SINGAPORE: A man implicated in a scheme that created the largest losses in any case of market manipulation in Singapore was sentenced to three years' jail on Wednesday (Mar 20) for two charges of false trading and market rigging.
In the wake of the rigging, a penny stock crash in 2013 wiped out S$8 billion from the Singapore stock market. To date, more than S$350 million in losses to financial institutions remains unpaid, the prosecution said in the High Court. The scheme involved two others who have claimed trial.
Goh Hin Calm, 59, pleaded guilty to two charges under the Securities and Futures Act on Wednesday, with another four charges taken into consideration for sentencing.
His decision to admit to the charges had come as a surprise as all three accused persons were set to go to trial over the case. His co-accused are: Malaysian businessman John Soh Chee Wen and former IPCO International CEO Quah Su Ling, who were in an intimate relationship at the time of the offences.
Goh, who was senior finance and administrative manager at Singapore Exchange (SGX)-listed company IPCO from July 2001, held two main roles in the scheme.
As early as 2008, he began opening multiple trading accounts at brokerages across Singapore in his name and his wife's name. He allowed Soh and Quah to use these accounts, effectively providing them the use of trading limits and credit to trade in shares of Blumont Group, Asiasons Capital Limited and LionGold Corp.
By 2011, Goh began handling the finances for the scheme, receiving and making more than 1,200 payments on behalf of his two co-accused into and out of a pool of funds that he managed for them.
The size of this "float" or pool of funds was more than S$2 million at times, said Deputy Public Prosecutors Nicholas Tan and Ng Jean Ting.
In total, Goh managed about S$30 million in outgoing payments on behalf of Soh and Quah.
"The accused was in effect both seed funder and finance manager of Soh's and Quah's scheme," said the prosecution.
ACCOMPLICES CONTROLLED ACCOUNTS, "ESSENTIALLY TRADING WITH THEMSELVES"
Goh's accomplices are accused of controlling a large volume of shares in the three companies and manipulating the market to create false appearances of supply, demand, trading volume, liquidity, active trading and price in the market for their securities.
They were "essentially trading with themselves", said the prosecution, "since they were on both sides of the trade".
In early October 2013, the companies' share prices crashed. The scheme's collapse triggered a dumping of penny stocks in the larger market and an investigation into the circumstances of the collapse, with regulators later introducing changes to the regulatory regime such as a minimum trading price requirement for mainboard-listed stocks.
Including 10 accounts held in the names of Goh and his wife, Soh and Quah controlled a total of 189 trading accounts for trading and holding securities for the three firms.
Quah and Soh are accused of instructing the trades in the controlled accounts through more than 25 brokers and third-party intermediaries, dominating trading activity in the market for Blumont, Asiasons and LionGold shares, the court heard.
Between Aug 2012 and October 2013, Soh and Quah were allegedly responsible for carrying out trades in billions of the shares - constituting between 60 per cent and 90 per cent of the total traded volume for the entire market.
MASSIVE LOSSES OF S$350 MILLION REMAIN UNPAID TODAY
The prosecution had called for a sentence of three years' jail to be imposed on Goh, saying that the losses caused to innocent parties were massive when the scheme collapsed in October 2013.
"This includes losses incurred in trading accounts, which remain unpaid till today, and which therefore fall on the financial institutions at which those accounts are held," said the prosecutors.
"The unpaid losses in just the accused’s and his wife’s trading accounts alone amount to S$1.5 million. The total unpaid losses in the 189 controlled accounts is more than S$350 million."
They added that market manipulation causes widespread losses not only to the investing public, but to financial institutions both locally and abroad.
Goh's defence lawyer Adrian Wee told the court that his client's role in the scheme was "extremely limited" and that he had "no specialised knowledge and no formal training in trading of equities".
He said Goh had "no part in conducting, strategising or formulating any of the trades which formed part of the scheme", adding that Goh had made no financial gains. Instead, he has purportedly been saddled with debts of S$400,000 from the scheme.
"In fact, there is no suggestion that the accused even knew what the scheme was for ... who it was to benefit, and what purpose the participants or the controllers of the scheme sought to achieve," said the defence counsel.
He said his client expressed remorse and decided not to claim trial, asking also for a term of three years' jail.
Justice See Kee Oon said Goh had some measure of autonomy in the "sophisticated, systematic and sustained" scheme. His role, although "facilitative in nature", was necessary for the functioning of the scheme and was not sporadic but extensive and prolonged, said the judge.
"It is clear nonetheless that the accused was not the mastermind," he added. "He did not actually know the full extent or the duration of the market manipulation."
However, the judge said the sheer magnitude of the market manipulation resulted in "serious damage to investor confidence".
The trial for Soh and Quah begins on Monday.