SINGAPORE - In meting out the longest custodial sentence for market manipulation in Singapore’s history, the High Court took into account the scale and sophistication as well as the severity of the harm caused by a scam that wiped out almost $8 billion in market value in October 2013.

This led to the unprecedented 36-year jail term for mastermind John Soh Chee Wen, while his co-conspirator Quah Su-Ling was handed a 20-year jail term.

Soh and Quah are guilty of manipulating the share prices of Blumont Group, Asiasons Capital and LionGold Corp – known collectively as BAL – between August 2012 and October 2013. They used 187 trading accounts to manipulate the share prices of the three companies.

High Court Judge Hoo Sheau Peng, in a 42-page oral decision delivered on Wednesday, said the scheme was “elaborate, complex and highly exploitative, yet it was intricate and very tightly planned and managed, specifically with a view to avoiding detection”.

“That the accused persons formulated and executed such a scheme is highly aggravating, and when sentencing them, I will give this factor due weight.”

Judge Hoo took into account the severity of the harm caused by the scheme, in particular, the $8 billion loss in market capitalisation and “$273 million in unrecovered losses that the financial institutions suffered”. The judge also found that the Singapore stock market suffered harm including reputational damage.

“In my view, it is clear that the scheme was of substantial scale (and) took place over a period of about 14 months. In fact, when this case is compared to the precedents, it will be readily apparent that the present case is quite unprecedented in terms of how long the accused persons were able to perpetuate the scheme,” she said.

The judge found that the 187 controlled accounts were “responsible for around 60 per cent of Blumont trades carried out in the market, 88 per cent of Asiasons shares traded, and 90 per cent of the LionGold shares traded”.

“The absolute volume of BAL shares traded during this period was also substantial. In respect of Blumont, the volume was around 1.15 billion; for Asiasons, it was around 3.42 billion; and for LionGold, it was around 4.38 billion.

“Having revisited the evidence, I am satisfied beyond reasonable doubt that the accused persons were responsible for most of the BAL trades executed in the controlled accounts,” Judge Hoo said.

But the aggravating factor, she added, was the sheer scale of the scheme. “This finding resolves the extent to which the accused persons should be held responsible for such scale.”

Judge Hoo noted the scheme “had lofty ambitions... It was meant, in the long term, to inflate the liquidity and value of BAL shares to a point where they could be used as ‘currency’ for corporate deals”.

With regard to its sophistication, the judge pointed to “the many layers within the scheme which made detection of wrongdoing very difficult” and “the manner in which the accused persons abused the mechanisms designed to facilitate genuine trading activity”.

These layers included the large number of accounts and account holders, including foreigners, which served to convey the impression of genuine trading activity.

Soh and Quah also “used trading representatives and intermediaries to create layers of separation between themselves and the trades; their use of accounts held with private banks which traded through omnibus accounts; and, in respect of Soh, even impersonation of account holders”, Judge Hoo said.

“First, by exploiting contra trading on a rolling basis, the accused persons were initially able to inflate the liquidity of BAL shares without needing to have the corresponding capital.”

She added: “When financial institutions started to accept BAL shares as collateral for the provision of margin financing – a result attributable at least in part to the increased liquidity and price of BAL shares caused by the accused persons’ scheme in its earlier stages – they obtained greater control over the pace and shape of the scheme, and the scheme itself attained more stability.”

In deciding Quah’s sentence, she said: “In my view, (Quah) was less involved in the scheme in terms of its conceptualisation and in aspects of its execution, but she was equally – if not more – involved in laying its foundations... As a starting point for the false trading and price manipulation charges, I will impose on Quah two-thirds of the sentence imposed on Soh.”