A Singapore court has sentenced Malaysian John Soh Chee Wen — who was found guilty of masterminding the manipulation of three penny stocks that eventually collapsed and wiped off $8 billion in market capitalisation in 2013 — to 36 years in jail. His main accomplice Quah Su Ling, another Malaysian, was given 20 years.
Soh was convicted of 180 of the 188 charges he faced for forced trading, price manipulation and deception. Quah was guilty of 169 of the 178 charges she faced. The two intend to appeal against their conviction and sentence.
In her oral judgement, judge Hoo Sheau Peng said, "Armed with a good understanding of the securities and financial markets, and tapping on their extensive connections and networks, they boldly exploited the system. They personally minded and tended to the intricate scheme they devised on an almost daily basis for a prolonged period of 14 months, taking steps to evade detection by the authorities."
Hoo also pointed out that by the crash, “immense harm was caused”.
If the appeal fails, Soh, 62, will have to spend 30 years in prison — the six years spent in remand is deducted from the 36-year sentence.
The crime that Soh committed is the biggest-ever case of share price manipulation in the Singapore Stock Exchange (SGX)’s history. The three stocks involved were Blumont Group Ltd, Asiasons Capital Ltd and LionGold Corp Ltd.
The Edge Markets had in October and November 2013 reported extensively on the manipulation.
Some quarters have commented that 36 years in jail was rather harsh for a white collar crime. That would be so when compared to Malaysia.
In Malaysia, there is a long ongoing case of stock manipulation against Low Thiam Hock, better known as Repco Low. He was charged in September 1999 for manipulating the shares in Repco Holdings Bhd in 1997.
Like John Soh, Low was a politically well-connected high flier in the stock market circle in the 1990s.
The Sessions Court had in 2016 found 60-year-old Low guilty and sentenced him to five years' jail and fined him RM5 million ($1.5 million), which he is currently appealing against. The High Court will deliver its verdict on Low’s appeal on Jan 27, 2023.
The sentence against Low is the highest imprisonment term imposed by the courts in a market manipulation case, according to the Securities Commission Malaysia (SC).
Serba Dinamik Holdings Bhd, which was embroiled in accounting irregularities flagged by its external auditor, is the latest high-profile commercial crime case.
In April this year, four senior executives of Serba Dinamik were compounded RM3 million each by the SC for giving false statements involving revenue of RM6.01 billion for the financial year ended Dec 31, 2020.
The compound fines settled the criminal charges they faced. This came after months of investigation conducted by the SC. The SC said the compounds followed the public prosecutor's decision to accept the representation made to the Attorney General's Chambers by Serba Dinamik and the individuals involved regarding the charges pending in court.
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Since the accounting irregularities were uncovered, Serba Dinamik’s share price plunged to barely one sen from RM1.61 in May 2021. Its earnings evaporated, and it incurred an annual net loss of RM1.09 billion for the financial year ended June 30, 2022, and missed the deadline to submit an annual report to Bursa Malaysia.
The latest quarterly financial report shows that Serba Dimanik incurred a net loss of RM104.6 million for the quarter ended Sept 30.
Compared with the losses suffered by its minority shareholders and creditors, the four senior executives escaped with only a paltry financial penalty.
Malaysia also has its own penny stock manipulation which The Edge Markets had exposed in 2020 and 2021 but to date no one has been held accountable. Instead the then editor in chief was charged for publishing the exposes. The charges have since been dropped.
It is thus no surprise that critics say that quite often crime does pay in Malaysia — especially if you are well connected like John Soh was in the 1990s.
The 36-year jail time he now faces in Singapore contrasts sharply to the penalty he got for similar charges he had faced in Malaysia for manipulating several stocks and fraud in the mid-1990s just before the Asian Financial Crisis of 1997/98.
He was compounded RM6 million for defrauding Omega Securities of more than RM500 million — an exorbitant amount even by today’s standards.
Soh was on the run when he was 39 years old after he was charged with defrauding Omega Securities together with TA Enterprise founder Datuk Tony Tiah in 1999. Tiah also escaped a more punitive punishment by paying a RM3 million fine.
The charges pertained to alleged irregularities over a block of 35.6 million Uniphoenix Corp Bhd (UCB) shares that were bought through several margin accounts in Omega Securities. More than RM400 million flowed to the margin accounts for the purchases of UCB shares then. When UCB's share price collapsed, Omega Securities suffered hefty losses.
In 2002, Soh returned to Malaysia and paid a RM6 million compound to settle the charges.
After the lucky escape from jail, what prompted him to do the same thing in Singapore a decade later? Could it be he believed that he could pull off the same thing in Singapore, and if he does get caught, can get away with just a fine?
If that was what he believed, it was the biggest miscalculation he has made, as he now has to spend what likely are the remaining years of his life in a prison cell.
This article was first featured on The Edge Markets.