SINGAPORE (Kyodo) The Monetary Authority of Singapore could withdraw its approval for fund manager Yoshiaki Murakami to operate his fund from the city-state in light of his alleged embroilment in an insider-trading scandal in Japan, according to sources.
Murakami was charged Friday with insider trading linked with his fund’s purchases of shares in a radio broadcaster from November 2004 to January 2005.
His indictment puts the fate of MAC Asset Management Pte., the investment firm he established in Singapore earlier this year, in doubt.
Murakami founded the company March 10 with capital of 30 million yen and transferred the core component of his $3 billion fund from Japan to Singapore, a move that was seen as yet another coup for the city-state.
Singapore’s central bank gave his firm the green light to set up here without any licensing as an “exempt fund manager and financial adviser” — a special category for fund houses that do not serve the public at large but only a small and selected pool of no more than 30 clients.
However, the central bank has the power to cancel the company’s exempt status, effectively forcing it to close down in the wake of his recent arrest in Japan for alleged insider trading, the sources said.
According to Singapore’s Securities and Futures Act, the bank can revoke the exempt status of fund houses if the “corporation or its substantial shareholder has been convicted of a relevant offense.”
“The exemption may be withdrawn, then it cannot operate here,” said a well-informed source who did not want to be identified.
If the central bank does decide to revoke its approval for MAC’s operation, it could spell doom for the Murakami fund, which is already grappling with a loss of investor confidence in the wake of the scandal.
Murakami stepped down as MAC’s director and managing director June 5 but still remains the company’s sole shareholder.
Reports retrieved Friday from the Accounting and Corporate Regulatory Authority of Singapore, a government agency, show that he had not as of Thursday relinquished his position as a substantial shareholder in the company in what some believe could be a possible bid to save the company from being ordered to close down by the MAS.
Both the MAS and Singapore’s white-collar crime buster, the Commercial Affairs Department, have declined comment on the MAC issue.
“MAS has no further comment on the matter at the moment,” a MAS spokeswoman said in response to an inquiry about the possible action it might take against MAC in the wake of Murakami’s indictment.
MAS said June 5 after Murakami’s arrest that day that it “can take appropriate regulatory action” against fund houses that are “found not to be fit and proper.”
Police have kept mum on whether they have been conducting investigations into the issue, and they maintained the same position Friday, saying “it is inappropriate for us to comment.”
However, there is no doubt that Japanese and Singaporean financial authorities are cooperating with each other in the investigations into MAC’s role in the unfurling scandal.
As part of the Japan-Singapore Economic Agreement for a New Age Partnership that was signed in 2002, MAS and Japan’s Financial Services Agency already have arrangements for mutual cooperation and information-sharing for the enforcement of the two countries’ securities laws.
Previous penalties imposed by MAS on others for insider trading outside Singapore could serve as a rough gauge of how it might respond to the Murakami case.
In 2004, the MAS imposed fines of up to 400,000 Singapore dollars ($251,000) on three employees of the Government of Singapore Investment Corp. Pte., which invests Singapore’s foreign reserves, for insider trading in Japan involving shares of Sumitomo Mitsui Financial Group Inc., after it received a tipoff from the Financial Services Agency and the Securities and Exchange Surveillance Commission of Japan.
MAC’s office is located on the 20th floor of an office block in the heart of Singapore’s Orchard Road shopping area. When asked to comment Friday about the prospect of the Singapore office continuing operations, a staff member said, “We are pretty sure we will continue to stay here to operate.”
Besides the advantage of Singapore’s low corporate tax rate, which is about half Japan’s 40 percent, another reason why Murakami may have chosen to relocate his fund operations to Singapore is his familiarity with the city-state.
Murakami spent part of his childhood in Singapore as his father was living here throughout much of the 1970s.
His Taiwanese father had strong business connections with overseas Chinese businessmen, particularly the late Kwek Hong Png, who was the founder of the Hong Leong Group, one of Singapore’s largest property conglomerates. The Murakami family still maintains an apartment here.
News reports also said he had applied for a Singapore employment pass to enable him to run his business here, away from the prying eyes of the Japanese media.
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