The Monetary Authority of Singapore (MAS) recently issued nine-year prohibition orders (POs) to Three Arrows Capital founders Zhu Su and Kyle Livingston Davies. It has dishonored the Securities and Futures Act 2001 (SFA) and Regulations 2013. The sanctions were enforced because they failed to develop a risk management framework. It also misled MAS, and failed to notify MAS of personnel changes.

3AC Zhu Su and Kyle Livingston Davies Face Prohibition for Regulatory Violations

Zhu Su was CEO and director of Three Arrows Capital Pte Ltd (TACPL). On the other hand, Kyle Livingston Davies was chairman and director. The Securities and Futures Act (SFA) prohibits both parties from managing, directing, or owning major holdings in capital market service providers from September 13, 2023.

MAS began investigating TACPL, Zhu Su, and Kyle Livingston Davies following its June 2022 censure. The warning followed multiple regulatory violations. These included providing incorrect information to the Monetary Authority of Singapore (MAS). It also failed to notify MAS of directorship and shareholder changes. Furthermore, it exceeded the registered fund management business’s asset under management limit.

From August 2020 to January 2022, the Monetary Authority of Singapore (MAS) found many TACPL breaches. TACPL appointed Mr. Cheong Jun Yoong Arthur as a portfolio manager without notifying the MAS as required by the Securities and Futures Regulations (SFR). The delay in notifying MAS of Mr. Cheong’s hiring violated principles.

MAS Concerned About Regulatory Neglect by TACPL Founders

TACPL deceived MAS in January 2022 by claiming they had not informed the authorities of Mr. Cheong’s employment owing to his lack of regulated activities. TACPL fund manager Mr. Cheong worked from August 2020 to September 2021.

TACPL’s absence of a comprehensive risk management framework made it difficult to detect, monitor, and mitigate digital asset investment risks, particularly cryptocurrency risks. As directors of TACPL, Zhu Su and Kyle Livingston Davies were responsible for ensuring compliance with the SFA and Regulations. The study showed MAS’s duties were lacking.

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The MAS is concerned about the 3AC founders’ apparent regulatory neglect and director incompetence. The MAS Assistant Managing Director (Policy, Payments & Financial Crime) Ms. Loo Siew Yee stressed the importance of senior management’s risk management practices in protecting investors. MAS takes wrongdoing seriously removes high-ranking individuals from their leadership posts. The nine-year prohibition orders demonstrate the Monetary Authority of Singapore (MAS)’s commitment to financial sector integrity and regulatory requirements.