SINGAPORE (Oct 21): Representatives from CGS-CIMB Securities and DBS Vickers Securities who testified in court on Oct 15 denied knowledge of unauthorised third-party instructions in the trading of stocks related to the 2013 penny stock crash.

Taking the stand at the trial of John Soh Chee Wen and Quah Su-Ling, the alleged masterminds behind the market manipulation scandal, the representatives in their respective conditioned statements said they would have rejected Soh as an authorised third party.

Voo Wai Lum, regional head of compliance at CGS-CIMB, pointed to adverse media reports on Soh in the period just before the penny stock crash; DBS Vickers’ Sim Han Kiang said Soh would not have been approved as an authorised operator based on the brokerage’s screenings.

Voo disclosed, however, that one of CGS-CIMB’s trading representatives, Yu May San, had received trading instructions from Soh.

The disclosure came after the Monetary Authority of Singapore in January 2018 requested for information concerning the accounts of Edwin Sugiarto, Adeline Cheng Jo-Ee, Quah Su-Ling, James Hong Gee Ho and Friendship Bridge Holding.

During an interview in which CGS-CIMB conducted its investigation in February 2018, Yu said she had received instructions from Soh.

According to Voo, Yu claimed she had “erroneously believed” that her clients Quah and Sugiarto had completed and returned the third-party authorisation forms that authorised Soh to give trading instructions on their behalf.

Yu was subsequently disciplined by CGS-CIMB. She was given a letter of warning and a month’s suspension, and placed under close supervision for a year after her suspension.

No disciplinary action was taken against CGS-CIMB’s other trading representatives.

One of these representatives and Hong’s broker, Jenny Lim Mui Yin, claimed the trading orders came directly from Hong.

Meanwhile, the trading representative for the Friendship Bridge account had left by the time CGS-CIMB started its investigation.

Under cross-examination by Soh’s lawyer, senior counsel N Sreenivasan of K&L Gates Straits Law, Voo admitted that CGS-CIMB had carried out investigations on these accounts because of the MAS query.

He added that some of these accounts were reviewed as part of the broking house’s compliance practices. However, no disciplinary action was taken until the query.

Voo also said that, beyond her own signed statement to CGS-CIMB, there was no proof that Yu took instructions from Soh.

Sreenivasan also asked Voo whether accountholders would assume that a third-party authorisation form was not needed unless the trading representatives “make noise”.

Later, Quah’s counsel, Philip Fong, managing partner at Eversheds Harry Elias, also pressed him on the same issue.

Voo stuck to his guns and reiterated that accountholders could not assume so because the clause is present in the terms and conditions when opening an account.

Sim also said DBS Vickers had suspended Sugiarto’s account after adverse news about him broke. However, no disciplinary action was taken against Sugiarto’s trading representative, Fred Yong.

When grilled by Sreenivasan, Sim admitted that DBS Vickers would not have known whether Soh or Quah gave such instructions to Yong.

Asked about the third-party authorisation form, Sim — in a departure from the usual reply from financial institutions — said it was the client’s, and not the trade representative’s, responsibility to provide the paperwork.

Sim agreed, however, that it was the trading representative’s responsibility to ensure it took instructions only from the accountholder or authorised third parties.

CGS-CIMB, DBS Vickers deny knowledge of unauthorised third-party instructions

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