2013 penny stock crash: No ‘comeback’ for Soh despite ‘over-abusing’ the word after the crash
John Soh, who is at the centre of a trial for allegedly manipulating three penny stocks in 2013 that subsequently led to their crash, made a couple of attempts to stage a “comeback” from losses incurred in the wake of their spectacular collapse.
According to former broker Gabriel Gan Tze Wee, who helped to carry out some of Soh’s trade orders, the latter tried to convince people around him that he had a “comeback story” and that they could all make a “solid” comeback.
Gan, who is taking the stand as the latest prosecution witness, told the court that the term “comeback” was “over-abused” by Soh three to four years after the crash.
The court also heard that a couple of “comeback” attempts were also made with two other listed companies, Sino Construction (since then renamed MMP Resources) and ISR Capital (now called Reenova Investment Holding) as well as a privately-held company called Greatronics.
However, before the schemes could gain traction and make enough money, Soh was arrested in November 2016 and has been held in remand ever since. He is now facing trial together with his lover and fellow accused Quah Su-Ling. “Yeah. Nobody came back. Not even him. None of us,” Gan told the court on July 1.
Gan was one of the “generals” Soh depended on to help coordinate and execute the trades of the three penny stocks — Blumont Group,
Asiason Capital (now renamed Attilan Group) and LionGold Corp, also collectively known as BAL — between 2010 and 2013. Others include Ken Tai Chee Ming and Henry Tjoa, as well as Soh’s long-time associate Dick Gwee.
In his earlier statements and testimonies, Gan recalled how he helped Soh seek new ways to increase the combined trading limit of the accounts under their control.
When selling pressure piled on just before the crash, Gan took on bigger risks, using trading accounts belonging to his family to help Soh support BAL’s stock prices. The risks taken were so large that when the crash happened, Gan, like many others involved, suffered losses. A few were even made bankrupt, including Gan.
According to Gan, Soh’s relationships with his network of brokers and individuals who traded on his behalf, was not always amicable, especially after the crash.
One of them was Leroy Lau, Gan’s colleague at DMG Securities (since then part of RHB Securities), who lost close to $30 million. “I was informed, but I cannot confirm, that Mr Soh didn’t make good the losses to Leroy. That’s why Leroy was very angry with him, and he was very, very rude to Mr Soh, so much so that Leroy would call him for no apparent reason and then scold him vulgarities and things like that,” said Gan.
On the other hand, Soh apparently took the trouble to reassure Gan. While Soh could not make good for all the losses, Gan told the court that Soh not only kept in contact but tried to make good by paying for Gan’s shares in another company that Soh wanted to use to make a comeback.
According to the transcript of one of the many recordings of conversations between Soh and Gan, Soh called Gan a “vital” associate. “Firstly, you have proven your toughness — your mental toughness. Two, you have your reach and your ability to spin,” Soh was recorded as saying to Gan.
Gan told the court these were “very comforting words”. “Yeah, a vital cog in the next new scheme. Mental toughness, of course. I’ve helped him to evade lots of losses, yeah, fended off lots of people asking for money, and followed by my reach — oh, because I was a public figure,” said Gan, referring to his years of being a prolific stock commentator including very frequent appearances on radio. “He probably thought that I’m very good at spinning, maybe writing stories, articles,” he added.
More than just taking orders?
But what Soh did not know was that Gan had secretly made around 100 audio recordings of many conversations between the two as well as that involving other individuals.
Gan told the court that although he did not fully cooperate with the investigators initially, he had already started recording the conversations and also the numbers of the unregistered phone lines used by the group.
During cross examination on July 2, Soh’s lawyer N Sreenivasan of K&L Gates Straits Law asked Gan the reason behind this. Gan explained he was then beholden to Soh, and was hoping that Soh would make good the trading losses incurred while using accounts belonging to Gan, his family and his friends.
“I was beholden to John because of the financial issues. I was willing to be very loyal to him, but since he was already remanded, I saw no ways, no means of recovering the money, so when the authorities came knocking on my door, I just had to surrender,” said Gan.
Sreenivasan tried to make Gan agree that during the alleged manipulation of shares, Gan was playing a more active role than just taking trading orders from Soh and Quah. Gan, the court was told, helped get prepaid SIM cards for various other individuals involved. Gan denied that he was in charge of logistics and operational security. “I wanted everybody to stay safe,” said Gan.
“It’s not Covid, so what were they staying safe from?” asked Sreenivasan. “It’s my own initiative. Safe from the authorities. Like I said yesterday [July 1], I was trying to protect John, all the way until he was remanded,” said Gan.
The making of a perfect storm?
In Gan’s conditioned statement, BAL shares came under “selling pressure” from Goldman Sachs a few days before the crash and he was told by Gwee to help “defend” its share price. Sreenivasan said that at the committal hearing back in 2018, representatives of the US financial firm flatly denied short selling the shares. Goldman had loaned money to Quah using BAL shares held by her and other related parties as collaterals.
Gan explained that he knew it was Goldman selling because traders could see the house code on their systems and that there were “a lot” of sellers with the Goldman house code unloading large chunks of BAL shares of between 500,000 and one million units each. Gan also heard from Tai that Interactive Brokers was making margin calls too.
In his cross examination, Sreenivasan also made Gan agree that the crash of the shares in early October 2013 was caused by other parties.
When BAL prices were surging, the Securities Investors Association of Singapore (SIAS) had called on Blumont to give an acceptable explanation for the unusual price hike in the shares, failing which an investigation could be launched.
But when Blumont asked for a trading halt, the request was denied by Singapore Exchange, which Gan agreed was an unusual response. “So we’re looking at a perfect storm: Selling pressure from Goldman, SIAS’s announcement, denial of trading halt. Agreed?” asked Sreenivasan. “Yes,” said Gan.
Sreenivasan added that other known associates such as Lim Kuan Yew and Nelson Fernandez were already up to their trading limits holding BAL shares. “So, it makes absolutely no sense for a group of people, allegedly acting in concert, to do things to bring the price down. Right?” asked Sreenivasan. “Yes, I would agree,” said Gan.
The trial continues.