China Aviation parent fined for insider trading

China Aviation Oil Holding Co (CAOHC) has been fined S$8 million ($4.8 million) by Singapore's central bank for selling shares in its Singapore unit a month before the unit, a jet fuel trader, collapsed last November.
CAOHC sold a 15 percent stake in China Aviation Oil (CAO) (Singapore) Corp Ltd on October 20 - a month before the unit imploded from $550 million in derivatives trading losses in the city-state's biggest trading scandal since the 1995 fall of Barings Bank.
The fine, which the Chinese firm has paid, is the first against a corporation under the central bank's civil penalty regime for market misconduct, which was introduced last year. It is separate from ongoing criminal proceedings against CAO Singapore officials.
Monetary Authority of Singapore (MAS) Deputy Managing Director Shane Tregillis said on Friday the fine was a signal to the market that anyone doing business in the city-state had to fully comply with Singapore law.
Analysts said global investors should take heart from Beijing's swift response to the penalty - as more Chinese state entities seek overseas listings.
"It shows maturity on both sides and should go down well with international investors," said Teng Ngiek Lian, fund manager at Target Asset Management. "China's a big country, but it's prepared to face the consequences and not renege on its responsibility."
"For Singapore, it shows they have strong resolve. In many Asian countries, they have regulations but don't necessarily implement them or are slack in implementation," Teng said.
Deutsche Bank AG arranged the share placement last October which raised S$185 million for the Beijing firm. The MAS declined to say whether there were ongoing investigations into Deutsche's role in the sale. Deutsche officials had no immediate comment, but the German bank has said the sale was in line with normal market practice.
CAO Singapore's suspended chief, Chen Jiulin, has said in an affidavit that the Beijing parent sold the shares to cover the Singapore unit's trading losses.
Tregillis said CAOHC had admitted to contravening Singapore law, motivated by wanting to rescue its unit rather than to trade on inside information. Four other company officials, including CAOHC president Jia Changbin, have been charged with fraud and dishonesty in Singapore courts.
Under its settlement with MAS, the state-owned jet fuel importer will give up additional equity on top of a 60 percent stake in CAO Singapore it would have got from a restructuring.
The shares, meant to repay part of CAOHC's US$118 million loan to CAO Singapore, will go to minority shareholders. CAO Singapore creditors voted in June for a bailout plan to revive the former stock market darling.