Soh, Quah said to be hit with at least S$400m trading loss

THE penny stock crash in 2013 caused John Soh Chee Wen and Quah Su-Ling to incur at least S$400 million in trading losses, the High Court heard in the ongoing trial of the pair accused of manipulating the market.

Prosecution witness Tai Chee Ming testified on Sept 30 that he and a few others who assisted Quah and Soh in their trades met up after the crash, which wiped S$8 billion off in market value in just days in October 2013. They looked at the total losses in all the known proxy accounts controlled by Quah and Soh, and estimated that the pair were S$400 million in the red as a result of the market crash.

Quah and Soh now stand trial over allegedly rigging the market for the shares of Blumont Group, Asiasons Capital (now known as Attilan Group) and LionGold Corp in August 2012 to October 2013.

By far, Mr Tai is the witness who has given the most detailed account of the alleged modus operandi of the two accused. In his written evidence read out in court, Mr Tai described how he came to know Quah, 55, and Soh, 59, executed the trades in question for them, helped them to obtain share financing, assisted in rolling over the trades and introduced them to the idea of trading via proxy accounts at foreign brokerages Saxo Bank and Interactive Brokers (IB).

Mr Tai testified that the accused, both Malaysians, "did not intend for the crash to occur either" as they were "in fact trying to defend the market in the days leading up to the crash by supporting the share price".

After the stocks tanked in early October 2013, Quah and Soh made arrangements to help the trading representatives with the local brokerages settle part of the losses, since these trading representatives would be personally liable if the account holders were unable to pay up.

However, Soh decided not to pay IB "a single cent" for any of the losses, Mr Tai said, because Soh did not like the brokerage's "aggressive" attitude and the steps it took to recover payment. "As a result, JS (Soh) took steps to frustrate IB's debt recovery efforts."

Soh allegedly directed Mr Tai to make a false statutory declaration to accuse IB of instigating Mr Tai to churn trading volumes in a bid to deny liability for the losses incurred.

When the police started their investigations, Mr Tai initially took the rap for market manipulation as he was grateful to Quah and Soh for helping him out when he was without a job and their trades were the main source of his income in 2012 to 2013, Mr Tai said.

Soh further promised Mr Tai that he would make good the S$2 million IB had seized from Mr Tai's account to set off against trading losses, the court heard.

Should Mr Tai go to jail for market manipulation, Soh allegedly said that he would take care of Mr Tai's family while the imprisonment term is served out and also give him a job after his release.

However, Mr Tai lost his trust in Soh after the former was sued in Malaysia for the IB losses arising from his "unauthorised" trading. He said he found out subsequently that Soh was "the one actually orchestrating the Malaysian lawsuits" against him.

Mr Tai, who is unemployed now, said he raised his concern with Quah when he began to realise she and Soh were involved in "improper trading" as he helped them to execute trades.

Mr Tai got to know Quah when he was a dealer at AmFraser Securities, now known as KGI Securities (Singapore). However, he left shortly and landed a trading representative position at DMG & Partners Securities (now RHB Securities Singapore) through Quah, who knew the then managing director of DMG, Nicholas Ng.

Mr Ng would later assume the position of LionGold's chief executive officer (CEO).

Mr Tai, who communicated with Quah in a mix of Hokkien and English, said: "I was concerned about the trading activities which QSL (Quah) and JS (Soh) were doing and asked QSL whether this was market manipulation. In response, QSL said to me in Hokkien, 'Ler kia si mi? Wa eh chu lai long zong si lawyer'." The statement translates to: "What are you afraid of? My house is full of lawyers".

"I understood QSL to be saying that I should not be worried about getting into trouble because she had many lawyers in her family, " Mr Tai testified. Despite knowing that the trades were "improper", the witness executed them because "I wanted to earn the commission".

He also recounted what the 55-year-old had told him in Hokkien about the market volume of LionGold and Asiasons: "Ma na wu an neh zuay buyer? Market volume si long zong ka ki zuo eh". It means "how can there be so many (genuine) buyers? We make all the market volume ourselves."

Despite most of the volumes for LionGold and Asiasons being generated by the accounts allegedly controlled by the accused, there were some occasions where third parties became involved in the daily trading. Quah was said to refer to these "aliens" entering the market with a large sell order as "si gut" or "wa kao fang" - "damned ghost" and "outsider" respectively.

Mr Tai testified that there was an occasion when Quah forged the signature of an account holder when the latter's authorisation was required for the proxy accounts.

"This was the first time I personally witnessed QSL's ability to forge signatures. Previously, I heard JS refer to QSL as a 'photocopying machine' because she was skilled at forging the signatures of nominees who had allowed JS and QSL to open and control trading and margin accounts in their name."

Mr Tai will continue his testimony on Oct 1.

Tay Peck Gek, Business Times

01 October 2019