Briefs

Richard Teng is a familiar name in financial regulation circles globally. Currently CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market (ADGM), Teng is the former chief regulatory officer of the Singapore Exchange (SGX).

Ironically, Teng’s name has been brought up by a prosecution witness in the trial of John Soh Chee Wen and Quah Su-Ling, the alleged masterminds behind what prosecutors have called “the most audacious, extensive and injurious market manipulation scheme ever in Singapore”.

According to former abettor-turned-prosecution witness Ken Tai Chee Ming in court on Feb 18, Soh had claimed that Teng was feeding him updates during the time the market manipulators were being probed by the Commercial Affairs Department (CAD).

At the time of the investigations, Teng was the chief regulator at SGX.

“According to John, he has someone in CAD whom he knows, who tells him what the development was. So that was also the reason why, from December 2013 onward, we get constant updates on what the development was,” Tai said. “We were told that the CAD were looking at three aspects of this case: was there any money-laundering involved? Who pushed up the share price? And who shortened it down?”

When pressed by Quah’s lawyer Philip Fong, managing partner of Eversheds Harry Elias, on the identity of this person, Tai claimed that Soh had told them that it was Teng.

“I’m not the only one that knows about this,” Tai said, noting that another former broker involved with Soh, Gabriel Gan, also knew about this. “The code that we use for Richard Teng was ‘RT’,” he added.

In response to the allegation regarding its former chief regulatory officer, an SGX spokesperson on Feb 19 said: “The matter is before the court and a trial is ongoing. As such, SGX is unable to comment except to reiterate our continued support of the authorities and our cooperation with them since the time when investigations began.”

The Edge Singapore on Feb 18 reached out to ADGM for comment, but has not received any response as of Feb 20.

Later in the trial, Soh’s lawyer, senior counsel N Sreenivasan, raised doubt over Tai’s allegations.

The defence counsel reasoned that if Tai had told indeed told CAD about Teng’s purported involvement in the market manipulation scandal, as he had claimed, the authorities would have followed up on it.

“Mr Tai, John Soh never told you that Richard Teng was his source or was giving him information. Agree or disagree?” Sreenivasan asked.

“I disagree,” Tai insisted.

“Your Honour, I’m putting it as a matter of [Tai’s] credibility, that nobody believed him when he made such a far-fetched allegation,” Sreenivasan told the court.

Throughout their cross-examination of Tai in this third tranche of the trial, the defence counsels have sought to cast doubt over the credibility of the witness.

Once part of the “inner circle” of brokers and remisiers allegedly used by Soh and Quah to manipulate the market, Tai had earlier admitted to cheating the duo and making millions of dollars for himself.

Tai was also shown by defence counsels to have raked in thousands of dollars’ worth of commissions in a single day from the trading of shares in LionGold Corp – one of the three stock counters at the centre of the scandal.

For instance, on Mar 28, 2012, Tai was found to have traded 25 million LionGold shares via the Interactive Brokers (IB) and Saxo accounts under his control. On this day alone, Tai had pocketed a whopping $8,587.50 worth of commissions, the court heard.

However, Tai has repeatedly denied during the trial that he had performed wash trades to churn commissions for himself.

Together with his alleged co-conspirator and girlfriend Quah, Soh and his associates are alleged to have been behind the massive rise of shares in Blumont Group, LionGold Corp and Asiasons Capital (now Attilan Group).

The subsequent sudden collapse of the counters in October 2013 wiped out some $8 billion in value from the stock market. — By Stanislaus Jude Chan

Penny Stock 2.0: Two stock brokers convicted for manipulating shares in Koyo International

Even as the long-running trial of alleged penny stock masterminds John Soh Chee Wen and Quah Su-Ling drags on, two brokers have been convicted for their roles in a separate but similar case. The duo were part of a scheme to manipulate shares of Koyo International, a Catalist-listed mechanical and electrical engineering firm.

Steven Teo Boon Cheang, who used to be a remisier with AM Frasers Securities (now known as KGI Securities), was on Feb 19 sentenced to three months’ jail by district judge Ng Peng Hong at the State Courts. He pleaded guilty to a charge of manipulating the shares.

Rayson Goh Qi Rui, who was a remisier with OCBC Securities, was sentenced to four months’ jail, including a three-week concurrent term. Similar to Teo, he pleaded guilty and was convicted on account of two charges. Three more charges were taken into consideration.

The scheme was allegedly led by one Andrew Lin Eng Jue. The Edge Singapore understands that Lin has been charged and his case is still pending.

The court was told how Teo used his own account to trade and help manipulate the Koyo shares.

Goh, on the other hand, used accounts opened by his clients to trade. The clients had allowed their accounts to be used for the scheme, and were told they would earn a 10% cut of the profit made using their accounts.

However, they would not be required to bear any losses from these trades.

While Lin is the alleged scheme leader, there are two distinct categories of individuals facing charges.

The first involves brokers like Teo and Goh, who were actively taking and placing orders.

The second group comprises individual account holders who allowed their trading accounts to be used.

While Teo and Goh have pleaded guilty, there are five other individuals, besides Lin, facing charges for their roles in the same scheme.

They include two other brokers: Janice Lau Wan Heng of CIMB, and Alan Chong Yew Mun of RHB Securities. The remaining three individuals are Simon Ang Wei Jie, Yeo An Lun and Koh Cheo Leng.

Over a 17-month period between 2014 and 2016, Lin allegedly led a scheme to manipulate the price of Koyo International shares from a low of 16 cents on Aug 12, 2014, to a high of 40 cents on Jan 7, 2016.

The scheme involved the buying and selling of Koyo International shares via a total 53 trading accounts under the names of 15 individuals. These accounts spanned eight brokerages, including KGI, CIMB, RHB, Phillip Securities, OSPL, Maybank Kim Eng, UOB Kay Hian, Lim & Tan Securities.

During this period, the 53 accounts accounted for 66.71% of the buy volume and 65.80% of the sell volume of Koyo International shares.

Cross trades between the 53 accounts represented 43.16% of the total market volume.

“The purpose of the scheme was to create a false appearance as to the price of Koyo shares,” says deputy public prosecutor Suhas Malhotra in his statement of facts (SOF).

“On Andrew’s direction, the scheme members used various trading accounts under their control, to trade Koyo shares amongst one another, as well as other third parties trading on the market, and gradually pushed up the price at which Koyo shares were traded on the SGX,” adds the DPP.

According to the SOF, Lin told Teo he knew the CEO of Koyo, Foo Chek Heng, and that Foo wanted to sell the company at a “certain price”. Lin told Teo his plan was to push Koyo’s share price to between 40 and 50 cents, and hold it at around that level, before finding a buyer.

Lin told Teo this would be achieved by using multiple accounts to contra trade Koyo shares.

The scheme came to a head on Jan 15, 2016, when SGX, which put in place a much-heightened surveillance regime in the wake of the Oct 2013 penny stock saga, issued a “trade with caution” warning.

SGX flagged that “small group of individuals was responsible for 60% of the trading volume of Koyo [between Oct 26, 2015, and Jan 14, 2016], of which at least half of these trades were due to this group of individuals buying and selling among themselves.”

On Jan 18, 2016 – the first trading day following the issue of the SGX warning – Koyo International shares crashed by almost 84% from its Jan 15 close of 34 cents. The counter closed at 5.6 cents on Jan 18, 2016.

The company’s share price, since the crash, has floundered at around that level since. On Feb 20, 2020, the counter closed at 6.9 cents.

On Jan 24, 2020, Koyo International announced that Foo is taking a leave of absence for “medical reasons”. — By Chan Chao Peh

Michael Bloomberg hit from all sides in spirited democratic debate

Michael Bloomberg came under sustained attack in a spirited Democratic debate on Feb 19 that saw Elizabeth Warren compare him to President Donald Trump in his treatment of women, and Bernie Sanders assail him over his attitude toward minorities.

Warren was aggressive in lashing out at Bloomberg, whose recent rise in the polls has shaken up the Democratic presidential race.

“I’d like to talk about who we’re running against – a billionaire who calls women fat broads and horse-faced lesbians. And no I’m not talking about Donald Trump, I’m talking about Mayor Bloomberg,” Warren said, arguing that the country shouldn’t swap “one arrogant billionaire for another”.

Trump weighed in on the debate in a tweet early on Feb 20, saying Bloomberg’s performance “was perhaps the worst in the history of debates, and there have been some really bad ones. He was stumbling, bumbling and grossly incompetent”.

“We have a grotesque and immoral distribution of wealth and income,” said Sanders. “Bloomberg owns more wealth than the bottom 125 million Americans. That’s wrong and that’s immoral.”

While Bloomberg said he cannot speak for all billionaires, he acknowledged having made a lot of money and given “a lot” of it to the Democratic Party. He also warned that the debate was veering in a direction that would turn voters away.

Other democrats such as Pete Buttigieg and Amy Klobuchar joined in the attacks. Buttigieg called Sanders and Bloomberg “the two most polarizing candidates” in the race.

Bloomberg was in a tight third place at 14% to Sanders’ 32% and Joe Biden’s 16% in a Washington Post/ABC News poll released Wednesday. This qualified him to join five of his Democratic rivals for the ninth debate of the primary season. — By Bloomberg LP

Singapore growth forecasts slashed as recession looms on coronavirus fears

Singapore’s Ministry of Trade and Industry (MTI) as well as private sector economists have cut the city state’s GDP growth forecasts for 2020.

This comes after state agencies on Feb 17 released economic performance and trade figures for 2019.

According to MTI, the Singapore economy grew by just 0.7% in 2019 – a steep decline from the 3.4% growth in 2018. In particular, the manufacturing sector contracted by 1.4% in 2019, retreating from a 7.0% growth the previous year.

At the same time, Enterprise Singapore on Monday also announced that Singapore’s total merchandise trade fell 3.2% to $1.0 trillion in 2019, reversing from two consecutive years of growth. The decline was spearheaded by a 13.9% drop in oil trade during the year amid lower oil prices.

Meanwhile, non-oil domestic exports (NODX) plunged 9.2% in 2019 on the back of lower shipments of both electronic and non-electronic products. NODX also continued to decline in January 2020, falling 3.3% on the back of a 13.0% drop in electronic exports.

MTI has downgraded Singapore’s GDP growth forecast to “-0.5% to 1.5%” for 2020, with growth expected to come in at around 0.5% – the midpoint of the forecast range. This is down from the GDP growth forecast of “0.5% to 2.5%” for 2020 that it announced in November last year.

The way economists see it, the coronavirus outbreak is not unlike a kick in the knees for Singapore, which had been just about showing signs of regaining its footing.

“Notably, exports rebounded in 4Q leading to a positive contribution from net exports to growth for the first time in four quarters,” says Sung Eun Jung, an economist at Oxford Economics. “However, the disruptions caused by Covid-19 have upended signs of recovery in trade.” “Accordingly, we have downgraded our GDP growth forecast for 2020 by 0.4 percentage point to 1%. However, the situation remains worrisome and downside risks to our forecast remain,” she adds.

Over at UOB Global Economics & Markets Research, economist Barnabas Gan agrees that Singapore’s growth outlook had been “largely positive” prior to the onset of the outbreak.

From an earlier projection of 1.5% growth in 2020, UOB had downgraded Singapore’s GDP growth to a range of 0.5% to 1.0% following the outbreak. Now, it is cutting its forecasts even further.

“We are trimming our forecast down to 0.5% in 2020 with downside risk, especially if the virus outbreak progresses to be more widespread, severe and protracted than anticipated,” says Gan. — By Stanislaus Jude Chan

Singapore dollar could fall to 2017 low amid potential monetary policy easing

Singapore’s currency may tumble to the lowest level since 2017 if the central bank responds as strongly to the spread of the coronavirus as it did to the SARS epidemic two decades ago.

That’s the view of Tan Teck Leng, a macro strategist at UBS Group’s Global Wealth Management Chief Investment Office, who thinks the Monetary Authority of Singapore could re-centre its policy band for the currency lower. It took this rare action in 2003 to deal with the fallout from SARS and doing so again could see the local dollar dip through 1.40 versus the greenback, according to Tan.

Singapore’s fiscal chiefs pledged $6.4 billion in dedicated support for the economy on Tuesday, underscoring the level of concern among policy makers about the threat posed by the virus. The city state has more than 80 confirmed cases of the coronavirus and its trade-dependent economy is particularly vulnerable.

“There is a chance that if the virus were to get worse, that a re-centring down is possible,” Tan said in an interview in Singapore.

“They can be very granular about how much they want to ease.”

Singapore’s dollar has already slid 3.3% against the greenback this year, making it the worst-performing currency in Asia after Thailand’s baht. – Bloomberg LP

Vividthree hit by ‘trade with caution’ warning as ‘Silent Horror’ movie spooks SGX RegCo

Vividthree Holdings’ planned acquisition of a company owning the “Silent Horror” comic rights has spooked SGX RegCo into issuing a “trade with caution” warning on this counter on Feb 20.

The exchange has detected indications that a small group of investors seem to have accounted for 90% of the trades made on this stock between Sept 9 last year and Feb 19.

“The individuals behind these accounts appear to be connected to each other. In addition, these accounts appeared to have traded among themselves during the period reviewed,” states SGX RegCo.

Their cross trades accounted for 71% of on-market traded volume. Out of 111 active trading days, these accounts engaged in cross trading activity on 94 days.

On Feb 12, Vividthree announced a placement of up to 15.88 million shares at price of at least 12.6 cents each, which is at a premium of 27.3% to the volume weighted average price of 9.9 cents on the date of the placement agreement.

The placement will raise some $2 million and a third of the proceeds is to go into acquisitions.

SGX RegCo notes that the announcement of the placement followed a decline in Vividthree’s share price since mid-January 2020.

Throughout this period, the volume of cross trades between these accounts progressively increased. — By Chan Chao Peh