Singapore regulators called on to punish "unscrupulous" short-sellers

SIAS demands tightening of short-selling rules.

The Securities Investors Assocation (Singapore) (SIAS) said it is "seriously concerned" that the "unscrupulous actions" of certain short sellers have caused the investing public to suffer and challenge the integrity of the Singapore capital market.

"We call on The Singapore Exchange and the Monetary Authority of Singapore to look into tightening short-selling rules to prevent and punish these shortsellers, especially those who stand to gain from their unfounded and unscrupulous acts. Left unchecked, this can have a negative effect on our capital markets development. The heavy weight of the law must be felt by these mischievous perpetrators," it added.

The call came as SIAS finished meeting up with representatives of the Board and management of China Minzhong Food Corporation (CMFC) with regards to the allegations made by Glaucus Research (Glaucus) against the company.

From the company’s presentation to SIAS and its detailed rebuttals and the extensive supporting documents the company had posted on SGX in the past three days, we are satisfied that CMFC had vindicated itself, said SIAS.

SIAS added that the company’s largest shareholder, PT Indofood Sukses Makmur Tbk (Indofood) has stated that it “is satisfied with CMFC’s rebuttals of the allegations and finds the rebuttals to be consistent with Indofood’s due diligence findings and analysis” and accordingly, “is confident that the due diligence that it conducted was sufficient to provide comfort over its investment”.

In the light of the strong rebuttals put up by the company, Glaucus’ unwarranted attack on CMFC with reckless and unsubstantiated allegations, resulting in panic selling was an attempt to serve its own ends of selfish gains.

The Glaucus report on August 26, 2013 had not only wiped out half of CMFC’s value then, it caused many of its shareholders who sold their shares that day to lose money. The report also threatened the livelihood of thousands of workers and farmers who depend on the Company and its subsidiaries.

"Two of our SGX-listed companies have already come under attack and many investors have been hurt by these short-sellers. How many more of such reckless, unfounded assaults on honest companies does the Singapore market need to see before such unethical practices are stopped?" said SIAS.