Expert in Soh’s trial: Level of wash trading was extraordinary
SINGAPORE: Three stocks allegedly manipulated by Malaysian businessman John Soh Chee Wen had charted an extraordinary level of wash trading ahead of the Singaporean penny stock crash more than four years ago, a stock market expert told the High Court here.
Capital Markets Cooperative Research Centre in Australia CEO Prof Michael James Aitken testified that he ran 10 algorithms that scanned changes in volume and price plus market announcements to determine incidences of wash trading and pre-arranged trading.
Wash trading – trading of stocks between the same parties – is illegal in Singapore.
“In a marketplace, we assume that all actors act independently. If that is not the case then the market is not subject to the free market forces of demand and supply and so the market that results from wash trading is false and misleading,” said Aitken.
He is an expert witness engaged by the Monetary Authority of Singapore (MAS) to analyse various accounts trading of three stocks: LionGold Corp, Blumont Group and Asiasons Capital (since then renamed Attilan), for use in the committal hearing of Soh. He faces 181 charges of violating the Securities and Futures Act, which alleged he masterminded the collapse of Singapore’s penny stocks. He was then slapped with an additional eight accusations of witness tampering.
Former IPCO International CEO Quah Su Ling and former IPCO interim CEO Goh Hin Calm were accused with him, with Quah facing 178 charges while Goh faces six charges.
Aitken’s findings showed wash trading of Asiasons stock went as high as 68% of total trading volume in June 2013, while Lion Gold wash trading went as high as 78% in March 2013. Blumont’s was as high as 45%.
“Now, any degree of wash trading in a marketplace is problematic. Any degree. This level of wash trading in any marketplace is extraordinary, okay? Absolutely extraordinary. I have never ever seen this level before,” he said.
Soh’s lawyer N. Sreenivasan questioned Aitken’s findings on whether it was coloured by the assumption that all the accounts he was told to analyse by the MAS were related.
“And you did not do any investiga- tion of your own or analysis of your own, that was a given fact; am I right?” asked Sreenivasan, to which the witness agreed.
The three-day committal hearing before assistant registrar James Elisha Lee continues today.
Based on the outcome of the hearing, the High Court may determine whether there are sufficient grounds to commit to a full trial.
The meteoric surge in prices of LionGold, Asiasons Capital and Blumont stocks came to a spectacular halt in October 2013, then crashed, vapourising S$ 8bil (RM23.7bil) worth in market value.