Answers emerge on scope and status of penny stock crash investigation

Leu Siew Ying, The Edge Singapore
1 February 2016


A trove of information about the investigation into the steep rise and eventual crash in October 2013 of Asiasons Capital (now Attilan Group), Blumont Group and LionGold Corp came to light this past week. Not only did the authorities finger Malaysian businessman John Soh Chee Wen as the probable mastermind of the whole affair, but they also pledged to bring charges against the wrong­ doers before year-end.

Comments

Guanyu said…
Answers emerge on scope and status of penny stock crash investigation

Leu Siew Ying, The Edge Singapore
1 February 2016

A trove of information about the investigation into the steep rise and eventual crash in October 2013 of Asiasons Capital (now Attilan Group), Blumont Group and LionGold Corp came to light this past week. Not only did the authorities finger Malaysian businessman John Soh Chee Wen as the probable mastermind of the whole affair, but they also pledged to bring charges against the wrong­ doers before year-end.

Details of the investigation became public as a result of Soh’s going to court to have his passport returned in order to visit his ailing mother and attend his son’s wedding in Malaysia. The Commercial Affairs Department (CAD) and Monetary Authority of Singapore (MAS), which are investigating the penny stock crash, sought to have his motion dismissed by the High Court on the grounds that he is a “very high flight risk” and that their probe is now at the tail-end.

According to affidavits filed by officers of CAD and MAS, raids were carried out at more than 50 locations on April 2 and 3, 2014. They included residences, offices and brokerage firms. The raiding parties seized 147 communication devices including phones and tablets, 413 computing devices including desktop and laptop computers, portable storage devices and 175 boxes of documentary evidence comprising accounting records, bank and trading statements and corporate secretarial records as well as telecommunication records.

In the course of the investigation, more than 70 persons were interviewed. Investigators also reviewed more than 20,000 emails extracted from the exhibits, monthly statements of more than 500 trading accounts and 1,100 banking accounts. They also studied close to a million orders transacted in each of the three penny stocks over a two year-period. Many of the documents obtained dated back as early as January 2011.

So far, the investigation has revealed a “co-ordinated scheme involving a large number of perpetrators” to engage in activities to infringe Sections 197 and 201 of the Securities and Futures Act (SFA). Some 25 trading representatives are believed to have assisted or participated in the scheme.

Evidence points to Soh

Sheryl Tan Teck Yeong, the CAD officer leading the joint investigation, says in her affidavit that evidence unearthed shows that Soh was responsible for trades in shares of Asiasons, Blumont and LionGold across a large number of accounts. She says she has reason to believe that Soh has, in conjunction with several others, engaged in false trading and market rigging activities that violated Section 197, and activities that have operated as a fraud and deception upon other persons which breached Section 201. “Our investigations reveal that [Soh] plays a primary role in the manipulative activities and the evidence suggests that he is the mastermind of the scheme,” says Tan.

Interestingly, Tan says in her affidavit that CAD officers recovered “documentary exhibits” that pointed to Soh’s involvement in the trading of the penny stocks during a search on April 2, 2014 of the residence of Quah Su Ling. Tan’s affidavit states that Soh was found to be residing there. The documentary exhibits found at the premises included bank and trading statements, minutes of meetings and correspondences, as well as electronic and computing devices such as data storage devices and handphones.

Quah is former CEO of Ipco International. She is also one of at least three individuals whose margin trading accounts with Goldman Sachs were force-sold on Oct 1, 2013. The sales eventually led to the crash in the share prices of Asiasons, Blumont and LionGold on Oct 4. The three stocks lost some $8 billion in combined market value within a few days.
Guanyu said…
Investigation to be concluded

CAD’s Tan also defended the amount of time it has taken to investigate the case by comparing it with large-scale investigations into securities-related offences in other countries. She noted in her affidavit that the first criminal proceedings against individuals accused of manipulating the Euro Interbank Offered Rate were issued on Nov 13, 2015, almost four years after investigations by the UK’s Serious Fraud Office commenced. She also pointed out that investigations into insider trading activities by Raj Rajaratnam, co-founder of Galleon Group, had taken 12 years.

The investigation into the penny stock crash is not expected to take much longer, though. Last week, Deputy Public Prosecutor Gordon Oh told the High Court that the investigation was now nearing completion and charges could be brought as early as September.

For investors who have been groping for answers over the last two years, that would bring some much-needed closure to the whole sorry affair.

Popular posts from this blog

Two ex-UOBKH staff charged with lying to MAS over due diligence reports on a Catalist aspirant