Investigate fraudulent practices

The Securities and Exchange Commission is charging Goldman Sachs for fraudulent practices in US courts. A letter published in the Straits Times asked the Monetary Authority of Singapore to take similar action against financial institutions for similar practices in Singapore. MAS has replied that the jurisdiction is different. Another person commented in my blog that fraud is fraud, regardless of jurisdiction.

Someone commented in my blog that such cases are complex and difficult to prove in court. I wish to take issue on this point. Fraudulent practices have to be investigated, if there are reasons to suspect that it has occurred and many hundreds of people are involved as victims. Only the authority (i.e. state or government) has the resources and power to carry out this investigation. The victims do not have the resources and power to take civil action.

After gathering the evidence, the authority has to bring the case in court and convince the judge that there was fraudlent intent. This may be difficult, but one should not shirk this responsibility. In many instances, the charged party may be willing to negotiate a settlement without admission of guilt and to compensate the victims or the state.

I applaud the attorney general of New York State for brining up the case against the financial institutions on the auction rate securities and on financial reinsurance. The financial institutions decided to settle the case out of court and agreed to make suitable compensations. It was not easy for the attorney general to take this task, but he did not find excuses to avoid the respnsibility.

I hope that our authority in Singapore will take the bold step to protect the reputation of Singapore as a safe place for people to invest their money here.

Tan Kin Lian