2013 penny stock crash: John Soh’s ‘generals’ told to ‘defend’ BAL shares — only to end up as bankrupts
For more than three years in the run-up to the penny stock crash back in October 2013, a group of brokers had actively executed trading orders supposedly instructed by John Soh Chee Wen and Quah Su-Ling.
In the end, several of them were bankrupted by the share manipulation operations allegedly orchestrated by Soh and Quah.
The brokers had helped manage the multiple accounts opened under names of dozens of known associates so that the buying and selling of three penny stocks involved — Blumont, Asiasons Capital (renamed Attilan) and LionGold — could be controlled by “rolling” from one account to another.
There were dozens of brokers involved but there was an exclusive group whom Soh called his “generals”. They included Gabriel Gan Tze Wee, Ken Tai Chee Ming and Henry Tjoa. All three are now prosecution’s witnesses in the long-running trial
According to former DMG broker Gan in his conditioned statement, when the alleged share manipulation operation was in full swing, Soh told Gan he relied on them for “market activities” while he himself concentrated on “corporate deals”.
Just a few days before the Oct 4, 2013, crash, Goldman Sachs, which had loaned money to Quah, was shortselling the penny stocks. To support the prices, Dick Gwee, Soh’s long-time associate who is now a prosecution witness as well, on Oct 3, 2013, told Gan to “defend” the market.
Gan said he tried, but faced with trading curbs imposed by brokerages on all but two accounts belonging to Soh and Quah, he had no choice but to use his own account as well as those belonging to his wife and his parents to help shore up the counters. “I therefore bought Asiasons shares in all six DMG accounts up to the maximum trading limit available,” said Gan in his statement.
On Oct 4, 2013, prices crashed further. Blumont tried to ask for a trading halt but was denied. The game was up. A week later, the shares were forced sold and Gan owed the brokerage nearly $20 million. The losses in his personal and family’s accounts came up to more than $2 million.
Since August 2016, Gan, who used to work as analyst with the Ministry of Defence before moving into the finance industry, has been adjudged bankrupt. He was the latest witness to take the stand on behalf of the prosecution in the long-running trial of Soh and Quah, who are accused of Singapore’s largest ever case of market manipulation which wiped off some $8 billion from the market.
Gan first met Gwee back in October 2010. A month after they met, Gwee asked Gan if he was keen to trade for Soh. However, Gan would be required to have trading accounts that can trade up to $40 million.
According to Gan, he already knew who Soh was, based on his recollection of media reports. He knew how Soh was implicated in the collapse of TA Securities in Malaysia, as well as Soh’s conviction for a securities-related matter in Malaysia which Gan did not elaborate in his statement.
First contact
Around November 2010, Quah, Soh’s fellow accused, contacted Gan. The CEO of IPCO International then introduced herself as Gwee’s friend and arranged for him to open accounts for her and CFO Carlson Clark Smith.
Besides opening accounts for them, Gan received application forms for five other individuals: former LionGold executive Peter Chen Hing Woon, former Blumont chairman Neo Kim Hock, Soh’s long-time associate Lee Chai Huat and former IPCO interim CEO Goh Hin Calm, who has already pleaded guilty and is described as the “treasurer” of the share manipulation operations, as well as Goh’s wife Huang Phuet Mui.
According to Gan, other than Neo and Lee, the other account holders, including Goh’s wife Huang, and Carlson, started calling him to place trading orders. On one occasion, Quah told Gan she wanted to place orders on behalf of the other account holders, except Carlson. “The angmoh is scared,” Gan recalled her as saying.
Gan did not insist on written authorisations as he did not want to offend Quah. Initially, the orders were all for just one counter: Think Environmental Group — the former name of LionGold.
“I viewed these accounts as a collective group. I would therefore look at the available trading limits in these accounts as a group on a daily basis. I would then call or SMS Quah to inform her about the shares for which payment was due in the next one to two days and for her to give instructions on the sale and subsequent repurchase of the shares in the accounts,” said Gan.
AmFraser, aware of the poor payment record for individuals linked to IPCO International, soon refused to allow trades to be made from all the accounts except that of Goh and Chen — and this was only because the two accounts had accumulated profits from previous trades.
In late 2010 or early 2011, Quah told Gan a friend of hers called “Peter” would be giving trading instructions on those two accounts. It was apparent “Peter” and Quah were working closely together because “there were instances where one took over the conversation from the other in the same call”, recalled Gan.
Circle of trust
Around the first quarter of 2011, Gan, stymied by AmFrasers’ reluctance to give him a bigger trading limit, moved to DMG Securities. This followed an introduction by Gwee to Nicholas Ng, then CEO of DMG and who subsequently became CEO of LionGold. “Dick Gwee assured me that the accounts operated by ‘Peter’ and Quah would follow me to DMG. ‘Peter’ also expressed his approval of my move to DMG for higher trading limits,” says Gan.
Soon after Gan moved to DMG, a Malaysian called Lim Kuan Yew opened an account and Quah, whom Lim called “ma’am”, placed orders on Lim’s behalf. “Peter” started calling again. Apart from Think Environmental, “Peter” started placing orders for Asiasons Capital and Blumont.
One day, while having a smoking break, Ng told Gan that he was moving to LionGold to be its CEO, and Gan mentioned he has been trading LionGold on behalf of “Peter”. That was when Ng told Gan that “Peter” was actually Soh. “I did not ask ‘Peter’ whether he was in fact Soh because to me, if Soh had wanted me to know his true identity, he would have done so earlier. In my subsequent phone communications with Soh, I addressed him as ‘sir’,” says Gan.
According to Gan, Quah, when giving trading instructions to him, would ask to know the counterparty for done trades — something he was able to tell from the trading system. Upon which, Quah would comment in Hokkien, either “bat nang” (other people), or “kah kee nang” (own people). “From this, I gathered that Soh and Quah were coordinating trades between accounts at different brokerage houses which were all controlled by them,” said Gan.
Gan recalled another time when he asked Quah to make an urgent payment. Quah took out a pre-signed cheque belonging to Lee Chai Huat with an amount of $67 already written and right in front of Gan, amended the amount to $200,000 and counter-signed against the amendment by forging Lee’s signature. “I tried to encash the cheque at the bank immediately thereafter, but failed. I believe Quah subsequently paid for the losses by other means,” said Gan.
Soh makes a presentation
In June 2013, Gwee asked Gan if he wanted “deeper involvement” in the trading activities and focus on the trading of Asiasons shares as Soh was expected to be busy in the coming few months with “corporate deals”. “I agreed to take on a bigger role in the scheme as I could make even more commission,” said Gan.
Gan also recalled numerous meetings, including one where Tai, Tjoa and him discussed how to better coordinate the trading activities. They had agreed not to use the same person’s accounts held at different brokerages to buy and sell the same shares.
“From my understanding, such ‘wash trades’ are a red flag which would prompt SGX to look into possible market manipulation activities, because it makes no commercial sense for a genuine investor to be the buyer and seller in the same trade,” said Gan. They also settled upon using anonymous unregistered “bangla
phones” to communicate.
At one meeting where Soh was present, Gwee explicitly said in Hokkien “gains or losses belong to towkay”. Soh did not refute this, recalled Gan.
According to Gan, just before the Oct 3–4 crash, Soh personally got involved when he met a bigger group of market players in his bid to promote the three counters. In late September that year, Gan attended a meeting at LionGold’s office together with 50– 60 other people. There, Soh mapped out the range of assets that Blumont had and his plans to inject additional assets such as lithium and coal into the company.
Soh briefly mentioned corporate plans of Asiasons and LionGold as well and he encouraged those at the meeting to buy shares of the three counters. “The impression I got from the meeting was that Soh was calling the shots at BAL and had all the corporate plans lined up for the companies. I was surprised that he was so blatant about the authority he held in the corporate affairs of these companies, given that he did not hold management positions at these companies,” said Gan.
Deny and retract
After the crash, Gan and other brokers began chasing Soh to make good the losses. Soh told Gan he had suffered $400 million in losses, but that it was “no sweat”.
He gave Gan around $500,000 in total, as well as a $8,000 hongbao for the Lunar New Year in 2014. “Thereafter, I continued to approach Soh regularly for further sums throughout 2014. He never denied that the trades in the accounts belonged to him, or that he was responsible for the losses, but began to brush me off and avoided discussing the outstanding losses. He did not make further payments for these BAL trading losses, despite what he initially promised,” says Gan.
When Gan was hauled up for investigations by the authorities in 2014. Soh told him to deny his and Quah’s involvement and retract a statement already made to the Commercial Affairs Department that Quah had communicated with Gan via a certain Malaysian telephone number. Gan, hoping that Soh will make up the losses, gave CAD another statement.
However, Gan began secretly recording conversations with Soh after the conversation. “I intended to hand these recordings over to the authorities in the event that Soh stopped taking responsibility for the BAL trading losses, or if I am implicated by Soh or other persons in the BAL investigations,” he explained.
In December 2016, Gan decided to cooperate with the authorities. Soh and Quah were arrested on Nov 24, 2016, and charged the following day. While Quah was granted bail, Soh was placed in remand. Meantime, the share price of ISR Capital (since then renamed Reenova Investment), another of the counters allegedly manipulated by Soh, had surged some 4,000% in the prior half a year, prompting regulatory scrutiny. When news of Soh’s arrest broke, ISR’s share price also crashed.
After investigators seized his laptop, Gan knew the recordings would make it clear he was involved in the trading activities with Soh. “I therefore knew that there would no longer be any prospect of receiving further sums from him for repayment of trading losses, and there was no reason for me to feel beholden to him anymore,” said Gan. E