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I was recently interviewed by Mr Jovi Ho from The Edge Singapore on the topical subject: “How should MAS enhance avenues for investor recourse?”
Here’s a summary of the thoughts I shared:
The initiative by the Monetary Authority of Singapore (MAS) is both commendable and timely. To ensure the effectiveness and sustainability of the scheme, it must be implemented with clear boundaries and safeguards:
1. Limit the Scope to Clear Breaches
The scheme should focus strictly on clear breaches of Listing Rules and market misconduct. It should not be used by disgruntled shareholders as leverage in disputes with the Board or management.
2. Prevent Abuse Through Independent Assessment
MAS should appoint an independent review body, such as the Securities Investors Association (Singapore), to conduct a preliminary assessment of claims in consultation with experienced lawyers. This step will filter out baseless or speculative claims, ensuring only meritorious cases proceed.
3. Mandatory Mediation Before Litigation
Before escalating disputes to the courts, claimants should attempt resolution through established mediation institutions like the Singapore Mediation Centre (SMC) or the Singapore International Mediation Centre (SIMC). Mediation provides a faster, cost-effective, and less adversarial route, with litigation reserved only for unresolved disputes.
4. Require Claimants to Have “Skin in the Game”
Retail investors seeking legal assistance through the scheme should contribute to litigation expenses if mediation fails. This “skin in the game” principle ensures accountability and discourages opportunistic lawsuits.
5. Striking the Right Balance
- MAS’ proposal is a positive step towards stronger investor protection. For long-term success, the scheme should:
- Involve co-funding to ensure accountability
- Focus on clear, material breaches of listing rules and securities laws
- Require independent legal assessment of claims
- Mandate mediation before litigation
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