The hedge fund manager, Three Arrows Capital (3AC) received a sanction from the Monetary Authority of Singapore (MAS) for providing false information and exceeding the asset under management threshold designated by law.
The regulatory watchdog announced today that the investment firm had overdone itself for a registered fund management company (RFMC) per the number of assets it had in its coffers.
Initially, in 2012 when the distressed hedge fund manager started its operation in Singapore, it managed about 30 investors with a cumulative asset worth S$250 million. It was registered in Singapore as a fund management company and allowed that particular threshold as its expected assets under management (AUM).
Between July 2020 to August 2021, the firm notably exceeded the AUM more than once. Sometimes last year, the firm moved the management of its funds to a British Virgin Islands organization. Shortly after, 3AC notified MAS of the transfer of management rights.
Although, the firm later took over the management of the fund from the BVI off-shore firm early this year, a move that was falsely communicated to the regulator. Barely two months later, the financial managers informed MAS of the intention to cease fund management operations in Singapore.
What 3AC failed to tell the regulator was that Zhu Su, one of its founders, is also a stakeholder in the British Virgin Islands firm despite being a director at 3AC in Singapore. Both its founders, Zhu Su and Kyle Davies had also transferred ownership positions without the knowledge of MAS.
The hedge fund managers compromised the directorship and shareholding rights without authorization. On finding out, MAS argued that the act is rather dubious and misleading. These suspicions led to the commencement of intense investigations into the firm back in June 2021.
The charges against Three Arrows Capital are into three counts judged under the Securities and Futures Act 2001 (SFA) and the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR). They are failing to provide accurate information, failing to notify MAS about the transfer of position, and breach of the AUM threshold.
3AC is now insolvent and has slipped into liquidation. Voyager Digital, a crypto brokerage firm, is likely to also sanction Three Arrows Capital after it failed to pay back a loan of 15,250 Bitcoins (BTC) and $350 million USDC.