The trades made in the lead up to the 2013 penny stock crash were not based on instructions given by him, John Soh told the court on May 18.
“It has nothing to do with mine or Su-Ling’s directions,” he maintained when shown a series of trades made on different dates, during his examination-in-chief by his defence counsel, N Sreenivasan of K&L Gates Straits Law.
Soh and his co-accused Quah Su-Ling allegedly orchestrated Singapore’s largest share manipulation scheme between 2012 and 2013 involving three penny stocks: Blumont Group, Asiasons Capital (now Attilan Group) and LionGold.
The eventual collapse of these counters – collectively referred to as BAL – in October 2013, had wiped out some $8 billion in market value.
Touching specifically on a series of trades made on 12 July 2012, Soh flagged that an “excessive amount of amendments and deletes” had been made.
He also noted that there had been 120 ‘spoofs’ made by Ken Tai, a broker who was a member of his inner circle.
Spoofing occurs when a trader places a large order to buy or sell a stock without an intention of executing the trade. This creates an impression that the demand for the stock is high and constitutes a form of market manipulation.
“Ken Tai is a master of this,” remarked Soh. He then added that Henry Tjoa, who was also supposedly part of his inner circle – had followed up on Tai’s spoofs with ‘layering’.
Layering happens when multiple visible orders are entered on one side of the market at multiple price tiers. This subsequently shifts the midpoint towards the opposite side of the market.
“Tjoa and Tai were using manipulative methods,” stressed Soh.
According to him, these two brokers made up the single largest entity controlling Blumont.
The counter accounted for $5.5 billion of the $8 billion drop in market capitalisation that occurred during the 2013 crash.
Drawing reference to a series of call logs, he noted that there was evidence indicating that he had given the two trading representatives instructions.
Soh then pointed out that Tai “when cornered” in court, had said that he received Soh’s instructions either through a bangla phone or BBMs (blackberry messages).
Soh claims he was not a great fan of bangla, or disposable phones and had only started using them in 2014, after investigations by the authorities commenced on him and his associates.
Quah had also not given instructions because she had not received market reports daily at the beginning and close of trading.
“Somewhere along the lines, their stories failed to find legs,” said Soh.
His suspicions that Tjoa and Tai were controlling the trading of LionGold and Asiasons shares were only aroused after the committal hearing for the trial.
However, at that time he only thought that the duo had been front running.
Soh said he didn’t realise how close the two were.
“I was totally flabbergasted to know of the extent of the collaborations,” he told the court.
“On an overall basis, Ken Tai and Tjoa were on a frolic on their own,” he added
Thinking back, Soh believes that Tai’s “manipulative behaviour” had started even before the period leading up to the crash.
“Ken Tai [had] total control of those accounts, he could have done anything at his whims and fancies,” he elaborated.
‘Still carry some weight’
Sreenivasan’s examination of Soh also touched on his interaction with Gabriel Gan.
A former remisier with DMG Securities, Gan had succumbed to bankruptcy on August 18 2016. He was part of the core group of remisiers who allegedly took trading instructions from Soh and Quah.
Soh recalled having met Gan sometime around 2012, through Dick Gwee, another of his close associates. At that time, Gan was looking around for more business.
“Dick kept pestering us…and sang praises of him,” he started.
“First me, because he was not on talking terms with Su-Ling. Then after some months [I] recommended someone,” added Soh.
When pressed by Sreenivasan why people still sought help from him – a bankrupt – Soh said: “they still recognise me, that I still carry some weight”. This “weight” came from his circle of friends in the high net worth category.
Gan, according to Soh, was once considered a big influencer as he was often invited to share his views on television and over the radio.
Soh recalled having spoken to several of Gan’s high net worth clients, specially to promote LionGold.
However, he said he was not aware of whether these individuals went on to buy or sell LionGold shares.
The court heard that Gan and Tai viewed Gwee to be some sort of mentor to them, and claimed that the latter had taught them the concept of layering.
However, things appeared to have soured between Gan and Gwee after the crash in October 2013.
“Gabriel came crying to me, cursing Dick Gwee. He said Dick Gwee abandoned him and wouldn’t even give him $5,000,” recalled Soh.
However, when Soh pressed him on this, Gan had apparently “clammed up” and not elaborated further.
Gwee is rumored to have made some $3 million to $5 million in the aftermath of the crash.
When asked about this, Soh responded that he did not put much thought into it.
There was a lot of “soul searching on what happened…but then again nobody knows what’s the truth,” he mulled.
But when asked if he had received some of Gwee’s profits – Soh appeared to be rather miffed.
“No way,” he replied.
The trial will resume on May 19 with Sreenivasan continuing his examination-in-chief of Soh.