Singapore Gets First Guilty Plea in S$8 Billion Penny Stock Scheme
Singapore Gets First Guilty Plea in S$8 Billion Penny Stock Scheme
(Bloomberg) -- Singapore meted out its first jail sentence for an October 2013 penny-stock rout, which the prosecutor said was caused by the “most audacious, extensive and injurious market manipulation scheme ever” in the city state.
Goh Hin Calm, who turns 60 this year, was sentenced to 36 months imprisonment by Singapore’s High Court Wednesday. Goh, who earlier pleaded guilty to two of six charges under the Securities and Futures Act, helped two others in perpetuating the scheme, Deputy Public Prosecutor Nicholas Tan said in court.
The charges are part of a probe into suspected stock-trading irregularities related to Blumont Group Ltd., LionGold Corp. and Asiasons Capital Ltd., which has been renamed Attilan Group Ltd. The stocks surged by at least 800 percent in the nine months before their shares plunged over three days in October 2013, spurring brokers to clamp down on margin lending and denting trading sentiment. The rout has been given as a reason for falling trading volumes in the city.
“The sheer magnitude of the market manipulation would also have inevitably resulted in serious damage to investor confidence as well as an adverse impact on the stock market and reputational damage,” Justice See Kee Oon said when delivering the sentence. “The role of the accused in the scheme may have been facilitative in nature, but it was necessary for the functioning of the scheme.”
Singapore has also charged Malaysian businessman John Soh Chee Wen as well as Quah Su-ling, former chief executive officer of Ipco International Ltd., for orchestrating the fraud. Goh, who was Ipco interim CEO, was named as a key accomplice. While the accused did play an important role in the scheme, it’s clear that he wasn’t the mastermind, Justice See said.
The crash wiped S$8 billion ($5.9 billion) off the value of shares of three companies in October 2013. For his part, Soh said in a 2016 interview that the crash in the shares of the mining companies was due to a “collection of ad hoc events” triggered by an unexplained phenomenon.
Adrian Wee, Goh’s lawyer, said the accused was never fully in the know as to the workings of the scheme, and only came to the knowledge of its existence through his own inferences. His client’s role was limited and he didn’t receive any financial gains, Wee added.
Goh understood the nature and scale of what Soh and Quah were doing, from his role in arranging payments, according to the prosecutor. Soh and Quah controlled more than 40 accounts as part of their scheme, which were used to conduct short-term contra trading. This number was only a subset of the total number of accounts that Soh and Quah controlled as part of their scheme, the prosecutor said.
False Appearance
Through the controlled accounts, Soh and Quah dominated the trading activity in the market for Blumont, Asiasons and LionGold shares, according to the prosecutor’s statement. From Jan 2, 2013 to Oct. 3, 2013, for example, Soh and Quah were responsible for carrying out trades in about 1.1 billion Blumont shares, accounting for 60 percent of the total traded volume for the entire market in Blumont shares. They were responsible for trades in Blumont on 189 out of 190 trading days during this period.
Soh and Quah created a false appearance of supply, demand, trading volume, liquidity, active trading and price in the market for shares in Blumont, Asiasons and LionGold, the prosecutor said.
The three companies have said they don’t know what caused the sudden declines. Banks and brokers have sued their clients and others to recover at least $230 million from the stock rout.
--With assistance from Andrea Tan.
To contact the reporter on this story: Ranjeetha Pakiam in Singapore at rpakiam@bloomberg.net
To contact the editors responsible for this story: Stephanie Phang at sphang@bloomberg.net, ;Joyce Koh at jkoh38@bloomberg.net, Ovais Subhani
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