The Monetary Authority of Singapore (MAS) has initiated a public consultation on proposed changes aimed at improving the ability of investors to seek civil compensation in cases of market misconduct.
The consultation paper, published on Oct. 24, outlines several measures designed to address current barriers faced by retail investors and to reinforce confidence in Singapore’s capital markets.
The proposals are part of broader efforts by the Equities Market Review Group to boost investor participation and strengthen the regulatory environment for listed entities.
According to MAS, providing effective avenues for investor recourse is a critical component in supporting a robust and trustworthy market.
MAS highlighted that retail investors often encounter challenges when attempting to pursue civil claims, including difficulties in organising group actions and securing the necessary financial resources for legal proceedings.
Under existing regulations, while third parties may assist claimants, they are not permitted to initiate legal actions on behalf of investors.
This representative would be responsible for coordinating and initiating legal action on behalf of affected investors.
MAS noted that specific criteria would be established to ensure that the designated representative has no conflicts of interest and no direct financial stake in the outcome.
In addition, MAS is considering the introduction of a grant scheme to help offset the costs associated with pursuing legitimate claims.
The scheme would provide partial funding for investor actions deemed to have merit, as well as support the organisational costs incurred by designated representatives.
MAS emphasised that controls would be put in place to prevent misuse of the scheme and to ensure that only genuine claims receive support.
The consultation paper also proposes refinements to the legal process for seeking compensation.
One suggestion is to simplify the steps required for investors to bring so-called “piggyback claims,” which are claims that reference prior criminal convictions or civil penalties against wrongdoers.
MAS is also considering expanding the types of resolved enforcement actions that can serve as the basis for such claims, including default judgments, consent orders, and civil penalty settlements.
Further, MAS is proposing legislative amendments to make it easier for investors to prove reliance in cases involving misstatements or omissions related to capital markets products.
The regulator is also seeking to remove existing statutory caps on compensation, allowing courts to determine appropriate compensation amounts based on the specifics of each case.
MAS stated that these proposed enhancements are intended to complement ongoing public enforcement efforts and to provide investors with more accessible avenues for redress.
The authority is seeking feedback from industry stakeholders and the public, with submissions open until Dec. 31 through the MAS website.
Insurance professionals and other market participants are encouraged to review the consultation paper and provide input on the proposed measures, which are expected to have implications for investor protection and market practices in Singapore.
