The promise of commissions from the trading activity of the accounts seemed to be the main reason all three of the remisiers failed to observe the rules. For instance, Ng initially said he did not insist that the account owners sign authorisation forms for Quah to give trading instructions for fear he would lose the business. Ng later asserted that it was common industry practice not to get written third-party authorisation. Meanwhile, Lee was able to increase his net commission from $60,000 a year to $150,000 between 2012 and 2013 when Quah was giving trade instructions.
Yet, the need for explicit third-party authorisation was not lost on them. Recounting his involvement in the scheme, Chew said he wished he had obtained third-party authorisation from owners of the accounts under him when the Commercial Affairs Department (CAD) called him in for questioning. “The first thing in my mind was that I should have gotten written authorisation for ‘Su-Ling’ and ‘John’ to give orders in the clients’ accounts but I had not done so,” he said in a statement.
Even more galling was the apparent nonchalance regarding Soh and Quah’s motivations. All three of the remisiers seemed to understand that they were part of a concerted effort to create artificial volume in Blumont, LionGold and Asiasons, and influence their prices. In fact, Lee admitted to being explicitly told by the remisier who previously handled some of the accounts that those accounts were linked to a “Malaysian syndicate”. Lee was also told when he took on those accounts that instructions would come not from the account holders but an individual named “Alice”, who turned out to be a broker at UOB Kay Hian.
Then, when investigations began, all three remisiers lied to CAD and came clean only belatedly. For instance, Lee said in a statement that he “concealed certain things” from CAD, partly because he feared he would be unable to recover losses he had been lumbered with after the crash if Soh and Quah were convicted. Separately, Chew said in a statement that he initially did not admit to taking trading instructions from Soh and Quah for fear of being “implicated in the case”.
Ng, the first witness to take the stand, also testified that he did not tell investigators everything at first. Under cross-examination by the defence, he also owned up to front-running the accounts controlled by Soh and Quah. For instance, he admitted to placing a sell order for one million Blumont shares with his wife’s account before placing sell orders for Blumont shares with accounts controlled by Soh and Quah. “This witness has indulged in the worst case of front-running possible,” said Soh’s defence counsel, N Sreenivisan of Straits Law.
Ng was also accused of “layering” trades together with Alice Ang Chau Hoon, the broker at UOB Kay Hian. Layering is where a trader makes and then cancels orders in hopes of influencing the stock price. Quah’s counsel, Philip Fong of Eversheds Harry Elias, showed how Ng had placed orders after instructions from Ang, who would then place similar orders at UOB Kay Hian. However, Ng disagreed that he had been involved in layering, and said he did not know what Ang was doing at her end.
“You’ve been a trader for over 40 years, surely you must know what’s going on,” said Fong.
“I simply take orders, asking clients if they are keen to buy, keen to sell, or withdraw,” Ng replied.
With local brokerage firms already under siege from slumping commissions and waning investor interest, the unflattering picture of the attitudes and practices that enabled Soh and Quah to pull off their alleged manipulation scheme is unlikely to improve morale in the industry.
