SINGAPORE (The Straits Times/Asia News Network): After nearly 200 days of trial over the past three years, the Singapore High Court on Thursday (May 5) found penny-stock saga masterminds John Soh and Quah Su-Ling guilty of a whopping 349 charges, nearly all involving share manipulation and cheating.
Soh was said to have conspired with his business partner and girlfriend Quah to artificially inflate the share prices of penny stocks Blumont Group, Asiasons Capital and LionGold Corp through a web of 189 trading accounts held with 20 financial institutions and 60 individuals and companies.
When their shares collapsed on Oct 4, 2013, some $8 billion in total market value was wiped out.
The Straits Times takes a look at the key points of this saga.
1. What happened?
The infamous 2013 penny stock crash wiped out S$8 billion in market capital in what the prosecution called "the most audacious, extensive and injurious market manipulation scheme ever in Singapore".
The massive fraud attracted international media attention, and the loss of investor confidence and harm to Singapore's reputation as a financial centre was "immeasurable and enduring," it said.
On Oct 4, 2013, the Singapore Exchange (SGX) suspended the trading of three counters - Blumont Group, Asiasons Capital and LionGold Corp - when they crashed shortly after the opening bell. This triggered a run on other penny stocks in the larger market.
The three stocks, known collectively as BAL, had surged by at least 800 per cent in the nine months before the rout. When trading resumed on Oct 7, 2013, they plunged further, even though the SGX had banned contra trading and short-selling to try to stamp out speculative activities on the trio.
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With market confidence battered, SGX's average daily traded volume plunged by more than 60 per cent in the 12 months after September 2013. The trading value over the same period fell by more than 30 per cent, as the crash made investors more cautious about small and medium-sized firms.
In the aftermath, regulators moved to tighten trading rules and add circuit breakers, among other things, to protect investors from excessive price swings and speculation.
But the fiasco led to criticisms of whether SGX could have acted earlier to protect the interests of retail investors caught up in the bubble, and calls for a probe by authorities.
Just weeks after the crash, the Monetary Authority of Singapore (MAS) and the SGX conducted an extensive review into the circumstances surrounding the trio's phenomenal price surge that could not be justified by their fundamentals, before their spectacular crash.
At the time, analysts said shareholders of the three firms racked up losses of almost $1.5 billion when trading restrictions were in place for two weeks.
One investor told ST that he had forked out $120,000 of his retirement savings on 50,000 shares in mining firm Blumont when they were at $2.40 a piece just days before the stock crashed.
After the rout, his stake was worth only $5,850. "I'm one of many saddened and disheartened investors who will have to live with this painful memory for a long time," he said.
2. What did the authorities do?
In April 2014, the Commercial Affairs Department (CAD) launched the widest-scale investigation into possible breaches of the Securities and Futures Act arising from suspected trading irregularities in the BAL shares.
At the time, the probe involved eight firms and 13 individuals, many of whom are top executives, for alleged false trading and market rigging.
The penny stock rout also triggered lawsuits by several broking firms and banks against those connected to some of the firms in a bid to recover hefty losses.
Former Ipco International chief executive Quah was among several parties sued over $79 million in losses sustained by US stock trading firm Interactive Brokers in the wake of the penny stock crash.
On Jan 27, 2016, ST was first to break the news of Malaysian businessman John Soh Chee Wen assisting the CAD in investigations into the penny stock crash.
Soh, who was 57 at the time and whose passport had been impounded since April 2014, had asked to return to Malaysia. But his request was rejected.
On Nov 24, 2016, Soh, along with Quah and co-conspirator Goh Hin Calm, former independent director at Annica Holdings and ITE Electric, were arrested by the authorities and charged the following day.
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3. What happened in court?
In November 2016, Soh was slapped with 181 charges under various sections of the Securities and Futures Act, the Companies Act and the Penal Code. In February 2017, Soh was hit with seven charges of witness tampering, bringing the total count to 188 charges.
Quah faced 177 charges. These included conspiring to create a false appearance with respect to the market for the three companies' shares between Aug 1, 2012, and Oct 3, 2013.
Other charges included conspiring to manipulate and support the three firms' share prices in August, September and October 2013 shortly before they collapsed on Oct 4, 2013.
She was also accused of cheating financial institutions into extending vast amounts of credit to accounts she and Soh controlled, and of giving instructions on the trading accounts without obtaining the financial institutions' consent.
Goh was among those asked by the CAD to assist in investigations starting in 2014.
He was charged with six counts of intentionally aiding Soh and Quah to create a false appearance with respect to the market for the BAL shares between Aug 1, 2012 and Oct 3, 2013.
In 2019, Goh pleaded guilty to two of six counts of abetment, with four other charges taken into consideration. The Singaporean was sentenced to 36 months' jail on each proceeded charge, with both sentences running concurrently.