Investor champion welcomes reforms
When Singapore gained independence from Malaysia 60 years ago, it began a chain of events that led to a crisis for the Lion City's investors – and the creation of an organisation that has fought for their rights ever since.
Singapore and Malaysia operated a joint bourse for years afterwards, until the Stock Exchange of Singapore was established in 1973. When in 1990 Malaysia delisted all dual-listed stocks from the SES, CLOB (Central Limit Order Book) International was created to allow Singaporean investors to continue over-the-counter trading in 180 Malaysian stocks.
In 1998, during the Asian crisis, Malaysia suddenly imposed capital controls and declared CLOB to be an illegal market, ordering the migration of all of the shares back to the Kuala Lumpur exchange.
David Gerald established the Securities Investors Association (Singapore) in 1999, shortly after retiring as a lawyer, to represent more than 172,000 affected investors.
Taking legal action in Malaysia to try to recover the assets would have been costly with no guarantee of success, but Gerald engaged with domestic and international media to highlight the issue. This is likely to have been a factor in some prominent funds withdrawing from the Malaysian stock market. When the SIAS announced it would take the matter to the World Trade Organisation, Malaysia backed down and a market in the securities resumed in 2000.
Gerald has continued to lead the SIAS since then, as investors dealt with such setbacks as fraud at some Singapore-listed Chinese companies, known as S-chips, and at commodities trader Noble Group. In 2024, it worked with minority shareholders of Great Eastern Holdings when majority shareholder Oversea-Chinese Banking Corp made a low-ball privatisation offer and sent queries on various governance issues to 131 listed companies, with a 74% response rate.
Better outcomes
SIAS's efforts have often helped small investors achieve better outcomes over the years, but the market regulator is looking to introduce measures to give them more power to fight back against unfair treatment.
On July 21, as part of a package of measures to strengthen the local stock market, the Monetary Authority of Singapore announced it would consult this year on measures to give investors more recourse.
One proposal is to enhance existing legal provisions to allow investors to ride on a court action or civil penalty to seek compensation, making it easier and less costly to seek recourse. MAS will also consider how representatives, including organisations such as SIAS, can organise and carry out legal action on behalf of investors, and is looking into setting up a grant scheme to help lower the cost barriers.
“If implemented, this would mark a significant shift in the investor protection framework, and arguably the most meaningful progress in this space in the past 25 years,” said Gerald, president and CEO of SIAS.
The MAS has also consulted on opening up more asset classes to individual investors, including private equity and private credit, as long as they assume responsibility for the risks.
Gerald said opening up such asset classes to retail investors is a “step in the right direction” provided risks are properly disclosed and investors know what they are buying.
“However, there must be safeguards,” he said. “While opening access to private market instruments aligns with financial inclusion, the suitability of such products for retail investors must be carefully considered. One red flag is when private market deals are marketed directly to retail capital. If a deal is truly compelling, then one has to ask: where are the institutions, the family offices, the sophisticated investors?”
Having led SIAS for 26 eventful years, Gerald has plans to step down.
“The biggest challenge has been to appoint someone to succeed me,” he said, noting that “the enormity of the job can be daunting because I have to regularly deal with many different parties”, from unhappy investors who have lost their money, to the regulator and boards of listed companies.
Gerald also noted that engaging with news organisations to promote investor causes is a crucial part of the role and “the problem is many of my potential successors are media-shy”.
He recently picked a successor, who will be announced in due course. The next SIAS head has a solid platform on which to build.
“My biggest achievement is taking SIAS from a small fledgling organisation 26 years ago to become a well-recognised, respected and an important market participant,” said Gerald.