5 trading representatives fined, suspended for market manipulation

Mr Lim Kok Tong was a founding member of Zhongmin Baihui, which owns this mall in China.
Mr Lim Kok Tong was a founding member of Zhongmin Baihui, which owns this mall in China.PHOTO: ZHONGMIN BAIHUI RETAIL GROUP

They artificially elevated prices and trading volumes of shares

Five trading representatives were fined and suspended last year after they created a false market in the shares of five listed firms.

Three of the representatives were working for CIMB Securities, with one from OCBC Securities and one from RHB Securities. The manipulative transactions were designed to artificially elevate the prices or trading volumes of the shares.

The three CIMB representatives were penalised for trades involving China-based retail store operator Zhongmin Baihui Retail Group while two had traded in Far East Group, PNE Micron Holdings, 8Telecom International and Halcyon Agri, the Singapore Exchange (SGX) disclosed on Friday.

A false market arises when the normal forces of supply and demand are disrupted, which in turn distorts the price and trading volumes of a stock.

Mr Lim Kok Tong, Mr Yeo Lay Hoon and Mr Lim Pei Woon were sanctioned for creating a false market in Zhongmin Baihui shares by engaging in manipulative transactions among their clients for eight months to artificially maintain the stock price. The trades accounted for 90 per cent of the traded volume at prices between $1.825 and $1.840 a share. This resulted in a "trade with caution" alert being placed on the stock on Feb 5 last year, which triggered a 29 per cent crash in the price.

Mr Lim Kok Tong was also a founding member of Zhongmin Baihui, which was incorporated here in 2004. After the company listed in 2011, more than 100 employees and company officers signed up as his clients. Sixteen of the 30 largest shareholders in the firm as at March 9 last year were his clients.

A false market arises when the normal forces of supply and demand are disrupted, which in turn distorts the price and trading volumes of a stock.

He was fined $180,000 and suspended for six months with effect from Oct 27, 2016. Mr Yeo and Mr Lim Pei Woon were each fined $35,000 and suspended from trading for three months with effect from Aug 30, 2016. All were ordered to attend an education programme on securities regulation.

Mr Fairuz Gunn, CIMB head of retail equities, said yesterday: "One of them has resumed duties while a second is still suspended. A third has since ceased employment with CIMB."

The SGX told The Straits Times: "The fine and suspension imposed on Lim Kok Tong is the biggest punishment for market manipulation for a single proceeded charge."

In the second case, Mr Alex Kok Wei Jian of OCBC Securities and Mr Marvin Ang Kok Pin of RHB Securities created a false appearance of active trading in various securities between Feb 16, 2015, and May 9, 2016.

Both men were found to have made prearranged trades for 10 months to prevent their member firms from force-selling their clients' positions in several securities. The volume of the trades accounted for as much as 96 per cent of the market volume on some days.

Mr Kok was fined $70,000 and suspended for three months, while Mr Ang was fined $60,000 and suspended for two months. Both suspensions were backdated to Aug 29, 2016. Mr Kok is no longer a remisier at OCBC Securities, said Mr Raymond Chee, its managing director. "The findings of the SGX disciplinary committee do not relate to OCBC Securities or any of its employees," he said. Remisiers are not considered employees.

A spokesman for RHB Securities said: "RHB was notified by SGX of its investigation on Mr Ang and took immediate action to suspend his trading access with us during the investigation period. Mr Ang is a remisier with an agency agreement with RHB."

A version of this article appeared in the print edition of The Straits Times on February 22, 2017, with the headline '5 trading reps fined and suspended'. Print Edition | Subscribe