Knowledge Highlights 7 November 2025
MAS consults on measures to enhance investors’ ability to seek civil compensation for losses suffered due to market misconduct
On 24 October 2025, the Monetary Authority of Singapore (“MAS”) published a consultation paper seeking feedback on proposed measures to enhance investors’ ability to seek civil compensation for losses suffered from market misconduct. The consultation closes on 31 December 2025.
The proposed measures follow the recommendations of the Equities Market Review Group to bolster investor confidence through strengthening investor protection by enhancing recourse avenues for losses suffered due to market misconduct.
Under the Securities and Futures Act 2001 (“SFA”), there are currently two ways for investors to seek compensation for losses arising from market misconduct. Investors may (i) bring a private action in court for compensation (“independent action”); or (ii) apply to court for compensation after the offender is convicted or a civil penalty order is made against him (“piggyback action”).
MAS has received feedback that retail investors face challenges in commencing civil action. These include difficulties in self-organising and finding sufficient funds for legal advice. MAS seeks feedback on proposed enhancements which aim to strengthen the investor recourse regime in three key areas: (i) facilitating self-organisation; (ii) providing access to funding; and (iii) reducing legal barriers to civil action. At the same time, MAS is reviewing ways to put in place appropriate safeguards to guard against frivolous legal actions which would place undue burden on the market.
This article provides an overview of the proposed enhancements.
Facilitating self-organisation
Although multiple investors who suffer losses as a result of market misconduct may pool resources and take collective action, they may face difficulties organising themselves and finding someone to step forward as the lead claimant. Under the current law, an independent third party can assist claimants but it cannot bring action on behalf of claimants.
MAS proposes to introduce an option for an independent party to be appointed as a designated representative (“DR”) to bring legal action on behalf of investors. The independent party will have to apply to be approved as a DR and to be given legal standing to bring the action. MAS will explore appropriate mechanisms for approving the DR, including possibly through the court.
MAS seeks views on the criteria the approval authority should consider when approving a DR:
- A sufficient number of affected investors must consent to the DR acting on their behalf. What constitutes a “sufficient number” will be determined on a case-by-case basis. MAS will also explore whether investor groups with common interests should be required to appoint common DRs.
- The DR must be independent of the wrongdoer and must not have any conflicts of interest that may compromise its ability to act against the wrongdoer objectively. The DR must also disclose any relevant relationships with the wrongdoer or the affected investors that could potentially influence its representation.
- The DR must not enter into any fee arrangement with the investors that gives it a direct financial interest in the outcome of the case. MAS proposes that the DR be compensated by way of a pre-agreed fee or fee structure, e.g. a fixed fee per investor, or a cost-plus model. The agreement will have to be submitted to the approval authority for endorsement/approval.
Providing access to funding
A key barrier is the high costs of bringing legal action. MAS proposes establishing a grant scheme to co-fund meritorious investor actions, with robust safeguards such as appropriate grant parameters and fund governance structures.
Grant parameters
- Qualifying investors: To encourage consolidation of claims and to avoid fragmentation of similar claims which could burden the legal system and the grant scheme, MAS proposes that investor groups must consist of a minimum number of retail investors to be eligible for the grant. As a start, a minimum threshold of 50 retail investors is proposed, with leeway for the Approval Panel (see section below on “Grant governance”) to adjust the threshold on a case-by-case basis. The Approval Panel may require investor groups who share similar interests to consolidate their claims as a condition for grant approval. Institutional investors may participate in these investor groups but will not count toward the minimum threshold.
If a DR has been appointed, grant approval will be conditional upon the DR receiving approval to act for the investor group. The DR must satisfy the Approval Panel that it has the operational capability to bring the action on behalf of investors. This includes the ability to manage investor communications, coordinate legal proceedings, and maintain appropriate systems for record-keeping and investor updates. This ensures the DR can effectively handle the complex administrative requirements of group legal actions and account for the grant amounts received.
- Qualifying cases: The grant will only be available for actions commenced in the Singapore courts for alleged market misconduct under the SFA. The grant will cover the securities market as Singapore retail investors mainly participate in the securities market. The grant is not intended to cover disputes with shareholders, directors, or the management of a listed issuer. Investors will have to provide the Approval Panel with a legal opinion provided by a law firm from a pre-approved panel to assist in determining whether a case justifies funding. Initial funding will be provided to investors to obtain the legal opinion.
- Qualifying costs: MAS proposes that the grant may be applied towards all necessary costs to facilitate effective collective action and conduct of civil litigation. These include publicity costs of seeking out fellow affected investors, costs of organising investor briefings and meetings to coordinate investors, costs of obtaining a legal opinion to help investors assess case viability, legal fees, expert fees for expert evidence to the court, and potential adverse cost orders for unsuccessful actions. For greater certainty over legal fees, the grant can only be used for legal fees incurred from a pre-approved panel of law firms.
The grant quantum will be capped for each successful application, with the exact cap determined on a case-by-case basis by the Approval Panel. Any cost incurred beyond the capped grant quantum will have to be borne by the participating investors.
To discourage frivolous participation in investor lawsuits, participation fees will be collected from each of the investors upon grant approval. MAS seeks views on whether a participation fee of S$200 and S$500 per investor for piggyback actions and independent actions respectively would be appropriate. The participation fees collected will be paid into the fund to be used for other eligible investor actions.
To enhance the sustainability of the grant scheme, MAS also seeks views on whether the grant scheme should include a mechanism to recover costs from successful compensation awards before the balance is distributed to participating investors.
Grant governance
To ensure robust and independent review of grant applications, the Approval Panel will comprise legal academics, industry professionals, lawyers, professional litigation funders, and/or retired judges to assess and approve grant applications. The Approval Panel will assess if the grant parameters are met and may exercise its discretion to vary the minimum number of investors where required. Before providing funding, the Approval Panel will independently assess the legal merits of the case and determine if there is a reasonable likelihood of investors receiving successful compensation.
Reducing legal barriers to civil action
MAS proposes enhancements to facilitate investors’ pursuit of compensation claims.
Enhancement of provisions providing for piggyback action
- Scope of provision: Under the provisions in the SFA providing for piggyback actions, investors can bring compensation claims by riding on a criminal conviction or civil penalty order made against a wrongdoer. MAS proposes to expand the scope of the piggyback provisions to include civil penalty settlements which the wrongdoer has entered into with MAS, or default judgments and consent orders against the wrongdoer. This will allow investors to use a wider range of resolved enforcement cases where there is admission of liability to commence piggyback claims.
- Simplifying the process: Currently, investors must follow formal procedural rules of court, which include making an application to the court, advertising the application, filing affidavits to prove their claims, and attending a hearing of the application. MAS proposes to simplify the process, such as by providing template forms and affidavits for use by investors. Further, to increase awareness of the piggyback action as an avenue for civil recourse among retail investors, MAS intends to publish a guidance note explaining when and how investors can use the piggyback provision.
Provisions to facilitate proof of reliance on false and misleading statements
Under the SFA, investors seeking compensation for losses suffered due to false or misleading statements or omissions must establish that they traded in the capital markets product in reliance on the misstatement or in ignorance of the omitted fact. MAS recognises that reliance or ignorance may be difficult to establish, for instance, if there are concurrent market rumours or business developments relating to the listed company. MAS proposes amendments to the SFA to alleviate this difficulty, for example, by providing that proof of certain matters is sufficient to demonstrate the requisite reliance or ignorance. These matters may include: (i) the misstatement is made to investors or is publicly known; (ii) the misstatement had a material influence on the price of the capital markets product in question; and/or (iii) the misstatement had a material influence on the trading behaviour of the investor.
Remove statutory caps on compensation
Under the SFA, an investor who brings a claim for compensation for market misconduct offences (such as insider trading, market manipulation, or failure to make continuous disclosure) cannot obtain compensation in excess of the amount of profit gained or loss avoided by the wrongdoer. MAS proposes to remove the statutory cap on compensation for all market misconduct offences. The court will be given the flexibility to determine compensation amounts on a case-by-case basis, consistent with its standard approach to assessing damages in civil claims.
Reference materials
The following materials are available from the MAS website www.mas.gov.sg:
