Public Prosecutor v Wang Ziyi Able

• Jurisdiction: Singapore
• Judge: V K Rajah JA
• Judgment Date: 29 November 2007
• Neutral Citation: [2007] SGHC 204
• Date: 11 March 2008
• Docket Number: Magistrate's Appeal No 226 of 2006
• Year: 2007
• Published date: 30 November 2007
• Plaintiff Counsel: Alvin Koh and Janet Wang (Attorney-General's Chambers)
• Citation: [2007] SGHC 204
• Defendant Counsel: Philip Fong and Evangeline Poh (Harry Elias Partnership)
• Court: High Court (Singapore)
• Subject Matter: Statutory offences,Criminal Procedure and Sentencing,Appellate court's review of trial judge's finding of fact,Section 199(b)(i) Securities and Futures Act (Cap 289, 2006 Rev Ed),Findings of fact,Mental state of not caring whether statement or information was true or false,Whether requisite mens rea was present,Purposive approach,Section 199(ii) Securities and Futures Act (Cap 289, 2006 Rev Ed),Statutory Interpretation,Criminal Law,Construction of statute,Whether mens rea was objective or subjective in nature,Disseminating false information that was likely to induce sale of securities by others where person disseminating information did not care whether information was true or false at time of dissemination,Lack of constraint where appellate court reviewed inferences of fact,"Care",Section 199(i) Securities and Futures Act (Cap 289, 2006 Rev Ed),Constraint where appellate court reviewed trial judge's finding of fact,Appeal,Words and Phrases,Lack of constraint where appellate court reviewed inferences of credibility drawn from evidence as opposed to demeanour of witnesses,Need for findings on credibility based on witness's demeanour to be coherently explained by trial judge in order for findings to retain their prima facie imperviousness to appellate scrutiny,Offences,Parliament's intention for mens rea of an offence

29 November 2007 Judgment reserved.

V K Rajah JA:

1 In recent years, Singapore’s financial markets, after having been progressively liberalised, have evolved into a distinctive disclosure-based regime. Instead of placing the burden entirely on regulatory bodies to ensure the integrity and security of investments, the onus is now on investors to make informed decisions in relation to their investments. Such a disclosure-based regime can, however, only function effectively if it is underpinned by a strong regulatory framework to protect the integrity of the securities market. The challenge is, thus, to devise a flexible regulatory framework which, on the one hand, mitigates risk and maintains market stability and, on the other hand, fosters market innovation and growth. This challenge is amplified by the “explosive ease with which information can now be disseminated” (see Margaret Chew, “Reform of Financial Services: The Effect on the Regulator” (2001) 5 Sing JICL 569). Since a disclosure-based environment ultimately requires adequate corporate disclosure in order for investors to judge the merits of any securities transactions for themselves, the vast pool of information available in the market must be effectively policed. Indeed, as pointed out during the second reading of the Securities and Futures Bill 2001 (Bill 33 of 2001), the reality today is that price-sensitive information per se drives securities trading (see Singapore Parliamentary Debates, Official Report (5 October 2001) at col 2148 (Mrs Lim Hwee Hwa, Member of Parliament for Marine Parade)). As such, the unchecked dissemination of false or misleading information may distort market forces and significantly impede the maintenance of a level playing field, ultimately culminating in a loss of confidence by investors in the securities market. Concerns about the severe repercussions that will ensue from such loss of confidence were expressed during the second reading of the Securities Industry (Amendment) Bill 1999 (Bill 40 of 1999), where Deputy Prime Minister BG (NS) Lee Hsien Loong (as he then was) explained (see Singapore Parliamentary Debates, Official Report (17 January 2000) at col 670):

If investors lose confidence in the integrity of our securities markets, we will enter a vicious cycle. Stock valuations will be poor because there is little secondary activity. Good companies will shun listings on the market, while doubtful ones embrace the opportunity.

For orderly and transparent markets to take root and flourish there must be an appropriate set of ground rules which impose and enforce obligations of responsible market conduct; all market players must understand and observe such rules.

2 Accordingly, the development of a vibrant financial sector must be supported by a legal system which places a strong emphasis on the integrity and the efficiency of our financial markets. It also goes without saying that a firm judicial stance must be taken against securities offences, and market misconduct proscribed, in accordance with the Securities and Futures Act (Cap 289, 2006 Rev Ed) (“the SFA”).

3 The present case is the first appeal to the High Court concerning an offence under s 199 of the SFA, and thus requires a careful appraisal of the statutory requirements necessary to establish such an offence. The respondent was charged under s 199(b)(i) of the SFA for having, on 16 February 2004, disseminated through an online forum at “shareinvestor.com” (“the SI forum”) information that was false in material particulars and that was likely to induce the sale of shares in Datacraft Asia Limited (“Datatcraft”) by other persons when, at the time he disseminated that information, he did not care whether it was true or false. The charge against him (“the Charge”) read as follows:

You, Wang Ziyi Able (Male/41 years),

NRIC No: S1647820/B

are charged that you, on or about 16 February 2004, in Singapore, using the nickname ‘Zhongkui’, disseminated information through an online forum at Shareinvestor.com that [was] false in material particulars and [was] likely to induce the sale of securities, namely, Datacraft Asia Limited shares by other persons, to wit,

“Heard CAD raided Datacraft office last Friday again.”

and in response to a posting by Papabull:

“ZK, as a frenly note, this was not carried in the local press nor reported in CNA. The word “raided” is serious. Remember giving anything unsubstantiated in a public forum is incriminating evidence to yourself as it is tantamount to giving false & misleading information. If the action was true subsequently one could be exonerated but yet again you may be brought to task for receiving illegitimate security leakage. Remember the OCBC dealer who gave a false report to induce price change? He had been brought to task. However, giving matters of opinion, even a wrong forecast inferring such is personal opinion, are matters of public opinion & in the grey area.”

made a further statement, to wit,

“PPB, thanks for your concern. I know what I am talking. Do you honestly think that the papers and CNA knows it all?”

when at the time you disseminated the information, you did not care whether the information was true or false, and you have thereby committed an offence under Section 199(b)(i) and punishable under Section 204(1) of the Securities & Futures Act (Chapter 289).

The respondent claimed trial to the Charge and was acquitted by the district judge (“the trial judge”). Dissatisfied with the result, the Prosecution appealed against the order of acquittal. To facilitate the understanding of this judgment, I now set out the schematic arrangement I have adopted herein:

(A) The facts

(a) The events on 13 February 2004

(b) The telephone calls on 14 and 15 February 2004

(c) The events on 16 February 2004

(d) The effect of the respondent’s forum postings on Datacraft’s share price

(e) The CAD’s investigations

(B) The Statement of Agreed Facts

(C) The parties’ contentions at trial

(a) The Defence’s case

(b) The Prosecution’s case

(D) The trial judge’s findings

(E) Additional evidence adduced during the appeal

(a) The contents of the Additional Statement

(F) The issues on appeal

(G) The applicable law

(a) General construction of s 199 of the SFA

(b) Rejection of the objective interpretation of the mens rea requirement

(c) Subjective interpretation of the mens rea requirement

(i) The case of Derry v Peek

(ii) Application of the Derry v Peek approach to s 199 of the SFA

(H) Appellate review of a trial judge’s findings of facts

(I) Application of the law to the facts of the present case

(a) Whether there were reasonable grounds to believe in the truth of the first post and the second post

(i) The 13 February 2004 SMS and the respondent’s telephone conversations with Sam Wong

(ii) The first OCBC report and the second OCBC report

(iii) The lack of verification from other sources

(b) Whether the respondent did believe in the truth of the information which he disseminated

(i) The respondent’s detrimental reliance on the 13 February 2004 SMS

(ii) The respondent’s attempts to seek verification of the news about the alleged CAD raid

(iii) The respondent’s motive

(c) Evaluation of all the evidence

(J) The sentence

The facts

4 The respondent, aged 42, is currently the managing director of Hui Run Company Ltd, a private limited company incorporated in Shanghai. At the time of the alleged offence, the respondent was a full-time private equities trader. He had been engaged in this line of work for more than ten years, discontinuing it only in 2005.

5 The respondent testified that, as a full-time equities trader, he based his trading decisions on charts, and also received “analysts’ reports, news and market news flow” (see the certified true copy of the notes of evidence for the trial (“NE”) at p 38). He would wake up before the stock market in Singapore opened and digest e-mails from brokers, research analysts and friends which contained reports, news and market rumours. Then, after refreshing his memory from his charts, he would make his trading decisions. As the day progressed, he would continue to receive additional information via e-mails and wired news from Reuters, among other sources, and would also monitor business news updates on television.

6 “Shareinvestor.com” (“SI”) is a financial portal which provides a website featuring real-time prices and information on stocks and shares. In addition, it maintains an online forum (viz, the SI forum) which serves as a platform for the exchange of information on share prices and movements. Before an individual can post an entry on the SI forum, he must first register with SI as a forum member and agree to the terms and conditions of use; thereafter, he has to log on to the SI forum using his registered user name. It is pertinent to emphasise that SI’s website is widely accessed, and may be viewed by all and sundry via the Internet; viewing access is not restricted to members of the SI forum.

7 At the material time, the respondent (under the pseudonym “Zhongkui”) was a member of the SI forum. In the course of his trading activities, he periodically logged on to the forum to view the postings therein. In addition, he often obtained news and information from brokers, friends and other personal contacts connected with the share trading community. One of the persons with whom the respondent periodically exchanged trading information and views was Samuel Wong Kok Piew (“Sam Wong”), an institutional sales dealer with OCBC Securities Pte Ltd (“OCBC Securities”). The respondent initially met Sam Wong through a mutual friend sometime in 2003. Subsequently, Sam Wong sent OCBC Securities’ “Market Round-up” and “Morning News” reports to the respondent, and often provided him with updates on market news and the outlook for various stocks. In return, the respondent provided Sam Wong with market information to which he was privy. Sam Wong testified that he thought the respondent...