SINGAPORE (June 1): The three individuals accused of being the masterminds behind the October 2013 penny stock crash will go to trial, the Singapore court decided on Friday.

The three-day committal hearing saw 13 out of 67 witnesses cross-examined by defence lawyers. The three individuals are Malaysian businessmen John Soh Chee Wen, Quah Su-Ling, former CEO of IPCO International, and Goh Hin Calm, former interim CEO of IPCO.

See also: Defence lawyers for alleged masterminds attempt to pin 2013 penny stock crash on forced selling

See also: Three-day committal hearing into 2013 penny stock crash starts

Soh faces 189 charges ranging from witness tampering to fraud. He has been denied bail repeatedly and has been held in remand since November 2016. Quah faces 178 charges and is out on bail for $4 million. Goh faces six charges and has been described as the “treasurer” of the operation.

During the hearing, the defence team for Soh, Quah and Goh sought to question the veracity of data analysed by investigators as well as pin the crash on forced selling by financial institutions.

In Friday’s session, it was revealed that Goldman Sachs slapped Quah with a margin call on the morning of Oct 2, 2013. In a letter of demand shown in court, Quah was asked to pay up to $36.6 million and US$19.3 million by 1.30pm that same day.

Defence counsel N. Sreenivasan suggested that Goldman Sachs would have force sold the shares of Blumont, LionGold Corp and Asiasons Capital -- now known as Attilan Group -- even if Quah and former Blumont executive director James Hong had not sold those shares as a sign of good faith, which Goldman requested.

Jason Moo, CEO, Goldman Sachs Singapore, denied this, saying that while there was a request of good faith in the discussions on the morning of Oct 2, 2013, alternative ways of showing good faith were discussed as well.

“There are alternative ways of showing good faith, by wiring assets or transferring funds from other institutions,” said Moo.

Sreenivasan also questioned the time frame given to Quah to repay the loan, having only three hours between the phone call and the payment deadline. The prosecution counsel, deputy public prosecutor Nicholas Tan, highlighted the terms and conditions that Goldman Sachs clients get when they are on-boarded.

“When the clients borrow an on-demand loan, we give them time to effect the mechanics of repayment terms -- a few hours is enough,” said Moo, “If a client has a margin loan with us, but has liquidity and funds in another bank, all the client has to do is call to transfer the money to us,” he added.

According to Moo, forced selling of the shares only occurred from Oct 9 2013 onwards to recover costs after Quah stopped communications with the bank and had no way of transferring alternative funds to repay the loan.

Ken Tai Chee Ming, a trader now with Algo Capital, was also cross-examined by Sreenivasan. Tai was questioned on the circumstances behind his acrimonious exit from Kim Eng Securities.

“I was accused of talking to the Straits Times. They said I breached the internal policy of talking to the Straits Times,” said Tai, adding he had committed no other offence.

During the hearing, Tai revealed that although Saxo Bank gave a better gearing ratio than other banks, he limited Quah and Soh’s gearing ratio. This was because he understood how the two operated, taking the full amount from margin trading, which made him uncomfortable.

“The gearing was so high, a 10% drop would trigger a margin call. I gave them a lower gearing limit than what Saxo gave me. The risk of a margin call is real, Interactive Brokers triggered a forced selling call, which was triggered by machines and not humans,” said Tai.

Sreenivasan also questioned the veracity of the results from the data analysis correlating telecommunications activity from the accused with trading activity, asking Esther Gao, senior quantitative analyst, Government Technology Agency, on the parameters of her analysis.

Gao was given five-minute and 10-minute parameters to correlate telco activity with trading activity, which she said was not the parameter she set. Sreenivasan questioned the data Gao received and whether she had access to the contents of the telecommunications activity, to which she said she did not.

Sreenivasan also questioned Commercial Affairs Officer Sheryl Tan about the data her investigation findings was based on. The defence counsel asked if Tan would have known if a sell order was a short sell if the broker did not key in the trade as a short sell order.

“It is a statutory requirement for brokers to key in trades as a short sell order,” said Tan.

Sreenivasan also asked if Tan knew if any other financial institutions were force selling in the lead-up to Oct 4 2013. Tan replied that only one interactive broker account was forced selling on Oct 4 2013, the morning before Singapore Exchange suspended trading for all three counters.

Defence counsel Philip Fong also challenged eight charges on the ground of having no or insufficient direct evidence of Quah's involvement. He argued that the prosecution is inferring evidence of control from other accounts to apply to those eight accounts.

However, assistant registrar Lee did not agree with Fong. “Based on the evidence and submissions that I’ve heard from the counsel for the accused, I find that there are sufficient grounds to commit the trial to the High Court,” added Lee.

All three counsels have reserved their defence for the trial.