Is Singapore’s Infamous Penny Stock Saga Coming To An End?

Three years ago in October 2013, investors in Singapore’s stock market were spooked by the collapse of three penny stocks, Blumont Group Ltd (SGX: A33)LionGold Corp Ltd (SGX: A78), and Asiasons Capital (now renamed as Attilan Group Ltd (SGX: 5ET)).

The trio saw their share prices soar through the roof before falling through the floor in just a couple of days, wiping out billions of dollars in market value in the process.

Following the collapse, regulators in Singapore started investigations into what could possibly be one of the largest local fraud cases ever. After three long years, the main suspects have been charged.

John Soh Chee Wen, a Malaysian businessman, is alleged to be the mastermind behind the saga. He has been slapped with 181 charges related to the case. His associates, Quah Su Ling and Goh Hin Calm, were charged with 178 and six counts of wrong-doing, respectively.

In their investigation, the regulators uncovered a complex scheme executed by the three suspects involving hundreds of trading accounts that were used to create a false market for the three stocks, pumped up their share prices, and controlled the supply of shares in the market.

Before John Soh became an infamous figure in Singapore, he was already a financier in Malaysia, who had run-ins with the authorities there. Soh was involved with numerous mergers and takeovers in Malaysia during the 1990’s. He was also involved with many Malaysia-listed companies such as Promet and Plantation & Developments during that period.

In 1999, an arrest warrant for Soh was issued in Malaysia following an investigation related to one of the country’s brokerage firms, Omega Securities.

Soh was finally convicted in 2007. He admitted to helping former TA Securities head, Tiah Thee Kian, to provide false statements to Malaysia’s stock exchange with regards to the shares of Omega Securities in 1997. Soh was fined RM6 million for his role.

Is this the end of the infamous penny stock saga?

Unfortunately, market manipulators are like weeds. Regulators can try their best to extract them one by one, but they will still pop up every now and again.

The only way for us, private investors, to protect ourselves is to learn more about investing and not be easily influenced by the speculators in our midst.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.