Monetary Authority of Singapore reprimands Three Arrows Capital
The Monetary Authority of Singapore (MAS) today reprimanded Three Arrows Capital Pte. Ltd. (3AC) for providing false information to MAS and exceeding the assets under management (AUM) threshold allowed for a registered fund management company (RFMC).
Earlier this week, Voyager Digital Ltd. (TSX:VOYG) announced that its operating subsidiary, Voyager Digital LLC, had issued a notice of default to 3AC for failure to make the required payments on its previously disclosed loan of 15,250 BTC and $350 million USDC.
In August 2013, 3AC obtained its RFMC status which allowed it to carry on fund management business with no more than 30 qualified investors and manage assets of no more than S$250 million. 3AC novated the management of the only fund it managed to an offshore entity in the British Virgin Islands on 1 September 2021.
While it resumed management of a portion of the fund’s assets in February 2022, 3AC notified MAS on 29 April 2022 of its intent to cease fund management activity in Singapore with effect from 6 May 2022.
The reprimand relates to contraventions by 3AC which occurred prior to its notification to MAS in April 2022. MAS has been investigating these contraventions since June 2021. The contraventions, under the Securities and Futures Act 2001 (SFA) and the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR), are as follows:
Failure to ensure that information provided to MAS is not false or misleading. 3AC had represented to MAS that it had novated the management of its fund to an unrelated offshore entity with effect from 1 September 2021. However, this representation was misleading as 3AC and the offshore entity shared a common shareholder, Mr Su Zhu, who is also a director of 3AC.
Failure to notify MAS of changes to directorships and shareholdings. 3AC failed to inform MAS within the required timeline of changes in the directorships and shareholdings of its directors, Mr Su Zhu and Mr Kyle Livingston Davies. (Paragraph 5(7I)(a) of the Second Schedule to the SFR).
Prolonged breach of the AUM threshold. 3AC exceeded its allowable AUM of S$250 million for a RFMC between July 2020 and September 2020 and between November 2020 and August 2021.
In light of recent developments which call into question the solvency of the fund managed by 3AC, MAS is assessing if there were further breaches by 3AC of MAS’ regulations.