Masterminds of 2013's penny stock crash charged in court
The curtains rose on Singapore's biggest market-rigging
scandal on Friday, as the alleged perpetrators who wiped out S$8 billion from
the market in the penny stock crash of 2013 appeared before the court.
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Jamie Lee
26 November 2016
The curtains rose on Singapore's biggest market-rigging scandal on Friday, as the alleged perpetrators who wiped out S$8 billion from the market in the penny stock crash of 2013 appeared before the court.
The prosecution slapped 181 charges on John Soh Chee Wen, and 178 on Quah Su Ling, the former chief executive officer of IPCO International Ltd.
These are for alleged breaches in Singapore's Securities and Futures Act, which governs conduct in the securities market; the pair are also said to have cheated financial institutions into providing millions in margin financing that funded a vast web of manipulation.
A joint statement by the Attorney-General's Chambers, Singapore (AGC), the Commercial Affairs Department (CAD) and the Monetary Authority of Singapore (MAS) said the duo are accused of "orchestrating a massive fraud to manipulate the market" in the three listings, Blumont Group, Asiasons Capital and LionGold Corp.
Their court appearances came a day after their arrest.
The AGC also charged Goh Hin Calm, allegedly the pair's key accomplice, with six offences. Goh, formerly the senior finance and administration manager of IPCO, is alleged to have been the "treasurer" of these manipulated trades and to have "intentionally" aided Soh and Quah to create a false market for the shares of the three companies.
Goh will plead not guilty, said his lawyer, Nicholas Narayanan from Nicholas & Tan. The trio allegedly had rigged or helped to rig the market of the three counters between August 2012 and October 2013. Their manipulations caused a collapse in the counters' share prices on Oct 4, 2013 - but not before a swell of more than 800 per cent in their prices in less than nine months. The joint statement by the AGC, CAD and MAS said: "In the course of investigations, CAD and MAS raided over 50 locations and interviewed more than 70 persons. The investigations covered extensive documentary evidence comprising more than two million e-mails, half a million trade orders and thousands of telephone records and financial statements."
The three authorities noted that the "complex and elaborate fraud" perpetrated by Soh, Quah and their accomplices had involved a web of more than 180 trading accounts which carried out the manipulative trades in Blumont, Asiasons and LionGold shares.
These accounts were exploited "to create an illusion of liquidity and demand for these shares by making thousands of manipulative trades in each of the three counters, and to control the supply of these shares available to the market so as to influence the price of these counters".
AGC, CAD, and MAS said these trading accounts belonged to 59 individuals and corporate nominees, who had handed over control of their accounts to Soh and Quah for their use; the trading accounts were linked to 20 trading representatives.
The three regulators said they are still investigating nominee account holders and traders who may have aided in the offences. These individuals include directors and members of the senior management in Blumont, Asiasons, LionGold and their then-related companies "at the material time", they said.
The authorities further claimed that Soh and Quah, said to be in a relationship, had also conspired to deceive Goldman Sachs International and Interactive Brokers into extending more than S$170 million in margin financing.
They did so by using Blumont, Asiasons and LionGold shares as collateral to secure this credit, while "dishonestly concealing" from the lenders of their market manipulation.
The lawyers were in court on Friday to settle bail proceedings.
Goh's bail was initially set at S$1 million, but was reduced by the judge to S$750,000, The Business Times understands. Mr Narayanan cited personal circumstances of his client, including a heart condition.
Soh, a Malaysian, was denied bail - a restriction which his lawyer, Senior Counsel Tan Chee Meng of WongPartnership, said would be "vigorously" contested.
An undischarged bankrupt since January 2002, Soh has had his passport impounded by the authorities since 2014.
Mr Tan said at the start of the hearing that he had had only five minutes to speak with his client in the past few months - and that was in court that very afternoon.
He asked that the court be adjourned so that Soh can review the affidavit filed by the prosecution, which runs into more 150 pages, and to prepare a response. Soh will thus be reviewing the court papers while in prison.
The prosecution said the bail amount had to represent the nature and gravity of the offences, with the charges of market manipulation here unprecedented in terms of severity. The prosecutor added that the market rigging has hurt Singapore's reputation as a financial centre.
Court has been adjourned to Dec 20.
Amendment note: The story has been clarified to show that the three regulators said they are still investigating directors and members of the senior management in Blumont, Asiasons, LionGold and their then-related companies "at the material time".