(Dec 5): ISR Capital is apparently miffed that recent media reports have associated it with “the three individuals charged for various offences under the Securities and Futures Act”. And, it has issued a statement that reads like a precursor to legal action.

In the statement, dated Nov 30, ISR says its “business activities are not in any way associated with the individuals mentioned or with any of three Singapore Exchange-listed companies whose trading activities are the subject of investigations by the Commercial Affairs Department”. It identifies the three companies as Blumont Group, LionGold Corp and Asiasons Capital (now renamed Attilan Group).

On Nov 25, John Soh Chee Wen and Quah Su Ling were charged for “orchestrating a massive fraud” to manipulate the market for the shares in Blumont, LionGold and Asiasons between August 2012 and October 2013. Charges were also tendered against Goh Hin Calm, whom the authorities allege is a key accomplice of Soh and Quah.

ISR is in the process of acquiring a 60% stake in a company that owns a rare earth mining concession in Madagascar for $40 million by issuing new shares at 10 cents each.

Shares in ISR were trading around 0.4 cent in April. By Oct 31, however, they had jumped to 33 cents, putting the company’s market value at as much as $507 million. ISR has put out two valuation reports, which value the rare earth mining concession it is acquiring at more than US$1 billion.

SGX has made several queries about the valuation reports, however, and ISR has asked for more time to provide answers. On Nov 24, shares in ISR suddenly fell 55%. As the stock was collapsing, SGX queried the company about the unusual trading activity. At 2.32pm that day, ISR asked for a trading halt, pending its response to the SGX queries about the valuation reports. The stock last traded at 12.7 cents, valuing the company at $189.7 million. Interestingly, Nov 24 was also the day that Soh, Quah and Goh were arrested.

Late on Nov 27, which was a Sunday, SGX said it had suspended the trading of shares in ISR to “safeguard the interest of the market, as there are circumstances that prevent trading in the shares of the company on an informed basis”.

Did SGX suspend the trading of ISR shares because of the lack of clarity about the valuation reports? If so, should it not have waited for ISR to answer all its queries before deciding to suspend the stock? Or, did SGX act because it viewed the proceedings against Soh, Quah and Goh to have some bearing on ISR?

“As reviews are ongoing, we are unable to comment or provide more information at this juncture,” says an SGX spokesperson in response to questions from The Edge Singapore. “However, please be assured that we are making it our priority to complete our review of the trading of ISR shares and provide the market with the necessary clarity to lift the suspension.”

For its part, ISR seems to think being linked to Soh, Quah and Goh has affected its share price. “The board regrets the inaccurate media reports that have implied that the company is somehow linked to the individuals under investigation. It notes that these inaccurate reports may have contributed to volatility in the company’s stock price in recent days. The board will seek legal advice and engage with SGX to seek an early lifting of the trading suspension imposed since Nov 27, 2016.”

Quah Su Yin, CEO of ISR, added in a statement on Dec 1 that the only link between the company and the Blumont-LionGold-Asiasons case is that she is a sister of one of the co-accused — namely Quah Su Ling. “I also wish to state that in my capacity as executive director and CEO (since April 29, 2011), I have not been involved in any criminal proceedings.”

Yet, there appears to be at least one individual recently associated with ISR who is directly linked to the case. One of the trading accounts that the authorities allege was used by Soh and Quah Su Ling belonged to a person named Chan Sing En, who is still listed on ISR’s website as CEO of the company’s subsidiary Dynamic Return (Singapore) Pte Ltd.

Moreover, it seems a stretch to blame media reports for the slump in ISR’s share price last week. The stock has not traded since 2.32pm on Thursday, whereas reports from major local media companies about the arrest of Soh and his alleged co-conspirators appeared only later that day. It seems much more likely that the slump was caused by individuals with knowledge of what was happening before the media reports were published.

The sooner SGX clears up whether the arrests of Soh, Quah and Goh have any bearing on the trading of shares in ISR, and discloses who was trading the stock as it collapsed on Nov 24, the better for the integrity of the local market.

This article appeared in the Corporate of Issue 757 (Dec 5) of The Edge Singapore