is it possible for major shareholders or C-suites to sell their shares through nominee accounts and thus avoid signal effects?
Excellent question — and yes, in theory, major shareholders or C-suite executives might try to sell shares through nominee accounts to delay or reduce the visibility of their trades and avoid triggering negative signal effects in the market. However, in Singapore (and most regulated markets), there are strict rules that aim to prevent or detect this type of activity. Here's a breakdown:
Can Insider Sales Be Hidden Using Nominee Accounts?
Yes, it's possible in theory, but:
Nominee accounts can mask the beneficial owner’s identity — on the public share register, only the nominee (e.g., a bank or custodian) appears.
This can reduce visibility of trades made by insiders, unless additional transparency is enforced.
But in Singapore, there are strict disclosure laws to counter this:
1. Substantial Shareholding Disclosure (Section 137Z of the Securities and Futures Act)
If an individual becomes or ceases to be a substantial shareholder (≥5% of voting shares), they must notify the company within 2 business days, regardless of whether the shares are held directly or via nominee.
This includes indirect interests and interests held through a controlled corporation or trust.
2. Insider Trading Prohibitions
It is illegal for directors, officers, or any insider to trade on material non-public information, regardless of how the shares are held.
Selling through a nominee does not exempt insiders from insider trading laws.
3. Directors’ and CEOs’ Disclosure Requirements
Directors and CEOs must disclose any change in interest (including through nominee holdings) within 2 business days under Section 165 of the Companies Act.
4. The Register of Nominee Shareholders (since 2022)
All companies must maintain a Register of Nominee Shareholders.
Though not public, it's available to ACRA and law enforcement to trace beneficial owners.
This limits the ability to permanently conceal trades, even if short-term visibility is reduced.
Why Might Someone Try This?
A C-suite executive or major shareholder might want to:
Avoid triggering market reactions by selling in large volumes.
Delay required disclosures (though this is risky and potentially non-compliant).
Create deniability or distance from the trades.
But this is risky, because:
If regulators determine the sale was an undisclosed insider trade, it can lead to fines, disqualification, or criminal charges.
How Regulators Detect Abuse
Cross-referencing trade data with shareholder registers.
Surveillance systems that flag suspicious trading patterns.
Inspections or audits of the Register of Nominee Shareholders.
Whistleblower reports or complaints.
Summary
Action Legally Allowed? Disclosure Required? Risk
Selling through nominee ✅ Possible ✅ Yes, if you're a director/C-suite/substantial shareholder High if used to hide intent
Avoiding disclosure using nominee ❌ No ✅ Required ❗ Regulatory action likely
Insider trading via nominee ❌ No ❌ Illegal 🚨 Criminal offense
Best Practice for Insiders
Always disclose trades, even if shares are held via nominees.
Ensure compliance officers clear trades in advance.
Avoid any appearance of secrecy or concealment, especially during blackout periods.
