Counsel asks if SGX query could have led to stock market panic

stocks.

The prosecution will also aim to show that Soh was involved in the management of the BAL companies despite a law that prohibits him from doing so as an undischarged bankrupt.Lawyers for the trio have reserved their defence for the trial, but posed several questions to the prosecution witnesses on their evidence during the committal hearing that took place from May 30 to June 1.

Senior counsel N Sreenivasan of Straits Law Practice, who represents Soh, questioned the assumptions used by an expert witness, Michael Aitken, whose analysis was used by the prosecution to allege wash trading.

Sreenivasan also questioned if a query by the Singapore Exchange to Blumont on Oct 1 could have caused panic in the stock market, leading to large sell-offs in the days that followed. Prof Aitken said that in his experience, price movements caused by such queries should stabilise within a matter of hours or even minutes.

The defence sought to clarify whether FIs would have known that trades were being made on instructions from Soh and Quah without the account holders’ explicit permission. Representatives from Saxo Bank, UBS, Goldman Sachs and IB said at the committal hearing that the FIs monitored trades without a direct relationship with the account holders. The FIs’ role in the crash could also come under the spotlight. The prosecution has sought to paint them as victims of a false market created by Soh and Quah; the defence questioned whether forced selling by the firms could have depressed share prices and caused the crash.

A Goldman Sachs representative said at the committal hearing that while his firm’s margin call based on the BAL companies’ fundamentals was issued before the crash, liquidation only commenced from Oct 9. Another witness, investigations officer Sheryl Tan from the Singapore Police Force’s Commercial Affairs Department, gave evidence that IB was the only FI that force-sold any shares in the lead-up to the crash, selling 220,000 LionGold and 550,000 Blumont shares on Oct 4. Beyond the trial, prosecutors also revealed in earlier bail hearings for Soh that investigators are looking into allegations that Soh was also involved in the management of ISR Capital and helped to manipulate that company’s stock while he was on police bail and before he was arrested. ISR Capital was not mentioned during the committal hearing. The Business Times understands that matters related to the ISR Capital case are currently being treated as a separate investigation. — SBT