The Monetary Authority of Singapore (MAS) said China Aviation Oil Holding Company (CAOHC), which is owned by the Chinese government, had "admitted to civil penalty liability for contravening" the local Securities and Futures Act.

CAOHC breached insider trading laws last year when it misled investors about how the cash proceeds of $185 million raised from the share placement of 145 million shares in China Aviation Oil would be used.

The Beijing-based CAOHC, at the time of the placement, already knew its subsidiary was in deep financial trouble and that the funds raised would be used to rescue the Singapore-listed firm.

However, it did not disclose the information to investors, the MAS said in a statement.

"Insider trading undermines investors' confidence in the integrity of our capital markets," said Shane Tregillis, the central bank's deputy managing director for market conduct.

"The Singapore authorities will take firm and effective action against persons who contravene our insider trading laws."

Tregillis said the penalty imposed on CAOHC "is a signal to the market that we expect all entities undertaking transactions in this jurisdiction to fully comply with Singapore law."

MAS said the civil penalty action brought against CAOHC is separate from the criminal charges lodged against China Aviation Oil executives.

China Aviation Oil, a former darling of stock punters, sought court protection from creditors in November last year after revealing it lost US$550 million in derivatives trading.

It was Singapore's biggest business scandal since the collapse of British merchant bank Barings in 1995 after young trader Nick Leeson tried to hide over US$1 billion in losses from financial derivatives trading.

China Aviation Oil's suspended chief executive, China-born national Chen Jiulin, was charged with 15 counts of cheating and forgery while running the Singapore Exchange-listed jet fuel trader.

Four other China Aviation Oil executives were also charged in connection with irregularities leading to the company's near collapse.

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