Soh Chee Wen & The Manipulation Of Penny Stocks in Singapore: Singapore court finds John Soh and partner guilty of share price manipulation & More News Here

MALAYSIAN businessman John Soh Chee Wen — the accused mastermind of the 2013 penny inventory crash — and his co-conspirator Quah Su-Ling had been discovered guilty by the Singapore High Court of the nation’s most critical case of market manipulation final Thursday.  They have been convicted of legal conspiracy, together with false buying and selling, price manipulation, deception and dishonest.

Soh was convicted of 180 of the 188 expenses confronted whereas Quah was discovered guilty of 169 of the 178 expenses confronted. They had been convicted of share manipulation and dishonest expenses however had been every acquitted of eight expenses of deception. They might be sentenced at a later date.

A joint press launch by the Singapore Police Force (SPF) and Monetary Authority of Singapore (MAS) on May 5 stated that, for every of the varied expenses, the convicted events face a jail time period of between two and 10 years. They may additionally face a wonderful of between S$10,000 and S$250,000 for the totally different expenses.

The two “long-term partners in both business and personal affairs” had been on trial since March 2019 for orchestrating the manipulation of three penny shares, Blumont Group, Asiasons Capital and LionGold Corp — collectively often known as BAL — between 2012 and 2013. The shares crashed in October 2013 and destroyed some S$8 billion in market worth.

Now underneath new shareholders and administration, Blumont has been renamed Southern Archipelago, Asiasons was first named Attilan Group earlier than it was delisted whereas LionGold has been renamed Shen Yao Holdings.

The episode has been described as Singapore’s most critical case of share manipulation. The Edge Singapore first reported in September 2014 — a 12 months after the crash — that Soh may need been concerned. Soh and Quah had been charged on Nov 25, 2016. He has been in remand since November 2016, whereas Quah is out on bail for S$4 million.

“Having considered the materials put before me, beyond that set out above, I am satisfied, beyond reasonable doubt, that the accused persons conspired to support” the share costs of BAL, stated Justice Hoo Sheau Peng on May 5 to a packed courtroom.

The court additionally discovered that Soh and Quah carried out their conspiracies by controlling and utilizing 189 securities buying and selling accounts held with 20 monetary establishments — each native and overseas starting from small brokerages to world banks — and 60 people and company nominees (managed accounts) to make hundreds of manipulative trades in every of the three counters.

Through this community of buying and selling accounts, the BAL shares had been traded amongst each other to generate synthetic liquidity and demand for the shares, to trigger the share costs to rise over time, and to retain management of giant quantities of shares with out disclosing this to the market.  Through this they “monitored, managed and coordinated the many moving pieces of their scheme,” Justice Hoo stated.

Inflating share costs

The duo adopted contra buying and selling and wash buying and selling to inflate the liquidity of the BAL shares. Contra buying and selling entails shopping for or promoting shares in an organization inside six months of buying and selling or transacting in an reverse transaction whereas wash buying and selling entails shopping for shares of an organization via one dealer whereas promoting shares via a special dealer.

Acting on the idea that every one 189 related accounts had been managed, Justice Hoo referenced prosecution professional witness Professor Michael James Aitken’s proof that wash buying and selling pertaining to Blumont shares occurred on 170 of 190 buying and selling days. This accounted for a median of 17% of the overall quantity of Blumont shares traded in a day.

Meanwhile, wash trades had been recognized on each buying and selling day of the related interval of the false expenses for Asiasons and accounted for a every day common of 45% of the overall buying and selling quantity of Asiasons shares.

Similarly, wash trades had been recognized for LionGold shares on all days besides one, and accounted for a every day common of 48% of the overall buying and selling quantity. “These volumes of wash trading clearly support the conclusion that the accused persons’ use of the 187 controlled accounts was illegitimate,” the decide stated.

In the course of their investigations, officers from the Commercial Affairs Department (CAD) and MAS raided over 50 places and interviewed greater than 70 individuals. The course of lined in depth documentary proof comprising over two million emails, half one million commerce orders, hundreds of phone data and monetary statements.

Separately, Soh was discovered guilty of expenses pertaining to his involvement with the administration at BAL whereas an undischarged bankrupt. He was additionally convicted of the seven witness-tampering expenses involving prosecution witnesses equivalent to Ken Tai Chee Ming, Leroy Lay Chee Heong and Gabriel Gan Tze Wee, who had been identified associates of Soh.

“[Soh] specifically asked four witnesses to hide the truth about various aspects of [his and Quah’s] scheme from the investigating authorities,” Justice Hoo stated. “[Soh] intentionally perverted or attempted to intentionally pervert the course of justice.”

This was seen from how the witnesses had acted as in the event that they had been underneath his instruction on 5 events though they didn’t comply along with his directions on three separate events.

‘Illogical’

The court had beforehand heard that Soh was supposedly one of the go-to individuals to show distressed firms round or to offer funding and buying and selling recommendation. He thus considered his involvement in initiatives as a approach to spur extra buyers to come back on board.

For instance, Soh advised the court that Gan — an ex-DMG dealer who helped Soh commerce — thought “my so-called presence will be a catalyst to his friends’ investing”. Soh, for probably the most half, reciprocated the correspondence with these “friends”. “I relish the part where someone wants to communicate, so obviously, I would reciprocate,” Soh had stated throughout his cross-examination by Deputy Public Prosecutor (DPP) Teo Guan Siew on May 31 final 12 months.

In her judgement, Justice Hoo dismissed this by saying that the Gan’s basic account on the “substantive allegations is to be preferred”, particularly since his model was clearly corroborated by audio recordings. She additionally asserted that Soh’s “explanations, in the face of the contents of the conversations, are illogical”.

In the course of the trial, a number of different witnesses agreed to having acquired directions on trades to be produced from both Soh or Quah.

Soh rebutted these allegations when he took the stand. “I want to show that these trades have nothing to do with me and the scale of which they did would have overwhelmed the market,” he had stated.

“I have no idea why in the world the rogues want to fix me,” he added, referring to the 4 brokers Henry Tjoa Sang Hi, Tai, Gan and Lau.

Gan and Lau had been, at totally different factors in time, brokers with DMG Securities, whereas Tai was working Algo Capital on the time when the alleged offences occurred. Tjoa, in the meantime, was a remisier with Phillip Securities.

In his closing submissions, Teo famous that Soh had painted himself as an altruistic particular person who was giving basic directions. “[Soh] was pushing the blame to everyone else” and lied that they had been falsely attempting to implicate him, he added.

Teo broke down Soh’s communications with the brokers — 83% or 10,662 had been made by Soh to the brokers whereas 17% or 2,639 had been made by the brokers to Soh. With this, Teo stated Soh was in reality the one continually contacting the brokers, opposite to his testimony that the brokers had been those initiating correspondence with him in hopes of tapping his community.

Criminal conspiracy

Soh’s defence counsel N Sreenivasan disputed this in his closing submissions. “My learned friend is mistaken that Soh is altruistic, he is an egotistical person,” the lawyer stated. “There is no altruism there. That is the nature of people who energise, mobilise, motivate and lead. He never said he was doing charity in this instance.”

But in her judgement, Justice Hoo stated: “I am satisfied that the accused persons remained extensively involved with matters pertaining to the relevant accounts even after the crash on Oct 4, 2013.”

She added that this included negotiations of settlements with the monetary establishments and the settlement of losses. “I do not accept the first accused’s characterisations of his involvement, generally, as provision of benevolent help to the account holders in a dire time of great financial loss.”

Justice Hoo additionally famous that participation in a legal conspiracy is itself an offence, including: “Given that these charges are criminal conspiracy charges, all the prosecution needs to prove in respect of each is the fact of the accused persons’ agreement to commit the offence described.”

Meanwhile, Quah had additionally alleged in her closing statements that the prosecution’s conduct was inappropriate. She advised the court that the DPPs had didn’t disclose materials proof, coached witnesses and even induced witnesses to supply proof beneficial to the prosecution.

Justice Hoo addressed this, saying: “[These allegations] distract from the substantive issues to be determined, and they have the potential to cast doubt on the fair administration of justice. In relation to these suggestions and allegations, I take this opportunity to dismiss them as entirely unmeritorious.”

 

Amala Balakrishner is a senior author with The Edge Singapore

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