Blumont’s ex-director, James Hong, declared bankrupt
James Hong, assisting probe into penny stock crash, owes bank $3m
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James Hong, assisting probe into penny stock crash, owes bank $3m
Grace Leong
02 October 2014
Former Blumont Group executive director James Hong has been made bankrupt.
He was one of several executives and directors asked to assist in the probe by the Commercial Affairs Department (CAD) into the penny stock crash in October last year.
In July, Blumont announced that Mr Hong, 47, had resigned as its executive director for “personal interest and reason”.
Four days after his resignation took effect on July 20, he was made bankrupt.
A notice published on Aug 15 in The Straits Times by the Assistant Official Assignee Davyd Chong said a bankruptcy order had been made against Mr Hong on July 24.
Mr Hong was made bankrupt at the instigation of Bank of East Asia over a $3 million debt, according to bankruptcy records.
Bankrupts cannot become a company director without approval from the Official Assignee, which manages their affairs.
The Monetary Authority of Singapore and CAD are investigating suspected false trading and market rigging after shares of Blumont, Asiasons Capital and LionGold Corp skyrocketed between 40 per cent and 160 per cent last August and September before plunging over a few days in October, erasing more than $8 billion in market value.
Blumont and LionGold are among eight mainboard-listed companies and several executives being probed for possible breaches of the Securities and Futures Act. The wider penny stock sector has also been hit.
And Bank of East Asia was not the only party that had sought to make Mr Hong bankrupt.
UOB, according to bankruptcy records, was the first to file a bankruptcy petition against him in January this year over a $244,749 debt.
The Straits Times understands that UOB withdrew its application after Mr Hong made a full settlement to the bank the next month.
Phillip Securities also filed a bankruptcy application against him in July over a $1.78 million debt, but the brokerage withdrew its application after the Bank of East Asia won the bankruptcy order.
Meanwhile, Mr Hong is also embroiled in lawsuits with other banks.
Royal Bank of Canada (RBC) obtained summary judgment against Mr Hong in August in the amounts of $21.5 million and US$611,402 (S$779,862), while Maybank sued him over $435,320 owed. RBC, in court papers, said he had allegedly refused to pay after shares in the penny stock trio, held as security, tumbled in the stock rout.
Mr Hong also lost a case he had brought in London against investment bank Goldman Sachs for failing to get a fair price when it force-sold his shares in the three firms during the stock rout.
London’s Commercial Court ruled in favour of Goldman in July after Mr Hong withdrew his claim before a trial.
He had accused Goldman of breaching its duties by “arbitrarily” selling his shares that it held as collateral after a margin call.
He alleged that the bank had issued a demand notice, giving him less than two hours to raise more than $60 million to cover his loan. Mr Hong failed to meet the deadline and was deemed to have defaulted on his loan obligations. This triggered the force-selling last October. The bank denied the allegations and countersued for £8.8 million (S$18.2 million), alleging Mr Hong’s lawsuit was a “tactic” to delay paying the money he owed.