SINGAPORE - The mastermind behind Singapore’s biggest case of stock market manipulation was sentenced to 36 years in jail on Wednesday, which lawyers say is the longest custodial sentence for the offence to date in Singapore.
The scam wiped out $7.8 billion in market value in October 2013, leading to the unprecedented jail term for mastermind John Soh Chee Wen. His co-conspirator, Quah Su-Ling, was handed a 20-year jail term.
The High Court granted Soh, 62, and Quah, 58, a stay on the execution of their sentences after their lawyers said they will file an appeal by the end of Wednesday.
But Soh, a Malaysian, will not appeal against his conviction on three charges of being involved in the management of Blumont Group, Asiasons Capital and LionGold Corp – known collectively as BAL – while being an undischarged bankrupt.
Soh and Quah are guilty of manipulating the share prices of BAL between August 2012 and October 2013.
In delivering the sentences on Wednesday, High Court judge Hoo Sheau Peng noted: “The accused persons perpetrated a scheme of substantial scale, complexity and sophistication. Armed with a good understanding of the securities and financial markets, and tapping on their extensive connections and networks, they boldly exploited the system.
“They personally minded and tended to the intricate scheme they devised on an almost daily basis for a prolonged period of 14 months, taking steps to evade detection by the authorities. They did so for financial gains. Even after the scheme failed, (Soh) continued to subvert justice and conceal what they had done.
“It is necessary and of utmost importance for the substantial global sentences to be imposed on (Soh and Quah) respectively to capture the gravity of their wrongdoing.”
The two were convicted of a record 349 successful charges in total following nearly 200 days of trial over nearly four years.
Soh has been in remand since Nov 25, 2016, while Quah, the former chief executive of Ipco (now renamed Renaissance United) is out on $4 million bail, which has been extended pending her appeal.
On Wednesday, Quah’s bailor, who was dressed in a black top and white shorts, was reprimanded by Judge Hoo for her inappropriate attire, and told “not to appear in shorts in future” in the courtroom.
Soh and Quah were found to have manipulated the share prices of BAL between August 2012 and October 2013 through 187 trading accounts held with 20 financial institutions in the names of 58 individuals and companies.
They used contra trading in multiple accounts to “roll-over” or extend their position in the market repeatedly over the 14-month period – week after week, month after month, the prosecution said.
These “roll-over” trades were done to create artificial liquidity in the market for these shares, and allow them to retain control of the shares without having to make payment for them.
By generating artificial liquidity, the pair had hoped the shares would enter market indices and attract genuine trades in BAL. They wanted to use the shares to fund BAL’s corporate deals.
They also kept the price of the shares on an upward trend, to grow the market capitalisation of BAL over time, enabling them to reap profits, and avoid sustained contra losses that would otherwise cripple their scheme, the prosecution said.
But around the end of September 2013, following several adverse news reports on BAL, Soh called a meeting with brokers at the LionGold office, touted the prospects of BAL and sought to persuade them to buy BAL to support the price.
As selling pressure continued to mount in the early days of October 2013, Soh and Quah then sought to support the price of BAL shares by using the controlled accounts to buy up shares. But this failed, and the prices of the stocks crashed, wiping out $7.8 billion in market capital.
Of the 180 charges on which Soh was convicted, prosecutors sought consecutive sentences for 11 charges (three of false trading, three of deception, two of cheating and three of witness tampering) and an aggregate sentence of 40 years’ jail.
For Quah, who was convicted on 169 charges, the prosecution sought consecutive sentences for six charges (two of false trading, three of deception and one of cheating), and an aggregate sentence of 19½ years’ jail.
Mr Robson Lee, a senior corporate finance lawyer, noted that the “heavy sentences reflect the severity of the conduct of the two convicted accused”, and the jail terms are “unprecedented in scale and would certainly be the longest custodial period in the history of Singapore for market manipulation”.
“This is a landmark case and underscores the robustness of our law enforcement against market manipulative conduct,” Mr Lee said.
Ms Loo Siew Yee, assistant managing director for policy payments and financial crime at the Monetary Authority of Singapore, noted that the duo’s “elaborate scheme to manipulate shares listed on SGX led to large losses by investors and harmed public confidence in the integrity of Singapore’s capital markets”.
“The successful prosecution and stiff sentences leave no doubt as to the authorities’ resolve in acting against such misconduct.”