Osim privatisation bungle: Credit Suisse, Morgan Lewis Stamford criticised for failings

Mr Ron Sim, founder, chairman and chief executive of Osim International.
Mr Ron Sim, founder, chairman and chief executive of Osim International.PHOTO: OSIM

SINGAPORE - The Securities Industry Council (SIC) has criticised Credit Suisse and Morgan Lewis Stamford for failing in their responsibilities when they acted as financial and legal adviser respectively for Osim International during its privatisation earlier this year.

Their actions resulted in Osim founder Ron Sim's offer vehicle purchasing shares above its stated final offer price of S$1.39 on a cum-dividend basis (S$1.37 on an ex-dividend basis) in April.

An inquiry by the SIC has found both Credit Suisse and Morgan Lewis Stamford to have breached the Code and put their client in breach of the Code.

The SIC said in a statement on Thursday evening: ""As financial adviser to the offeror, Credit Suisse should have been alert to the erroneous use of the dates in the context of market purchases and exercised independent judgement when making the purchases and/or sought further clarifications from Morgan Lewis Stamford before making the purchases."

Morgan Lewis Stamford failed to take into account whether Osim shares had started trading ex-dividend, and the implications on the price at which market purchases could be made.

"Instead, Morgan Lewis Stamford erroneously took reference from the books closure date, which was not relevant for the purpose of determining the maximum price for market purchases. In this case, the erroneous advice had contributed to the purchases being made in breach of the Code.

However, the SIC said it would not take further action against Morgan Lewis Stamford and Credit Suisse since Osim shareholders did not suffer a loss as a result of the bungle, as moves were quickly taken to compensate those shareholders who sold their shares at the lower price.

The SIC also noted that both Morgan Lewis Stamford and Credit Suisse have since taken steps to improve their internal processes and controls to prevent a similar incident from re-occurring.