3 family members fined up to S$150,000 for insider trading over Nippon Paint’s acquisition of DuluxGroup

SINGAPORE: Three family members have been fined sums ranging from S$100,000 to S$150,000 for insider trading offences over the acquisition of DuluxGroup by Nippon Paint.

Shae Toh Hock, 62, was the senior vice president of corporate planning and development at a Nippon Paint Holdings subsidiary in Singapore, when DuluxGroup was listed on the Australian Securities Exchange, said the Singapore Police Force on Friday (May 26).

Shae and his team were tasked to conduct due diligence on paint maker DuluxGroup as part of an acquisition plan. 

Due to his position, he knew in advance that Nippon Paint Holdings would acquire DuluxGroup and make an offer of around 30 per cent premium over the company’s existing share price. 

On Apr 7, 2019, Shae shared this information with his sister Shae Hung Yee and her husband Siew Boon Liong. 

“The duo knew that the proposed acquisition had not been made known publicly then and that the proposed acquisition might have a material effect on the price of DuluxGroup’s shares once it has been made public,” said the police in a news release. 

The next day, Siew, 62, opened a new securities trading account to purchase Australian shares.

He and his wife then jointly purchased 40,000 shares of DuluxGroup on Apr 12, 2019.  

Nippon Paint Holdings and DuluxGroup announced the proposed acquisition on Apr 17, 2019.

“On the day of the announcement, a total of 15.7 million DuluxGroup shares were traded. This represented an 865 per cent increase from the average daily traded volume in the one month preceding the announcement,” said the police. 

Dulux’s share price also rose 27.1 per cent from its previous day’s close, it added. 

Shae Hung Yee and Siew then sold all 40,000 of their DuluxGroup shares between Apr 17 and May 9, 2019, making a profit of more than S$75,000.

On Friday, Shae Toh Hock was convicted of communicating non-public and material information to his sister. He pleaded guilty and was fined S$100,000.

Shae Hung Yee, 59, and Siew were each convicted of purchasing shares of DuluxGroup while in possession of inside information and before the proposed acquisition was announced.

They both pleaded guilty and were fined S$150,000 each. 

The trio could have been each jailed up to seven years, fined up to S$250,000 or both.