The Monetary Authority of Singapore has reprimanded China Capital Impetus Asset Management Pte. Ltd. (CCIAM), a registered fund management company (RFMC), for breaches of the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR).

In a statement on 31 July, MAS said it had also issued prohibition order (PO) against CCIAM’s executive director and former chief executive officer, Mr Sun Quan, for failing to take reasonable steps to secure compliance by CCIAM with the SFR.

In addition, MAS has declined CCIAM’s application to upgrade to a licensed fund management company (LFMC).

CCIAM has committed several breaches of the SFR which were uncovered during MAS’ review of CCIAM’s operations from February to March 2023. CCIAM had failed to mitigate conflicts of interest arising from the management of assets and/or disclose the conflicts of interest to its investors.

It had also not put in place an appropriate risk management framework to address basic aspects of the business such as conducting investment due diligence, ongoing monitoring of investments, handling of redemptions and pursuing claims owed to the fund managed by CCIAM, or to inform MAS of changes to its representatives and relevant professionals, as well as changes in Mr Sun’s external business interests, within the required timelines, and submit its annual declarations and auditors’ reports within the required timelines.

MAS has also issued a 2-year PO against Sun for his failure to take reasonable steps to secure compliance by CCIAM with the SFR. As the former CEO and the executive director of CCIAM, Mr Sun was principally responsible for ensuring that CCIAM complied with MAS’ regulatory requirements.

However, MAS found that Sun knew of CCIAM’s breaches, and failed to take adequate steps to ensure that CCIAM complied with MAS’ regulatory requirements.

Under the PO, Sun is prohibited from performing any regulated activities, and from taking part in the management, acting as a director, or becoming a substantial shareholder of any capital markets services firm under the Securities and Futures Act.

In view of CCIAM’s and Sun’s contraventions, MAS has declined CCIAM’s application to upgrade to an LFMC.

Accordingly, with the repeal of the RFMC regime, CCIAM can no longer undertake fund management activity in Singapore with effect from 1 August 2024. The fund that CCIAM was managing has been placed under liquidation.