By Lee Su Shyan

A BUSINESSMAN who bought shares in listed See Hup Seng when he held inside information on a looming deal involving the company has been ordered to pay a civil penalty of $50,000 by the Monetary Authority of Singapore (MAS).

That makes Mr Chu Chwee Tiak the second person linked to a deal involving the company to receive such a penalty for insider trading.

Last year, its chief executive Yap Sew was ordered to pay $50,000 as well, also over insider trading stemming from the same incident.

On July 25, 2006, then-Sesdaq-listed See Hup Seng had announced that it had entered into an agreement to buy Speedo Corrosion Control for $3.5 million from CT Holdings.

Earlier, on July 21, Mr Chu, a CT Holdings director and shareholder, had bought one million See Hup Seng shares. He made a gain of about $10,000, MAS said.

He made the purchase while in possession of non-public price-sensitive information concerning the impending agreement between See Hup Seng and CT Holdings, MAS said.

According to Bloomberg, a check showed that the shares of See Hup Seng ended at 15.5 cents on July 20, and 16.5 cents on July 21. On July 26, the day after the announcement, the shares ended at 17.5 cents.

Under the Securities and Futures Act, a person cannot buy, subscribe to, or sell shares, if he has material price-sensitive information which he knows is not generally available.

In some cases, criminal charges can be brought against people who commit insider trading offences. Neither Mr Chu nor Mr Yap faced criminal charges.

The civil penalty option requires a less onerous burden of proof to succeed.

Mr Chu cooperated fully during the course of the investigation, MAS said.

In Mr Yap's case, he had bought 900,000 See Hup Seng shares during the July 21 to July 24 period in 2006.

His actions resulted in him making a profit of about $4,020, MAS had said.

At that time, he was acting as a consultant to See Hup Seng. The following month he was appointed CEO. Before joining See Hup Seng, he was managing director of Speedo, where he had been employed since 1983.

After MAS took the action against Mr Yap, he continued to serve in his executive position, with the board supporting him, a move that some market observers criticised.

Yesterday, shares of See Hup Seng, which is now listed on the mainboard, ended unchanged at 20 cents with 1.4 million units traded.

This article was first published in The Straits Times on January 09, 2009.