Three Arrows Capital gets a slap on the wrist from Singapore financial watchdog

Singapore’s financial regulators have accused the three Arrows Capital (3AC) of providing false information about its business in Singapore.

The Monetary Authority of Singapore (MAS) said 3AC has exceeded the threshold for the number of assets under management (AuM) that domestic investment funds can hold. According to an official MAS statement, 3AC has been in breach of regulations since at least July 2020.

As a Registered Fund Management Company (RFMC), 3AC has been authorized to manage assets of up to $ 250 million from 30 accredited investors. However, the company exceeded the allowable AuM limit between July 2020 and September 2020, and between November 2020 and August 2021.

In September 2021, 3AC renewed its RFMC status from 2013 and moved the fund to an offshore entity in the British Virgin Islands. The company managed some of the fund’s assets in February 2021, but notified MAS that it plans to suspend all fund management activities in Singapore from May 6, 2022.

Singapore regulators say 3AC’s claim to move the fund to an offshore entity is “false and misleading.”

“This phrase was misleading because 3AC and the offshore entity shared a common shareholder, SuZhu. SuZhu is also a board member of 3AC.”

The disapproval letter from MAS has no legal impact on the company. However, recent developments that questioned the solvency of 3AC have led MAS to begin a deeper investigation into whether the fund violates other regulations. If the investigation is fruitful, MAS may file a proceeding against 3AC, claiming fines and other damages.

The rebuke came at a difficult time for Three Arrows Capital as a court in the British Virgin Islands ordered the fund to be liquidated. Earlier this week, Voyager Digital issued a default note to 3AC after the fund failed to repay its $ 660 million loan.