https://www.channelnewsasia.com/sin...-rigging-teo-thiam-chuan-goh-jin-hian-4612386
Ex-director of New Silkroutes Group jailed for market rigging; prosecution calls Goh Jin Hian the ‘mastermind’
Four men allegedly conspired to push up the share price of New Silkroutes Group as a way to facilitate the company's expansion through acquisitions.
SINGAPORE: A former finance director at New Silkroutes Group (NSG) was sentenced to 12 weeks in jail on Monday (Sep 16) for false trading and market rigging.
As Teo Thiam Chuan William is the
first of four co-accused to plead guilty, this is the first time the facts of the case are coming to light.
In its sentencing arguments for Teo, the prosecution labelled his co-accused, former CEO Goh Jin Hian, as the "mastermind" in the scheme.
Goh, 55, is the son of former prime minister Goh Chok Tong.
According to the prosecution, the four men schemed to increase the price of NSG securities in 2018, even engaging a commercial market maker to push up prices from S$0.285 to S$0.50.
Teo, 55, pleaded guilty to six charges under the Securities and Futures Act for abetment by conspiracy over false trading and market rigging transactions. Another 25 charges were taken into consideration.
THE CASE
NSG is an investment holding company listed on the Singapore Stock Exchange (SGX) since 2002. It has subsidiaries operating in industries like oil trading, information technology and healthcare.
As finance director, Teo managed the company's accounts and worked on funding, mergers and acquisitions. He also had control of NSG's corporate securities trading accounts and was authorised to conduct share buybacks of NSG shares.
The other co-accused are Oo Cheong Kwan Kelvyn, 53, then the executive director and chief operating officer of NSG; and Huang Yiwen, 40, the sole director of commercial market maker GTC Group.
According to court documents, NSG started out in the oil trading, electronics and IT product distribution business.
In December 2016, it moved into healthcare through the acquisitions of clinics and medical supply companies.
NSG largely paid for the acquisitions through the issuance of NSG shares as consideration for the purchase.
However, its efforts to acquire companies and raise capital through private placements were hindered by its declining share price in 2017.
NSG SHARE PRICE DECLINE
The share price ranged from S$0.70 to S$0.90 from January to May 2017, before dropping to around S$0.40 to S$0.50 in June. It hit a low of S$0.285 in November that year.
On Nov 29, 2017, NSG successfully applied to halt trading of its shares. This became a trading suspension a few days later.
Between the time trading was suspended and when it was lifted on Feb 25, 2018, NSG agreed to a number of corporate transactions involving the potential issuance of new NSG shares as consideration.
On Feb 21, 2018, NSG announced a proposed placement of more than 11 million new shares at a price of S$0.44 per share to an external investor named Dr Andrew Chua Soon Kian, to raise a sum of S$5 million. This placement was completed in March 2018.
NSG also announced a memorandum of understanding with a third party named Mr Shen Yuyun in February 2018, to acquire two medical supply companies in Shanghai. NSG planned to issue new shares at S$0.50 per share to complete the acquisition for S$65 million.
That same month, NSG announced a memorandum of understanding with Haitong International Securities, where Haitong would subscribe to a convertible bond of S$5 million, issued by NSG with a maturity date of two years from the date of issue.
The convertible bond would pay interest of 5 per cent per annum.
THE CONSPIRACY
However, while trading was suspended, Teo and his three accomplices agreed to engage in a scheme to artificially push up the price of NSG securities, the prosecution said.
According to the prosecution, the scheme involved three methods: Placing orders and executing trades in NSG securities using market maker GTC's trading account; placing orders and executing trades using NSG's share buyback accounts; and using Goh's personal trading account to place orders and execute trades in NSG securities.
As a commercial market maker registered with SGX, GTC was not allowed to manipulate the share price of a security. Market makers are instead generally supposed to improve trading liquidity for the contracted securities, by providing competitive bid-ask quotes on a continuous basis with an agreed-upon spread.
However, Teo, Goh and Oo allegedly hired GTC to place orders and execute trades for NSG securities for the specific purpose of artificially pushing up and maintaining the price of NSG securities, under the guise of providing legitimate market-making services.
One reason for bolstering the share price was to provide investor confidence to complete the corporate transactions that had been announced, and to allow for future share placements based on an attractive share price.
According to the statement of facts Teo pleaded guilty to, Goh asked him to find a market maker to support NSG's share price on Feb 4, 2018. NSG then hired GTC sometime between Feb 21 and Feb 28 in 2018.
Goh, Teo and Oo allegedly gave GTC's Huang a target price of S$0.50 to achieve.
Over six months from late February 2018, the four men allegedly carried out the market-rigging scheme, communicating via text and emails, discussing when to buy NSG securities and at what price.
In one text message, Goh purportedly encouraged Teo to put in bids at a certain time.
The prosecution listed another example of an email in which Goh allegedly asked Teo to emphasise to GTC that they were not reaching their target price of S$0.50.
In a group chat, Goh also allegedly suggested not paying GTC its fees "until the share price hits S$0.40 in May".
"This was a concerted and coordinated effort between (Teo) and his co-accused persons to engage in market rigging," said the team of three prosecutors.
TRADING SUSPENSION LIFTED
The trading suspension in NSG shares was lifted after the market closed on Feb 25, 2018.
The next morning, Teo and his accomplices allegedly discussed how to push up the opening share price of NSG to meet their target.
Huang allegedly used GTC's trading account to place buy orders during the opening routine before trading on the SGX began at 9am.
On Feb 26, 2018, the price of NSG shares opened at S$0.390, which is a 36.84 per cent increase over its last traded price of S$0.285.
Teo and Huang also placed orders and executed trades for NSG securities in early March 2018 to artificially push up the share price.
GREAT DISTORTION CAUSED: PROSECUTION
The prosecution sought 12 weeks' jail for Teo, calling the scheme "sophisticated, well-coordinated and effective", designed to manipulate the price of NSG in order to allow its shares to be used as consideration for corporate deals.
They said Teo played a "critical role" in the scheme as finance director.
The scale of the market rigging was significant, with "great distortion" caused to the market for NSG securities, said the prosecutors.
On the 31 days which form the subject matter of Teo's proceeded charges, the alleged trades and orders executed by Teo, Huang and Goh accounted for 28.78 per cent of the total market volume, taking buy trades only.
They also set the intraday high on 11 trading days and raised the closing price of NSG securities on 22 trading days.
"There was a concerted and successful effort by the accused persons to manipulate the price of NSG to make it appear more attractive than ordinary market forces would otherwise dictate," said the prosecution.
The scheme was devised as "a quick and convenient way" to facilitate NSG's expansion by acquiring other companies and to raise capital through the issuance of new NSG shares, the prosecution added.
The men also engaged GTC to create "a veneer of legitimacy to their manipulative trades".
"While not the mastermind (which was Goh), (Teo) played an important role in the scheme," said the prosecutors, adding that he was the main liaison between NSG and Huang.
Teo was allowed to begin his jail term on Sep 18.
The cases for Goh, Huang and Oo are at the pre-trial conference stage, with the next one slated for Sep 26.
According to court records, Huang intends to plead guilty.
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