outcome: Court found that Airocean was not reckless in failing to disclose the Information.
- Category: Substantive
- Sub-Issues:
- Subjective awareness of risk
- Unreasonableness in taking risk
- Materiality
- Outcome: Court found that the Tay/Subsidiaries Information did fall under s 218 read with s 216.
- Category: Substantive
- Sub-Issues:
- Likely to materially affect the price or value of securities
- Likely to influence persons who commonly invest in securities
8. Remedies Sought
- Appeal against conviction
- Appeal against sentence
- Setting aside disqualification order
9. Cause of Actions
- Breach of Disclosure Obligations
- Insider Trading
10. Practice Areas
- Commercial Litigation
- Securities Regulation
- Corporate Governance
11. Industries
- Air Cargo Logistics
- Financial Services
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Public Prosecutor v Chong Keng Ban @ Johnson Chong, Peter Madhavan, Ong Seow Yong | District Court | Yes | [2011] SGDC 97 | Singapore | Refers to the lower court's judgment which was appealed in this case. |
| The H156 | High Court | Yes | [1999] 2 SLR(R) 419 | Singapore | Cited for the principle that the expert cannot usurp the court’s function. |
| Pacific Recreation Pte Ltd v S Y Technology Inc and another appeal | High Court | Yes | [2008] 2 SLR(R) 491 | Singapore | Cited for the principle that the expert cannot usurp the court’s function. |
| Jubilee Mines NL v Riley | Court of Appeal of the Supreme Court of Western Australia | Yes | (2009) 69 ACSR 659 | Western Australia | Discusses the inconsistency between statutory and regulatory regimes governing the obligation to disclose material information. |
| Lew Chee Fai Kevin v Monetary Authority of Singapore | Court of Appeal | Yes | [2012] 2 SLR 913 | Singapore | Discusses market impact evidence in the context of insider trading. |
| TSC Industries, Inc, et al, Petitioners, v Northway, Inc | United States Supreme Court | Yes | (1976) 426 US 438 | United States | Cited for the test of materiality. |
| Ng Geok Eng v Public Prosecutor | High Court | Yes | [2007] 1 SLR(R) 913 | Singapore | Cited as an example of a market rigging case where the market misconduct involved more culpable conduct. |
| Public Prosecutor v Wang Ziyi Able | High Court | Yes | [2008] 2 SLR(R) 1082 | Singapore | Discusses sentencing approach for false or misleading disclosure under s 199 of the SFA. |
| Public Prosecutor v UI | High Court | Yes | [2008] 4 SLR(R) 500 | Singapore | Cited for the principle that an appellate court will not disturb the sentence of a lower court unless certain conditions are met. |
| R v Goodman | English Court of Appeal | Yes | [1993] 2 All ER 789 | England | Formulates the test for whether an offence was committed in connection with the management of a company. |
| R v Creggy | English Court of Appeal (Criminal Division) | Yes | [2008] 3 All ER 91 | England | Applies the test formulated in Goodman. |
| Ong Chow Hong (alias Ong Chaw Ping) v Public Prosecutor and another appeal | High Court | Yes | [2011] 3 SLR 1093 | Singapore | Discusses the disqualification regime in Singapore. |
| Public Prosecutor v Foo Jong Kan and Another | District Court | Yes | [2005] SGDC 248 | Singapore | Mentioned in relation to disqualification under the Companies Act. |
| R v G and another | House of Lords | Yes | [2003] 4 All ER 765 | England | Interprets the word “reckless” as bearing its pre-existing common law meaning. |
| Regina v Rivkin | New South Wales Supreme Court | Yes | [2003] NSWSC 447 | Australia | Discusses sentencing for insider trading. |
| R v Spearman | English Court of Appeal | Yes | [2003] EWCA Crim 2893 | England | Discusses sentencing for insider trading. |
| R v McQuoid | English Court of Appeal | Yes | [2009] 4 All ER 388 | England | Discusses sentencing for insider trading. |
| R v H | English Court of Appeal | Yes | [2011] EWCA Crim 2753 | England | Discusses the relevant date for determining the sentence. |
| R v MJR | New South Wales Court of Criminal Appeal | Yes | (2002) 54 NSWLR 368 | Australia | Discusses the sentencing practice in force at the time of the commission of the offence. |
| Green v The Queen | Northern Territory Courts | Yes | [2006] 205 FLR 388 | Australia | Discusses the sentencing practice in force at the time of the commission of the offence. |
| HKSAR v Mok Yiu Kau | Court of Appeal of the Hong Kong Special Administrative Region | Yes | [2007] HKCA 341 | Hong Kong | Discusses the sentencing practice in force at the time of the commission of the offence. |
| Miller v Florida | United States Supreme Court | Yes | (1987) 482 US 423 | United States | Discusses the sentencing practice in force at the time of the commission of the offence. |
| Public Prosecutor v Manogaran s/o R Ramu | High Court | Yes | [1996] 3 SLR(R) 390 | Singapore | Interprets the word “law” in Art 11(1) of the Constitution. |
| Seow Wei Sin v Public Prosecutor and another appeal | High Court | Yes | [2011] 1 SLR 1199 | Singapore | Discusses the retrospective application of sentencing norms or guidelines to “old” offences. |
| Chota bin Abdul Razak v Public Prosecutor | High Court | Yes | [1991] 1 SLR(R) 501 | Singapore | Discusses the retrospective application of sentencing norms or guidelines to “old” offences. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Securities and Futures Act (Cap 289, 2002 Rev Ed) s 331(1) | Singapore |
| Securities and Futures Act (Cap 289, 2002 Rev Ed) s 199 | Singapore |
| Securities and Futures Act (Cap 289, 2002 Rev Ed) s 203(2) | Singapore |
| Securities and Futures Act (Cap 289, 2002 Rev Ed) s 216 | Singapore |
| Securities and Futures Act (Cap 289, 2002 Rev Ed) s 218 | Singapore |
| Companies Act (Cap 50, 1994 Rev Ed) s 154(2) | Singapore |
| Prevention of Corruption Act (Cap 241, 1993 Rev Ed) s 6(b) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Securities and Futures Act
- Listing Rules
- Materiality
- Insider Trading
- Non-disclosure
- Misleading Disclosure
- CPIB Investigations
- SGX
- Directors' Duties
- CAD Investigations
- Trade-sensitive information
- Price-sensitive information
15.2 Keywords
- insider trading
- securities and futures act
- disclosure obligations
- directors' duties
- material information
- recklessness
- market manipulation
- corporate governance
- singapore
- high court
16. Subjects
- Securities Regulation
- Corporate Law
- Criminal Law
- Financial Markets
- Corporate Governance
17. Areas of Law
- Securities Law
- Criminal Law
- Company Law
- Insider Trading
- Corporate Disclosure