SINGAPORE (Feb 19): Even as the long-running trial of alleged penny stock masterminds John Soh and Quah Su-Ling drags on, two brokers have been convicted for their roles in a separate but similar case involving the manipulation of Koyo International shares.
Steven Teo Boon Cheang, who used to be a remisier with AM Frasers Securities, now known as KGI Securities, was on Feb 19 sentenced to three months’ jail by district judge Ng Peng Hong at the State Courts. He pleaded guilty to a charge of manipulating the shares.
Rayson Goh Qi Rui, who was a remisier with OCBC Securities, was sentenced to four months’ jail, including a three-week concurrent term. Similar to Teo, he pleaded guilty and was convicted on account of two charges. Three more charges were taken into consideration.
Both Teo and Goh were part of a scheme to manipulate shares of Koyo International, a Catalist mechanical and electrical engineering firm. The scheme was allegedly led by one Andrew Lin Eng Jue. The Edge Singapore understands that Lin has been charged and his case is still pending.
The court was told how Teo used his own account to trade and help manipulate the Koyo shares.
Goh, on the other hand, used accounts opened by his clients to trade. Those clients allowed their accounts to be used for the scheme. They were told they will earn a 10% cut of the profit made using their accounts, but will not be required to bear losses if any.
While Lin is the alleged scheme leader, there are two distinct categories of individuals facing charges.
First, are the brokers like Teo and Goh who were actively taking and placing orders. Next, individual account holders who allowed their trading accounts to be used.
While Teo and Goh have pleaded guilty, there are five other individuals, besides Lin, facing charges for their roles in the same scheme.
They include two other brokers: Janice Lau Wan Heng, of CIMB and Alan Chong Yew Mun of RHB Securities.
The remaining three individuals are Simon Ang Wei Jie, Yeo An Lun and Koh Cheo Leng.
Over a 17-month period between 2014 and 2016, Lin allegedly led a scheme to manipulate the price of Koyo International shares from a low of 16 cents Aug 12 2014 to a high of 40 cents on Jan 7 and 14 2016, before closing at 34 cents on Jan 2016.
The scheme involved the buying and selling of Koyo International shares via a total 53 trading accounts under the names of 15 individuals, across eight brokerages, including KGI; CIMB; RHB; Philip Securities; OSPL; Maybank Kim Eng; UOB Kay Hian; Lim & Tan Securities.
These 53 accounts, during this period, accounted for 66.71% of the buy volume and 65.80% of the sell volume of Koyo International shares. Cross trades between the 53 accounts represented 43.16% of the total market volume.
“The purpose of the scheme was to create a false appearance as to the price of Koyo shares,” says deputy public prosecutor Suhas Malhotra in his statement of facts.
“On Andrew’s direction, the scheme members used various trading accounts under their control, to trade Koyo shares amongst one another, as well as other third parties trading on the market, and gradually pushed up the price at which Koyo shares were traded on the SGX,” adds the DPP.
According to the SOF, Lin told Teo he knew the CEO of Koyo, Foo Chek Heng, and that Foo wanted to sell the company at a “certain price”. Lin told Teo his plan was to push Koyo’s share price to between 40 and 50 cents, hold it at around that level, and then find a buyer.
Lin told Teo this would be achieved by using multiple accounts to contra trade Koyo shares.
"Trade with caution"
The scheme came to a head when on Jan 15 2016, SGX, which has put in place a much-heightened surveillance regime in the wake of the Oct 2013 penny stock saga, issued a “trade with caution” warning.
SGX flagged that “small group of individuals was responsible for 60% of the trading volume of Koyo [between 26 Oct 2015 and 14 Jan 2016], of which at least half of these trades were due to this group of individuals buying and selling among themselves.”
On Monday, Jan 18 2016, the first trading day after the SGX warning was issued, Koyo International shares crashed by almost 84%. From Jan 15 close of 34 cents, it closed at 5.6 cents on Jan 18 2016.
The company’s share price, since the crash, has floundered at around that level since. On Feb 19 2020, it closed at 6.9 cents.
Last month, Jan 24 2020, Koyo International announced that Foo, citing “medical reasons”, is taking a leave of absence.