Team 'working tirelessly' to probe penny stock crash

The CAD is looking into possible breaches of the Securities and Futures Act due to suspected trading irregularities in the shares of LionGold Corp, Blumont Group and Asiasons Capital. The 2013 crash saw $8 billion wiped off the value of the three sha
The CAD is looking into possible breaches of the Securities and Futures Act due to suspected trading irregularities in the shares of LionGold Corp, Blumont Group and Asiasons Capital. The 2013 crash saw $8 billion wiped off the value of the three share countersST FILE PHOTO
The CAD is looking into possible breaches of the Securities and Futures Act due to suspected trading irregularities in the shares of LionGold Corp, Blumont Group and Asiasons Capital. The 2013 crash saw $8 billion wiped off the value of the three sha
The CAD is looking into possible breaches of the Securities and Futures Act due to suspected trading irregularities in the shares of LionGold Corp, Blumont Group and Asiasons Capital. The 2013 crash saw $8 billion wiped off the value of the three share countersST FILE PHOTO

CAD aware of impact on investor confidence and need to resolve issue effectively: Report

Singapore's white-collar crime buster admits that it needs to get to the bottom of the penny stock scandal that wiped $8 billion off the value of three share counters in 2013.

The Commercial Affairs Department (CAD) said in its 2014 annual report issued last week: "We are acutely aware of the impact on investor confidence and the need to resolve this quickly and effectively."

It called the probe - which it started in April last year together with the Monetary Authority of Singapore (MAS) - the "biggest securities fraud investigation to date".

The CAD added that "the joint team is working tirelessly to get to the bottom of the matter" so as "to bring those responsible to justice".

The investigation is looking into possible breaches of the Securities and Futures Act due to suspected trading irregularities in the shares of Asiasons Capital, Blumont Group and LionGold Corp.

The stocks had surged by more than 800 per cent in less than nine months before plunging by between 91 and 96 per cent in October 2013, wiping out $8 billion in market value in three days.

The CAD noted that this joint investigation is the "first of many to come". It announced earlier this year that it will jointly investigate market misconduct offences with the MAS. It expects the new arrangement to significantly enhance the enforcement regime.

In the same report, the CAD also said that suspicious transaction reports last year were up 30 per cent from 2013. The banking sector continues to be the main source of these, although reports submitted in other sectors such as those for moneychangers, insurance companies and the casinos increased.

The rise in the number of such filings is "a positive development", said the CAD, for it "reflects the vigilance of reporting entities and a higher level of anti-money laundering and counter-financing of terrorism awareness in Singapore".

The enhanced capability of certain industry sectors to detect suspicious transactions is also seen as a contributing factor to the increase in the number of such reports.

The CAD has also been proactive in providing information to foreign regulators and investigators. It provided information to its foreign counterparts in 385 instances last year, up from the 74 cases in 2011.

The CAD reported a sharp jump in online commercial crime last year, reflecting the increased amount of time Singaporeans spend on the Internet. It noted that e-commerce-related fraud and online scams contributed to a 42.3 per cent surge in cheating and related offences.

The CAD added that it will strive to do well in the next Financial Action Task Force (FATF) evaluation at the end of the year in order to safeguard "Singapore's reputation as a trusted financial centre and a global business hub, and a regime that is tough on crimes".

The FATF is an inter-governmental body that develops and promotes national and international policies to fight money laundering, terrorism financing and financing of nuclear, chemical or biological weapons, also known as proliferation financing.

Singapore did well in the previous evaluation seven years ago, but the CAD said it will be much harder to hit the same level this time as FATF standards have risen significantly.

In the past two years, the CAD has channelled resources to prepare for the evaluation, as well as worked closely with key domestic agencies to enhance Singapore's anti-money laundering and counter-financing of terrorism regime.

A version of this article appeared in the print edition of The Straits Times on August 12, 2015, with the headline 'Team 'working tirelessly' to probe penny stock crash'. Print Edition | Subscribe