SINGAPORE: A former finance director at New Silkroutes Group ( NSG) was sentenced to 12 weeks in jail on Monday ( Sep 16 ) for false trading and market rigging.
This is the first moment the facts of the case are being made public because Teo Thiam Chuan William is the first of four co-accused to enter a admit guilty.
In its punishment claims for Teo, the trial labelled his co-accused, past CEO Goh Jin Hian, as the “mastermind” in the program.
Goh, 55, is the brother of former prime minister Goh Chok Tong.
The four gentlemen allegedly conspired to raise the price of NSG securities in 2018, yet employing a business market maker to raise the price from S$ 285 to S$ 50.
Teo, 55, entered a guilty plea to six counts of crime abetment under the Securities and Futures Act. Another 25 claims were taken into consideration.
THE CASE ,
NSG is a holding company for investment that has been trading on the Singapore Stock Exchange (SGX ) since 2002. It has companies in sectors like care, information systems, and fuel trading.
As funding director, Teo managed the company’s records and worked on money, mergers and acquisitions. Additionally, he was authorized to hold stock buybacks of NSG stock and had power over NSG’s corporate stocks trading accounts.
Oo Cheong Kwan Kelvyn, 53, who was NSG’s executive chairman and chief operating officer, and Huang Yiwen, 40, who is GTC Group’s only producer, are the other co-accused.
According to judge files, NSG started out in the , oil trading, technology and IT solution supply business.
Through the expansions of hospitals and health offer companies, it entered the field of healthcare in December 2016.
NSG mainly funded the expansions through the issuance of NSG stocks as payment for the order.
However, its declining share value in 2017 hindered its efforts to acquire businesses and raise funds through personal placements.
NSG SHARE PRICE DECLINE
The share price ranged from S$ 0.70 to S$ 0.90 from January to May 2017, before dropping to around S$ 0.40 to S$ 0.50 in June. It hit a small of S$ 0.285 in November that time.
On Nov 29, 2017, NSG properly applied to block exchanging of its stocks. A few days afterwards, this turned into a buying suspension.
Between the period the trading was suspended and the date the suspension was lifted on February 25, 2018, NSG agreed to a number of business transactions that included the probable issuance of new NSG shares as concern.
To increase a total of S$ 5 million, NSG announced on February 21, 2018 that it was proposing the position of more than 11 million new stock at a price of S$ 0.44 per share to an outside buyer named Dr. Andrew Chua Quickly Kian. This position was finished in March 2018.
In February 2018, NSG even made a memorandum of understanding with a third party named Mr. Shen Yuyun to get two medical supply firms in Shanghai. To finish the acquisition for S$ 65 million, NSG planned to issue new shares at S$ 0.50 per share.
A memorandum of understanding between NSG and Haitong International Securities was signed that month, in which NSG announced that the company would subscribe to a$ 5 million convertible bond with a two-year maturity date.
Interest on the convertible bond may be 5 % annually.
THE Crime
But, while exchanging was suspended, Teo and his three collaborators agreed to participate in a scheme to deliberately drive up the price of NSG securities, the prosecutors said.
The prosecution claimed that the scheme involved using Goh’s personal trading account to place orders and execute trades in NSG securities, market maker GTC’s trading account to place orders and execute trades on the company’s trading account, and trading orders and executing trades in NSG securities.
GTC was not permitted to influence a security’s share price because it was a commercial market maker with SGX. Marketers are instead primarily expected to increase trading liquidity for the contracted securities by offering competitive bid-ask quotes on a continuous basis with an agreed-upon spread.
Teo, Goh, and Oo allegedly hired GTC to place orders and trade trades for NSG securities in an effort to artificially raise and maintain NSG stock prices under the guise of providing reliable market-making services.
One of the benefits of raising the share price was the ability to give investors confidence to close the corporate transactions that had been announced and allow for upcoming share placements based on an attractive share price.
Goh asked him to find a market maker to support NSG’s share price on February 4, 2018, according to the statement of facts Teo pleaded guilty to. Then, sometime between February 21 and February 28, 2018, NSG hired GTC.
Goh, Teo and Oo allegedly gave GTC’s Huang a target price of S$ 0.50 to achieve.
The four men allegedly carried out the market-rigging scheme over the course of six months, communicating via text and emails, and negotiating when and how much NSG securities should be purchased.
Goh allegedly allegedly urged Teo to submit bids at a specific time in a text message.
Goh allegedly told Teo to make it clear to GTC that they were not meeting their$ 0.50 target price in another email that the prosecution provided.
Goh allegedly suggested not paying GTC its fees “until the share price hits S$ 0.40 in May” in a group discussion.
” This was a concerted and coordinated effort between ( Teo ) and his co-accused persons to engage in market rigging”, said the team of three prosecutors.
TRADING SUSPENSION LIFTED
After the market closed on February 25, 2018, the trading suspension for NSG shares was lifted.
Teo and his associates allegedly discussed how to raise NSG’s opening share price in order to hit their goal the following morning.
Huang allegedly placed buy orders using GTC’s trading account before the SGX’s trading session started at 9am during the opening period.
On Feb 26, 2018, the price of NSG shares opened at S$ 0.390, which is a 36.84 per cent increase over its last traded price of S$ 0.285.
Early in March 2018, Teo and Huang placed orders and executed trades for NSG securities to artificially increase the share price.
GREAT DISTORTION CAUSED: PROSECUTION
The prosecution sought 12 weeks ‘ jail for Teo, calling the scheme” sophisticated, well-coordinated and effective”, designed to manipulate the price of NSG in order to allow its shares to be used as consideration for corporate deals.
They said Teo played a” critical role” in the scheme as finance director.
The scale of the market rigging was significant, with “great distortion” caused to the market for NSG securities, said the prosecutors.
The alleged trades and orders executed by Teo, Huang, and Goh made up 28.78 % of the total market volume, excluding buy trades, during the 31 days that constitute Teo’s proceeded charges.
Additionally, they increased the closing price of NSG securities on 22 trading days and set the intraday high on 11 trading days.
The accused made a concerted and effective effort to sway the NSG price to appear more attractive than normal market forces would otherwise, according to the prosecution.
According to the prosecution, the plan was created as” a quick and convenient way” to raise money through the issuance of new NSG shares and to facilitate NSG’s expansion by acquiring other companies.
Additionally, the men engaged GTC to give their” conflict of legitimacy” to their deceptive trades.
” While not the mastermind ( which was Goh ), ( Teo ) played an important role in the scheme”, said the prosecutors, adding that he was the , main liaison between NSG and Huang.
On September 18, Teo was given the opportunity to begin serving his jail time.
The pre-trial conference stage is currently holding the Goh, Huang, and Oo cases, with the upcoming trial scheduled for September 26.
According to court records, Huang intends to plead guilty.