SINGAPORE (Oct 1): Prosecution witness Ken Tai Chee Ming has exposed more names within the local stock broking community that had connections with alleged 2013 penny stock crash masterminds John Soh Chee Wen and Quah Su-Ling.

Tai, who was once part of the duo’s “inner circle”, had said in his conditioned statement that one Roger Tan had introduced him to Quah in late 2010.

In court on Tuesday, Tai revealed that Tan was the chief executive officer of Voyage Research – the spin-off of the Singapore Investors Association (Singapore) that was formerly known as SIAS Research.

According to Tai, Tan had provided proxy accounts for Soh and Quah to use in their market rolling activities.

Under that arrangement, Soh and Quah would share the profits 50-50 with the proxy account owners, while absorbing any losses.

According to Tai, one of the proxy accounts provided by Tan belonged to Vincent Chia, the chairman of Transcorp Holdings.

Tai also described in detail the relationship that Soh and Quah had with a few of the brokers.

For example, Tai recounted that he saw Wong Xue Yu very often at the LionGold office after the October 2013 penny stock crash. Wong was the duo’s broker at AmFraser, and had provided third-party trading lines to Soh and Quah.

Tai said that there were instances when Wong was close to tears. “[Wong] told me that his losses were almost $28 million, and were mostly in his third-party lines, which were his friends and relatives,” he added.

Another broker, Ong Kah Chye, was fingered as an old friend of Soh, with their friendship going back some 20 years.

Ong was the trading representative for Peter Chen Hing Woon and Joseph Gutnick. The latter was the chairman of Merlin Diamonds, the company Innopac tried to acquire via a share swap.

“As far as I remember, it was Soh who instructed [Gutnick] to open an account with Ong,” said Tai. “Subsequently, I heard Soh placing orders with Ong to buy Innopac [shares].”

Tai also explained that he had heard Soh and Quah giving instructions to other brokers, such as Lincoln Lee from Kim Eng and a “Jordan” from DMG.

He also mentioned that he was aware that Soh and Quah had an arrangement with another market operator named Tan Chin Hock, where they would “cross” their “headcount”.

Under this arrangement, Soh and Quah would provide proxy accounts to Tan for his use, in return for Tan providing them with proxy accounts to use for Blumont, Asiasons and LionGold.

Tai explained that this was in order to ensure that there appeared to be multiple buyers in the market.

According to Tai, the addition of LionGold into the MSCI small cap index was a cause of joy for Soh, who reportedly told him that he had “found the formula” for inclusion.

Soh’s conclusion from this, Tai said, was that the companies don’t need to have strong fundamentals, only trading volume and market cap.

The inclusion into the MSCI index also led fund managers to add the counter into their portfolios. Tai noted that the Vectors Junior Gold Miner ETF had bought a stake in LionGold.

Tai also revealed that AmFraser took a huge haircut in their losses from the penny stock crash, with Soh and Quah only paying 15 cents on every dollar.

The trial will resume on Wednesday as the prosecution continues its examination-in-chief.

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:

Second tranche of witnesses (starting Oct 1, 2019)

First tranche of witnesses (March 11, 2019 to May 24, 2019)