SINGAPORE (May 24): After stretching over nearly two months, hearings for the first tranche of witnesses in the trial of alleged 2013 penny stock crash masterminds John Soh Chee Wen and Quah Su-Ling has finally come to an end.

So far, 12 prosecution witnesses – mostly remisiers and dealers – have taken to the stand to testify against the duo.

Soh and Quah are alleged to have manipulated over 189 trading accounts to inflate the shares prices of Blumont Group, Asiasons Capital (now known as Attilan Group) and LionGold Corp – collectively known as BAL.

This led to a spectacular rise in their share prices – and a subsequent crash in 2013 that wiped out some $8 billion from the stock market.

The duo is alleged to have performed wash trading, where the same individuals or groups buy and sell shares among themselves.

They then used these shares as collateral to get funds from financial institutions and to buy assets.

As a result, BAL shares rocketed over 550% between August 2012 and September 2013, before plummeting nearly 50% in October 2013.

Soh faces 189 charges while Quah faces 178.

The 12 witnesses have fingered Soh and Quah as the masterminds who would instruct them to execute trades in BAL shares. The duo would also send them money to cover losses that arose.

However, the witnesses presented a common picture: the absence of written third party authorisation from the account holders allowing them to receive instructions from Quah and Soh.

Several witnesses said they did not think to get written authorisation, as they believed Soh and Quah were close enough to the account holders to give instructions on their behalf.

Both Soh and Quah seemingly used this to their advantage to conduct the alleged manipulation.

Another commonality was that these witnesses often lied in their conditioned statements to the Commercial Affairs Department.

Mostly, the witnesses said they had lied because they were afraid that their brokerage licenses would possibly be revoked. Others implied it was because the responses they gave the CAD was based on the data shown by the Investigating Officer, and not based on their memory.

In court on May 23, the final day in the first tranche, the prosecution and defence crossed swords over how these conditioned statements had been prepared, and the relevance of questions raised in the cross-examination of these statements.

Deputy public prosecutor Peter Koy said questions by the defence counsel for the alleged co-conspirators were a “distraction from the facts”.

Senior counsel N Sreenivasan, the defence counsel for Soh, argued that it was relevant to assess whether a witness’ evidence in trial was “unvarnished [and] uncontaminated evidence”.

Justice Hoo Sheau Peng disagreed with the prosecution’s submissions. “To test the reliability of the contents of a conditioned statement, as well as the recollection of events by the witness, it may well be necessary to question the witness on the preparation of the statement and how he was prepared for his evidence in court,” Hoo explained.

Another key accomplice in the crash, Goh Hin Calm, who was formerly an interim CEO of IPCO International (now known as Renaissance United) and the alleged “treasurer” for Soh and Quah, pleaded guilty in March to abetting and aiding the duo.

Goh faced two charges under Section 197 of the Securities and Futures Act and was jailed for three years. He is a possible prosecution witness.

The second tranche of the case will be heard between August and November 2019.

Read more about the 2013 penny stock crash trial in The Edge Singapore (Issue 883, week of May 27), available at newsstands now.

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What the 2013 Penny Stock Crash trial is about

John Soh Chee Wen is the alleged mastermind behind the penny stock crash of 2013, which prosecutors have called “the most audacious, extensive and injurious market manipulation scheme ever in Singapore”.

Together with his alleged co-conspirator and girlfriend Quah Su-Ling, Soh and his associates are alleged to have been behind the massive rise and sudden collapse of shares in Blumont Group, LionGold Corp and Asiasons Capital (now Attilan Group), which wiped out some $8 billion in market value.

Subscribers can click here to read our 8-page special pullout on the penny stock crash trial.

Don’t miss out on these highlights in the penny stock saga so far: