Singapore proposes measures to enhance investor recourse for market misconduct

The Monetary Authority of Singapore (“MAS”) on 24 October 2025 published a consultation paper proposing measures to enhance investors’ ability to seek civil compensation for losses suffered from market misconduct. This comes as part of the Equities Market Review Group’s proposals to improve the ecosystems’ attractiveness to quality listing and improve investor interest and confidence in the securities market.

Currently, under the Securities and Futures Act 2001 of Singapore (“SFA”), there are two ways for investors to seek compensation for losses arising from market misconduct:

• investors may bring a private action in court for compensation under section 234 of the SFA (“independent action”); and
• investors may apply to court for compensation after the offender is convicted or a civil penalty order is made against him under section 236 of the SFA (“piggyback action”).

However, investors face significant challenges in commencing such legal action, such as evidential hurdles, high costs and complex procedural steps. Taking such feedback into consideration, MAS has proposed enhancements in the following three key areas:

• Facilitating self-organisation
  
  To address challenges in bringing collective action, MAS proposed allowing an independent party to be appointed as a designated representative to bring legal action on behalf of affected investors for market misconduct cases. To be approved as a designated representative, an application needs to be made for legal standing to bring the action and the designated representative must satisfy specified criteria such as having no conflicts of interests and no direct financial interest in the outcome of the case (e.g. no fee which is contingent on successful action or pegged to the amount of compensation obtained by the investors or the costs awarded to the investors).
   
• Providing access to funding
  
  To address the high legal costs of bringing an action, MAS proposed establishing a grant scheme to co-fund meritorious investor actions. To prevent frivolous or opportunistic litigation, MAS proposed the following safeguards: 

Grant Governance		MAS proposed to form an approval panel to assess and approve grant applications (the “Approval Panel”). The Approval Panel will for each application assess if the grant parameters are met and independently assess the legal merits of the case and determine whether there is a reasonable likelihood of investors receiving successful compensation, before providing funding.
Grant Parameters	Qualifying Investor	A minimum of 50 retail investors with discretion for the Approval Panel to adjust the threshold on a case-by-case basis.
	Qualifying Case	Only for actions commenced in Singapore courts for alleged market misconduct under the SFA.   A legal opinion will need to be provided by investors to the Approval Panel to aid in determining whether a case is legally meritorious to justify funding.
	Qualifying Costs	The grant may be applied to all necessary costs to facilitate effective collective action and conduct of civil litigation subject to a cap determined on a case-by-case basis by the Approval Panel, and legal fees can only be incurred from pre-approved panel law firms.   MAS has also proposed to collect participation fees of S$200 and S$500 per investor for piggyback actions and independent actions respectively upon grant approval. It is also considering whether the grant scheme should seek to recover the grant amount dispensed from the total compensation successfully awarded, before allowing the balance to be distributed to the participating investors.

• Reducing legal barriers to civil action
  
  MAS has proposed various enhancements to independent action and piggyback action to address possible frictions for investors. These include:

Enhancement of piggyback action	MAS proposed widening the scope of piggyback action to include civil penalty settlements, default judgments and consent orders and simplifying the process to use piggyback action by providing template forms and affidavits and publishing a guidance note.
Facilitate investors’ proof of their reliance on false and misleading statements	MAS has proposed amendments to the SFA to ease investors’ proof of reliance in cases of misstatements or omissions in relation to the trading of capital markets products, recognising that investors seeking compensation for losses suffered due to false or misleading statements or omissions under section 234(1A) of the SFA may find it difficult to establish such reliance, if there are concurrent market rumours or business developments relating to the listed company.
Remove statutory caps on compensation	MAS has proposed the removal of existing statutory caps that limit compensation amounts for all market misconduct offences, so that the court may determine what would be a reasonable compensation amount in each case.

For the avoidance of doubt, the enhancement of investor recourse is intended to complement, not replace, public enforcement actions. The MAS has asked for feedback by 31 December 2025.

Legal teams within financial institutions should prepare for a more active litigation landscape where more focus will be on pre-emptive risk management and ensuring that internal misconduct reporting mechanisms are sufficiently robust. Cross-border firms should also assess how these proposals impact its business.

If you have any questions or would like to submit feedback on these proposals, please reach out and contact us.