Public Prosecutor v Joseph Chai Ming Leong
| Jurisdiction | Singapore |
| Judge | Toh Han Li |
| Judgment Date | 04 December 2019 |
| Neutral Citation | [2019] SGDC 262 |
| Court | District Court (Singapore) |
| Hearing Date | 25 November 2019 |
| Docket Number | DSC-900087-2019 & Ors |
| Plaintiff Counsel | DPP Kevin Yong (Attorney-General's Chambers) |
| Defendant Counsel | Mr Sashidran Nathan (Withers Khattar Wong), Tania Chin Li Wen (Withers Khattar Wong) and Eric Liew Hwee Tong (Gabriel Law Corporation) |
| Published date | 11 December 2019 |
This is an appeal by the accused against sentence.
The chargeThe accused pleaded guilty to the following charge:
Statement of Facts
DSC-900087-2019 You are charged that you, on or around 28 July 2015, in Singapore, did abet by engaging in a conspiracy with Jimmy Ng Kian Bin (“Jimmy”) and Erik Ng Song Hann to furnish a false statement to the Singapore Exchange Derivatives Trading Limited (“SGX-DT”), a futures exchange, relating to Jimmy’s trading in futures contracts, namely the SGX MSCI Singapore Index July 2015 Futures (“SGN15”) and in pursuance of the conspiracy and in order to the doing of that thing, an act took place to wit you submitted a statement to the SGX-DT through UOB Bullion & Futures Ltd on 28 July 2015 claiming that:
- Jimmy was doing a beta of his “algo strategy”, when he did not conduct any algorithm trading on 24 July 2015 from 0900 hrs to 0930 hrs and from 1330 hrs to 1530 hrs; and
- Jimmy placed numerous buying and selling orders simultaneously in the futures market for SGN15 intending for the orders to be filled continuously as long there is open interest in the market, when he had no intention for the buying and selling orders to be filled continuously,
which statement was furnished with the intent to deceive the SGX-DT about Jimmy’s trading activities on SGN15 after the SGX-DT queried Jimmy and you have thereby committed an offence under section 330(1)(a) of the Securities and Futures Act (Chapter 289, 2006 Revised Edition) (“s 330 SFA offence”) read with section 109 of the Penal Code Chapter 224.
The accused is Joseph Chai Ming Leong. At the material time, he was the director of Joerik Financial Pte Ltd (“Joerik”), a SGX-DT proprietary trading member. The accused also ran and co-owned Joerik with another director, Erik Ng Song Hann (“Erik”). The accused and Erik each owned 50% of Joerik.
On 17 December 2015, the Monetary Authority of Singapore (“MAS”) received information from the Singapore Exchange Derivatives Trading Limited (“SGX-DT”) about suspected trading irregularities in Joerik trading account TB108 (“TB108”) on SGX MSCI Singapore Index Futures July 2015 contract (“SGN 15”).
On 27 July 2015 at 1714 hours, SGX-DT sent an email query to Joerik’s broker, UOB Bullion and Futures Limited (“UOBBF”) to enquire about trading irregularities it observed in account TB108 in SGN15 on 24 July 2015 from 0900 hours to 0930 hours and from 1330 hours to 1530 hours (hereinafter known as the “material time”). In particular, SGX-DT asked about:
UOBBF notified Joerik about the query from SGX-DT and sought its reply. Joerik replied that TB108 was operated by Jimmy Ng Kian Bin (“Jimmy”), a trader who worked for Joerik and reported to both the accused and Erik.
On the same day at 1740 hours, UOBBF emailed the directors of Joerik, namely the accused and Erik, to seek their response to the said query. The accused, Jimmy and Erik discussed their reply to SGX-DT over a WhatsApp group chat.
At the material time, Jimmy had engaged in what is known as spoofing on SGN15. Briefly, Jimmy tried to give a false impression of either demand or supply on one side of the order book of SGN15 by placing a large number of orders on either the buy side (at or below the prevailing best bid prices) or the ask side (at or above the prevailing best ask prices) without the intention to execute the order(s). At the same time he entered the spoof orders, he would place genuine orders to trade on the other side of the order book. The objective of Jimmy’s spoofing trading conduct was to obtain superior bid prices or ask prices than he could otherwise obtain.
Investigations reveal that the accused had already known at the material time on 24 July 2015 of Jimmy’s illegal trading activity on SGD15, even before SGX-DT initiated the query on 27 July 2015. On 24 July 2015, the accused and Erik exchanged messages where they discussed the success of Jimmy’s spoofing strategy. The accused was only concerned that Jimmy’s spoofing strategy was risky, and not that his strategy was illegal.
The accused, Erik and Jimmy then discussed how to reply SGX-DT to help cover up for Jimmy. The following statement was issued to SGX-DT claiming that:
The accused knew the statement in paragraph 9 to be untrue. It was the accused who conceived and drafted the reply, which Jimmy and Erik agreed to.
On 28 July 2015, the accused sent the reply containing the false statement to SGX-DT through UOBBF, copying Erik. The accused admitted that he knowingly helped Jimmy to explain away Jimmy’s illegal trading activity to avoid further trouble with SGX-DT.
Charge taken into consideration for sentencing (“TIC charge”)The accused admitted to the following charge to be take into consideration for the purposes of sentencing:
AntecedentsYou…are charged that you, on or around 1 September 2016, in Singapore, did abet by engaging in a conspiracy with Erik Ng Song Hann (“Erik”) to furnish a false statement to the Singapore Exchange Derivatives Trading Limited (“SGX-DT”), a futures exchange, relating to Erik’s trading in futures contracts, namely the SGX MSCI Taiwan Index August 2016 Futures (“TWQ16”), and in pursuance of the conspiracy and in order to the doing of that thing, an act took place to wit Erik, with your knowledge, submitted a statement to the SGX-DT through UOB Bullion & Futures Ltd on 1 September 2016 claiming that he was doing arbitrage trading on the Taiwan Stock Exchange Capitalization Weighted Stock Index futures (“TAIEX”) and mini-TAIEX futures, when it was not true that he was doing arbitrage trading, and which statement was furnished with the intent to deceive the SGX-DT about Erik’s trading activities on TWQ16 after a query from the SGX-DT and you have thereby committed an offence under section 330(1)(a) of the Securities and Futures Act (Chapter 289, 2006 Revised Edition) read with section 109 of the Penal Code Chapter 224.
The accused is a first offender.
Prosecutions submission on sentenceProsecution’s submitted that the accused should receive 4 weeks’ imprisonment for the proceeded charge, as his accomplices, Jimmy and Erik, had each received the same sentence for their role in the proceeded charge.
The prosecution submitted that the accused did not play a minor role in issuing the false statement. He actively drafted the false statement and reminded Jimmy to “read through and see if its justifiable” because if he is invited “for a coffee session at SGX, must be able to stand with this claim [SIC]”.
By issuing the false statement to SGX-DT, Jimmy was able to temporarily conceal his fraudulent market conduct from SGX. This was done with the help and the knowledge of the accused. The accused was clearly helping Jimmy out of self-interest because Jimmy was trading on behalf of Joerik, and if Jimmy was punished, Joerik would likely be punished too.
The prosecution submitted that the accused’s role in the present offence was no less than the role played by Jimmy and Erik. The culpability is the same and therefore the sentence meted should be the same.
Further, the prosecution submitted that with respect to the TIC charge, the accused had committed a similar offence on 1 September 2016 he conspired with Erik to furnish a false statement to SGX-DT relating to Erik’s trading activities on another futures contract. Through the false statement, he assisted Erik in concealing his fraudulent trading activities from the SGX-DT.
MitigationThe defence highlighted the following salient background facts:
The accused is married with four children aged 1, 8, 11 and 13. His father passed away recently in May 2019 and he was still grieving over his father’s passing. In 2003 the accused got to know Erik when they were attending at trading course at the SGX to attain the relevant certification to become a trader. After successfully completing the course, they rented a booth together to trade electronically. In 2005 they approached UOB who offered them two trading desks and they started trading at UOB in 2006. In 2006, they incorporated their own trading companies but remained close friends and supported each other financially and the defence gave examples of how they supported each other financially. In 2012, the accused and Erik decided to merge their companies to form Joerik.
In 2013, they invested in a more efficient trading system and in order to lower their costs by benefitting from economies of scale, decided to engage more traders to join Joerik. One of these traders recruited was Jimmy. The accused saw his younger self in Jimmy and wanted to groom him, treating him like a younger brother and guiding him.
In asking the court to impose a high fine for the s 330 SFA offence, defence counsel highlighted the following circumstances surrounding the offence:
The accused had pleaded guilty at the earliest available opportunity which is testament to his genuine remorse, contriteness for his actions, thus saving the courts valuable time and resources while also facilitated the administration of justice. He had cooperated with the authorities and voluntarily supplied all relevant information pertaining to the investigations.
The accused was not involved in the spoofing conduct of Jimmy. He felt that he needed to help Jimmy think of a reason to avoid Jimmy...
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