ISR Capital's finger-pointing misses the point
It almost never ends well when the Singapore Exchange cuts
to the chase after pounding firms on its cross hair with a litany of questions
on the trading of their shares and corporate transactions.
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Anita Gabriel
12 December 2016
It almost never ends well when the Singapore Exchange cuts to the chase after pounding firms on its cross hair with a litany of questions on the trading of their shares and corporate transactions.
The regulator's persistent queries claimed one 'victim' three weeks ago - investment firm ISR Capital.
With thinning patience, the SGX chose a severe and unbeaten track (at least since its unprecedented move in 2013 amid the penny stock rout when it temporarily suspended trading in three counters) to suspend trading in ISR Capital shares under its trading rules with immediate effect on Nov 27.
Lest one is mistaken, this is a no-nonsense punishing move on SGX's part on the basis that it was a market safeguard as in its own words, "there are circumstances that prevent trading in the shares on an informed basis". Until there is fair, orderly and transparent trading in the company's shares, the suspension will stay, said the SGX.
The mainboard-listed firm which in May scrapped plans to transfer to the Catalist had it coming, one could argue.
The company has drawn at least five trading activity queries from the securities market's frontline regulator this year since May.
If that's not enough to send one's spider sense tingling, let's toss in the nearly ten occasions when the SGX gave the company the "third degree" on issues ranging from valuation of a Madagascar mining concession it wants a bigger slice of - this is still pending - to utilisation of bond proceeds and its financial results announcements. Noteworthy is that the SGX's queries in many instances were lengthy and painfully detailed.
The reasons for the trading suspension seemed loud and clear (enough) but somehow, not so for the beleaguered firm that has said it was engaging the regulator to lift the rap.
On Nov 24, the stock lost over half its value from 28.5 Singapore cents to 12.7 Singapore cents, prompting the fourth trading activity query in six months from the SGX which led to a trading halt request and eventually, the suspension.
In two statements issued about a week after the trading suspension, ISR Capital took the unusual step to point the finger at the media for the volatility in the stock price. The "inaccurate media reports" had implied links between the company and Singapore regulators' probe into the October 2013 penny stock crash which had led to the price swings in the recent days prior to the trading suspension, said its chief executive, Quah Su Yin on Dec 1.
On the same day the stock had plumbed, reports emerged that Singapore regulators had hauled up the "masterminds" of the manipulation of the three stocks including John Soh Chee Wen and Quah Su-Ling. They were charged a day later.
"I wish to state categorically that there is no direct or indirect link of ISR Capital Limited (to the penny stock probe), its directors and officers save for the fact that I am the sister of one of the three co-accused charged on 25 November 2016," said Ms Quah Su Yin.
But like it or not, it's hard to dismiss any connection between ISR Capital and two of the three hammered down penny stocks - Asiasons Capital (now called Atillan Group) and LionGold Corp.
Market watchers may know this already - the sharp swings in ISR Capital shares is not just a thing of 2016 - the stock has vaulted from a low of 0.3 Singapore cents on Jan 18 to 33 Singapore cents on Oct 31 - and certainly not limited to the month of November.
It was also a 2013 trend. Yes, then when share prices of Asiasons, LionGold and Blumont Group rose to dizzying highs and later, suffered a ghastly crash; ISR Capital was one of several other counters that mirrored the pattern.
Recall that back in April 2014, ISR Capital was one of several companies that the Commercial Affairs Department had served a notice on to cough up information amid a sweeping probe into the penny stock rout which would later be referred to as the largest market manipulation and securities fraud case in Singapore.
Rightly or wrongly, the similar rush and fall in the stock's showing in the past and the common shareholders and directors had underscored the company's connection to the hammered penny stocks whose trading have been under probe by Singapore regulators for over two years.
It's no wonder then that ISR Capital's recent attribution of the sharp gyrations in its counter to "inaccurate" media reports may seem somewhat misplaced.
It also unwittingly undermines the homework that the SGX must have surely done before it moved to, for the first time in three years, suspend trading in the stock under its trading rules.