Regulators to beef up policing of corporate and governance breaches
Joint forum to review accounting, disclosure issues, as well as the bolstering of co-ordination among bodies such as MAS, ACRA, CAD, SGX RegCo.
Regulators and enforcement agencies are nudging towards closer collaboration in the patrolling and investigation of the Singapore capital markets, a move that could lead to speedier prosecution and improved regulatory efficiency in the future.
In a keynote speech delivered by Money Authority of Singapore (MAS) deputy managing director Ong Chong Tee, he spoke of the set up of a joint forum to review accounting and disclosure issues, as well as the bolstering of co-ordination among the authorities.
"MAS will strengthen our coordination with ACRA (Accounting and Corporate Regulatory Authority) and CAD (Commercial Affairs Department) in the surveillance of our capital markets and in investigations," he said at a My Money seminar held at the Singapore Polytechnic Convention Centre on Saturday.
"We have set up a joint forum between MAS and ACRA to review accounting-related and disclosure issues....MAS' enforcement team already has a joint investigation arrangement with CAD where our investigators collaborate closely. Our agencies will, in addition, work closely with SGX RegCo as they are the frontline marketplace regulator."
This comes as corporate and governance failures continued to dog the market. In recent years, there have been high-profile cases of disclosure lapses being unravelled, as well as irregularities reported at smaller firms.
Some market players have long called for a move towards a regulatory super-agency model like that seen in the US and Hong Kong.
Using the SWAT team analogy, Stefanie Yuen Thio, joint managing director of TSMP Law Corp said: "I think we need one coordinated regulatory arm that has the ability to move quickly, has access to relevant information and has a sufficient arsenal of enforcement tools to address emergency situations."
She proposed a better armed regulatory division comprising key agencies so that swifter action can be taken when mismanagement is suspected, to protect and preserve shareholder value.
Current regulatory responsibilities are too fragmented due to the many different regulators involved in enforcing rules, said corporate governance advocate Mak Yuen Teen.
"There seems to be regulatory paralysis with regulators seemingly hesitant or unable to take actions," said Professor Mak, who is also associate professor of accounting at the National University of Singapore (NUS).
This may result in regulators waiting for one another to act. "What we need is a system of administrative, civil and criminal sanctions for different severity of offences and speed of enforcement," he said.
Critics have long pointed to delayed responses by investigators and prosecutors.
Take for instance, the penny stock crash that wiped out billions from the Singapore stock market. The saga happened in October 2013, but only went to trial in March this year.
Said MAS' Mr Ong: "In complex cases, issues often cut across the domain of several agencies.
"A single case could span potential breaches of different regulations and laws, such as financial advisory regulations, securities law, company law, listing rules, accounting rules, and the Penal Code. Often, our investigators have to retrieve and review a lot of data."
While regulatory effectiveness is important, Mr Ong also noted in his speech that "no amount of regulations nor supervision can prevent wrongdoings".
Annabelle Yip, joint head of corporate governance and compliance practice at WongPartnership LLP, noted too that the regulatory landscape should not take the fall for corporate failures. "The causes of specific corporate failures tend to be complex and multi-dimensional."
Prof Mak however highlighted the risk of the "lack of enforcement leading to moral hazard".
This could lead to those who are controlling, directing and managing the companies believing that nothing will happen to them even if they do not comply with the rules, he said.
While the joint forum between MAS and CAD may not yet be quite what some market professionals have been calling for - a dedicated separate regulatory agency - it could be another step towards a more integrated regulatory framework.
It is also not the first attempt to step up collaborative efforts. The MAS-CAD Joint Investigations Arrangement was launched in March 2015, to collectively investigate offences involving violation and abuse of the financial system.
The merits of an independent agency like the Securities and Exchange Commission (SEC) in the US, which oversees the securities markets, are apparent to some market watchers.
"Besides promotion of orderly markets and development of financial capitals, a commission in Singapore will have a sharper focus on investor protection, which is primarily spearheaded by an industry body currently," said associate professor Lawrence Loh of the centre for governance, institutions and organisation at NUS.
But the regulatory framework is only part of the puzzle. Auditors, lawyers and journalists are among other stakeholders who can play key roles in promoting good corporate governance and effective market discipline, said MAS' Mr Ong.
David Gerald, founder and chief executive officer of Securities Investors Association Singapore, said: "No amount of regulation can protect investors 100 per cent and so they must learn to protect themselves by gaining knowledge about investing before entering the market."
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