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Siow It Loong, 43, pleaded guilty mid-way through a trial to two charges each of scheming with each other to create a false and misleading deal on two index-based warrants issued by Deutsche Bank. -- ST PHOTOS: WONG KWAI CHOW
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In the first case of its kind to come before the courts, two former stockbrokers were fined $100,000 each on Thursday for conspiring to rig the Straits Times Index (STI) so as to profit from trading structured warrants.
Siow It Loong, 43, and Chua Siew Lian, 40, pleaded guilty mid-way through a trial to two charges each of scheming with each other to create a false and misleading deal on two index-based warrants issued by Deutsche Bank on April 5, 2005.
Both were proprietary traders at CMIB-GK Securities.
During a 38-minute window between 11.23am and 12.01pm that day, they traded in various STI component stocks and two other securities.
At each of the four phases, they initiated trades in the STI warrants first before proceeding to initiate trade in the STI component stocks.They ended each phase by closing out their initial positions in the STI warrants at a profit.
In the charges proceeded, they sold shares in 13 component stocks at prices below their preceding traded prices with the intention to cause the STI to fall in value. About two minutes later, they bought shares in 12 component stocks at prices above their preceding traded prices with the intention to cause the STI to rise in value.
In all, the transactions involved 16 index stocks, including heavyweights like Singapore Airlines, DBS Group, Singapore Telecom and Jardine Matheson.
The prosecution said that the offences had a fairly significant impact on the market, but District Judge Francis Tseng felt that it had failed to quantify the weight of the impact.
'The impact of these offences on the market was, in my opinion, fairly limited,' he said.
Judge Tseng felt that a jail term was not necessary or appropriate in this case.
He said a stiff sentence could take the form of a fine which was high enough to have a deterrent effect.
But he warned would-be offenders that they would be jailed if they did anything to shake the public confidence or manipulate the market.
Two other similar charges against each of them were taken into consideration.
They could have been fined up to $250,000 or jailed for up to seven years, or both, on each of the two charges under the Securities and Futures Act.
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