See Hup Seng Ltd – See No Evil?
The board of See Hup Seng announced that it has unanimously decided not to fire its CEO for the insider trading he engaged in when he was a consultant at the company in 2006.
It had announced on Monday that Yap Sew, its current CEO, was fined S$50,000 by the MAS.
A bit of background here: In 2006, Yap bought 900,000 See Hup Seng shares after knowing that the company had bought Speedo Corrosion Control Pte Ltd. He was a consultant at See Hup Seng at that time and had profited from the price-sensitive information.
This matter was referred to MAS by SGX-ST and MAS carried out civil penalty investigations.
MAS then carried out a civil penalty enforcement action against Yap.
The board of See Hup Seng gave a few reasons why it won’t fire Yap:
Firstly, it said the insider trading incident took place in 2006 when Yap Sew was not a director or employee of the company.
Note: Yap engaged in insider trading on 25 July 2006; he was made CEO on 5 August 2006.
Secondly, it said Yap has been successful in implementing key business strategies which helped turn the loss-making company to being profitable.
Thirdly, Yap is working on several projects to help the company grow further.
Yap Sew should be lucky that he was let off with just a civil penalty, which carries no criminal record, got to keep his job, and enjoys such support from his board.
But credit should go to him for turning See Hup Seng from six years of losses to being profitable in 2006. Its net profit more than tripled to S$13.6 mln from FY2006 to FY2007 on the back of a huge increase in revenue.
But will the board’s decision raise shareholder confidence in the company?
It is very possible that the man on the street with a few lots of See Hup Seng shares might now feel less assured of the company’s corporate governance policies.
After all, value investors want to sleep easy at night and not worry about whether the CEO will place personal gains above ethics.
It is even worse when the board seems to see Yap as a messiah for turning round the company and voted unanimously to not fire him.
In fact, for a company that specialises in preventing corrosion, See Hup Seng has allowed the rot to settle at the top.
As always, please see your licensed financial advisor before making any investment decisions.
ArchivesIt had announced on Monday that Yap Sew, its current CEO, was fined S$50,000 by the MAS.
A bit of background here: In 2006, Yap bought 900,000 See Hup Seng shares after knowing that the company had bought Speedo Corrosion Control Pte Ltd. He was a consultant at See Hup Seng at that time and had profited from the price-sensitive information.
This matter was referred to MAS by SGX-ST and MAS carried out civil penalty investigations.
MAS then carried out a civil penalty enforcement action against Yap.
The board of See Hup Seng gave a few reasons why it won’t fire Yap:
Firstly, it said the insider trading incident took place in 2006 when Yap Sew was not a director or employee of the company.
Note: Yap engaged in insider trading on 25 July 2006; he was made CEO on 5 August 2006.
Secondly, it said Yap has been successful in implementing key business strategies which helped turn the loss-making company to being profitable.
Thirdly, Yap is working on several projects to help the company grow further.
Yap Sew should be lucky that he was let off with just a civil penalty, which carries no criminal record, got to keep his job, and enjoys such support from his board.
But credit should go to him for turning See Hup Seng from six years of losses to being profitable in 2006. Its net profit more than tripled to S$13.6 mln from FY2006 to FY2007 on the back of a huge increase in revenue.
But will the board’s decision raise shareholder confidence in the company?
It is very possible that the man on the street with a few lots of See Hup Seng shares might now feel less assured of the company’s corporate governance policies.
After all, value investors want to sleep easy at night and not worry about whether the CEO will place personal gains above ethics.
It is even worse when the board seems to see Yap as a messiah for turning round the company and voted unanimously to not fire him.
In fact, for a company that specialises in preventing corrosion, See Hup Seng has allowed the rot to settle at the top.
As always, please see your licensed financial advisor before making any investment decisions.
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