Monetary Authority of Singapore Consults on Revised Misconduct Reporting Notices

Proposal

Summary

1. Scope to include RFMCs

• The Revised Notice will be applied to all RFMCs such that RFMCs will be required to report all reportable misconduct of its representatives going forward. At present, the Current Notice do not apply to RFMCs.

• Two of the current reportable misconduct categories under the Current Notice will be removed under the Revised Notice. Please refer to the Annex for a summary of the revised categories of reportable misconduct under the Revised Notice. 

•  The reporting timeline to lodge a misconduct report with MAS has been extended to 21 calendar days after the date on which the FMC first had reasonable grounds to believe that a misconduct has been committed by its representative.

• Currently, FMCs are required to lodge a misconduct report with MAS no later than 14 days after the discovery of a representative’s misconduct.

• The misconduct report will have to be submitted using the prescribed format. A template for the misconduct report was set out in Annex 2 of the 2021 Response. MAS  indicated that it would work with the industry to fine-tune the report template and provide sufficient lead-time for the industry to adopt the finalized template.

•  Where a FMC has lodged a police report in respect of the alleged misconduct by the time it submits the misconduct report, the FMC must submit to MAS a copy of the police report together with the name of the police officer investigating the case and the status of the investigation and any criminal proceedings.

• Where a FMC has commenced an internal investigation into the alleged misconduct by the time it submits the misconduct report to MAS, the FMC must submit an investigation report to MAS at the same time as the submission of the misconduct report.

• The investigation report will have to be submitted using the prescribed format. FMCs would only be required to adopt the investigation report template for submission of details of investigations relating to the reportable misconduct. A template for the investigation report was set out in Annex 2 of the 2021 Response. MAS indicated that it would work with the industry to fine-tune the report template and provide sufficient lead-time for the industry to adopt the finalized template.
• The Revised Notice provides guidelines on MAS’ expectations regarding the conduct of internal investigations.

• An update report must be submitted to MAS as and when there is any significant development in relation to the alleged misconduct, no later than 21 calendar days after the development.
• The Revised Notice contains a specific definition for “significant development”. This includes the following developments:
• the lodging of a police report by the FMC (a copy of the police report must be submitted to MAS together with the update report);
• the completion of the FMC’s internal investigations (where applicable, an investigation report must also be submitted to MAS together with the update report);
• the taking of any corrective action by the FMC³;
• the taking of any further action by the FMC following an appeal against any corrective action; and
• the FMC being notified or made aware of the outcome of police investigations or criminal proceedings.

• As a new requirement under the Revised Notice, a FMC must provide to its representative with a copy of any misconduct report and filed with MAS no later than 21 calendar days after the date of submission to MAS.

• Where a FMC subsequently submits an update report to MAS, it must provide a copy of the update report to its representative no later than 21 calendar days after the date of submission.

• A FMC is not required to provide its representative with a copy of the investigation report or police report filed with MAS.

• The Revised Notice contains certain exemptions from the requirement to provide a copy of the misconduct or update report to the representative concerned, including where the FMC is acting in connection with its internal investigation and the provision of the report is likely to prejudice the investigation.

• The Revised Notice sets out more specific record keeping obligations. For instance, a FMC must keep proper records of:

• documentary evidence that a copy of the misconduct report or update report has been provided to the representative concerned; and
• the FMC’s assessment on the likelihood of prejudice to any investigation, if the FMC does not provide a copy of the misconduct report or update report to the representative concerned.

Categories of Reportable Misconduct under Current Notice

Categories of Reportable Misconduct under Revised Notice (revisions in bold and italics)

(1)

Any act relating to market conduct provisions under Part 12 of the Securities and Futures Act 2001 (SFA) (e.g. prohibited conduct or insider trading as set out in Part 12 of the SFA)

Any act relating to any contravention of the market conduct provisions under Part 12 of the SFA (e.g. involvement in prohibited conduct or insider trading as set out in Part 12 of the SFA)

(2)

Any act involving fraud, dishonesty or other offences of a similar nature (e.g. cheating, dishonesty, fraud, forgery, misappropriation of monies or criminal breach of trust)

Any act involving fraud, dishonesty, illegal monetary gains, or any offence of a similar nature (e.g. cheating, forgery, dishonest misappropriation of monies, criminal breach of trust, bribery, money laundering and tax evasion).

(3)

Failure to Satisfy the Guidelines on Fit and Proper Criteria

Removed

(4)

Any type of misconduct other than those set out in (1) to (3) above, resulting in:

1. a non-compliance with any regulatory requirement relating to the provision of any regulated activity under the SFA; or
2. a serious breach of the CMS Licensee’s internal policy or code of conduct which would render the representative liable to demotion, suspension or termination of the representative’s employment or arrangement with the CMS Licensee.

Removed