Public Prosecutor v Lau Wan Heng

• Jurisdiction: Singapore
• Judge: Ong Chin Rhu
• Judgment Date: 23 December 2020
• Neutral Citation: [2020] SGDC 293
• Court: District Court (Singapore)
• Hearing Date: 12 October 2020,15 October 2020,21 July 2020,17 September 2020,20 August 2020
• Docket Number: District Arrest Case No 928628 of 2019 & 12 Others, Magistrate’s Appeals No 9849 of 2020
• Plaintiff Counsel: Suhas Malhotra, Kenneth Chin and Tan Zhi Hao (Attorney-General's Chambers)
• Defendant Counsel: Chai Ming Fatt James (James Chai & Partners)
• Subject Matter: Criminal Law,Offences,Securities and Futures Act,Market rigging,Criminal Procedure and Sentencing,Sentencing
• Published date: 05 January 2021

District Judge Ong Chin Rhu:

The Accused, Ms Lau Wan Heng, pleaded guilty to one charge under section 197(1A)(a) of the Securities and Futures Act (Cap 289) (“the Act”) for engaging in a course of conduct which she knew would be likely to create a false or misleading appearance of active trading in shares issued by Koyo International Ltd (“marking rigging charge”). The Accused also pleaded guilty to another 12 charges under section 201(b) of the Act, in connection with the trading of shares issued by Koyo International Ltd, for indirectly engaging in a practice which was likely to operate as a deception upon the brokerages concerned (“deceptive practice charges”) . I sentenced the Accused to a global term of 20 months’ and 18 weeks’ imprisonment.

The Prosecution being dissatisfied with the sentence has filed an appeal. The Accused is currently on bail pending appeal.

I had issued brief oral grounds to explain my sentencing decision. These are available in the transcripts for 15 October 2020 at pages 1 to 6. I shall elaborate on the reasons for the sentence in these grounds.

The Charges

The details of the market rigging charge under section 197(1A)(a) of the Act which the Accused pleaded guilty to were as follows: DAC928628-2019 You […] are charged that you, sometime between 6 February 2015 and 15 January 2016, in Singapore, were engaged in a course of conduct, by controlling the trading of shares issued by Koyo International Ltd (“Koyo”) and traded on the Catalist board of the Singapore Exchange, through various trading accounts (as set out in Annex A), on the instructions of one Lin Eng Jue (“Lin”), which you knew would be likely to create a false or misleading appearance of active trading in Koyo shares, and you have thereby committed an offence under section 197(1A)(a) of the Securities and Futures Act (Chapter 289) (“SFA”) punishable under section 204(1) of the SFA.

As for the 12 deceptive practice charges under section 201(b) of the Act, they were all similarly framed, save for the details relating to the period of offence, as well as the brokerage and trading account involved. As such, I shall set out in full the first of such charges which the Accused pleaded guilty to, followed by a table containing the salient details of each of the 12 charges for ease of reference: DAC-929620-2019 You […] are charged that you, sometime between 19 October 2015 and 14 January 2016, in Singapore, were indirectly engaged in a practice which was likely to operate as a deception upon KGI Fraser Securities Pte Ltd (nka KGI Securities (Singapore) Pte Ltd) (the “Firm”), in connection with the trading of shares issued by Koyo International Ltd (“Koyo”) and traded on the Catalist board of the Singapore Exchange, by intentionally obtaining the account of one Chong Chin Eoo (“Chong”) (account no. XXX) (the “Account”) maintained with the Firm, for one Lin Eng Jue to instruct orders and trades in Koyo shares in, without the authorisation of the Firm, which was likely to deceive the Firm that the orders and trades in Koyo shares in the Account were instructed by Chong, and you have thereby committed an offence under section 201(b) of the Securities and Futures Act (Chapter 289) (“SFA”) punishable under section 204(1) of the SFA.

Charge	Dates between which offence was committed	Brokerage	Account owner
DAC-929620-2019	19 October 2015 and 14 January 2016	KGI Fraser Securities Pte Ltd	Chong Chin Eoo
DAC-929621-2019	20 October 2015 and 8 January 2016	KGI Fraser Securities Pte Ltd	Hee Yoon Siang Perry
DAC-929624-2019	4 November 2015 and 13 January 2016	KGI Fraser Securities Pte Ltd	Neo Yew Seng
DAC-929625-2019	27 October 2015 and 13 January 2016	KGI Fraser Securities Pte Ltd	Tan Siew Hwa
DAC- 929626-2019	21 October 2015 and 13 January 2016	KGI Fraser Securities Pte Ltd	Wang Ming Ming
DAC-929627-2019	26 October 2015 and 13 January 2016	KGI Fraser Securities Pte Ltd	Yoon Soon Seng
DAC-929628-2019	11 November 2015 and 14 January 2016	RHB Securities Singapore Pte Ltd	Chua Hong Kiang
DAC-929629-2019	2 November 2015 and 7 January 2016	RHB Securities Singapore Pte Ltd	Hee Yoon Siang Perry
DAC-929630-2019	5 November 2015 and 14 January 2016	RHB Securities Singapore Pte Ltd	Heng Por Noi
DAC-929633-2019	9 November 2015 and 13 January 2016	RHB Securities Singapore Pte Ltd	Tan Siew Hwa
DAC-929634-2019	26 October 2015 and 12 January 2016	RHB Securities Singapore Pte Ltd	Wang Ming Ming
DAC-929635-2019	11 November 2015 and 15 January 2016	RHB Securities Singapore Pte Ltd	Yoon Soon Seng

Facts

The Accused admitted to the facts set out in the Statement of Facts and Annex A (“SOF”) without qualification:¹ The accused 1 The accused is Lau Wan Heng (“Janice”), a 62-year-old female Singaporean. At the material time, Janice was initially a broker and later a remisier with CGS-CIMB Securities (Singapore) Pte Ltd (“CIMB”). 2 The co-accused are as follows: a. Lin Eng Jue (“Andrew”), male, 43, Singaporean. b. Ang Wei Jie Simon (“Simon”), male, 30, Singaporean. c. Yeo An Lun (“Yeo”), male, 46, Singaporean. d. Chong Yew Mun Alan (“Alan”), male, 30, Singaporean. At the material time, Alan was employed by RHB Securities Singapore Pte Ltd (“RHB”), in the “e-brokering” team; Alan’s responsibilities included assisting Janice’s clients to open accounts with RHB and to execute trade in those accounts. e. Teo Boon Cheang (“Steven”), male, 51, Singaporean. At the material time, Steven was a remisier with KGI Fraser Securities Pte Ltd (“KGI”). f. Goh Qi Rui Rayson (“Rayson”), male, 35, Singaporean. At the material time, Rayson was a remisier with OCBC Securities Pte Ltd (“OSPL”). g. Koh Cheo Leng (“Koh”), female, 55, Singaporean. 3 Janice and the co-accused will hereafter be collectively referred to as the scheme members. Koyo International Ltd 4 Koyo International Ltd (“Koyo”) is a Singapore-incorporated company whose shares have been listed on the Catalist board of the Singapore Exchange (“SGX”) since 2009. Koyo is in the business of providing integrated mechanical and electrical engineering services to various industries, including construction, marine and oil and gas. 5 Between 12 August 2014 and 15 January 2016, approximately one-third of Koyo’s issued shares were floating (i.e. were available for trading by the public). The CEO of Koyo and/or his family held most of the remaining shares. 6 On 12 August 2014, Koyo’s market capitalisation was about $32 million. The scheme to manipulate the price of Koyo shares 7 Between 12 August 2014 and 15 January 2016 (“the relevant period”), Andrew led a scheme to manipulate the price of Koyo shares. The purpose of the scheme was to create a false appearance as to the price of Koyo shares. On Andrew’s direction, the scheme members used various trading accounts under their control, to trade Koyo shares amongst one another, as well as other third parties trading on the market, and gradually pushed up the price at which Koyo shares were traded on the SGX. 8 Most of the trades conducted by the scheme members were on a “contra” basis. Contra trading involves buying shares without paying the full price of the shares upfront. Over the relevant period, the brokerage firms involved in the scheme permitted their accountholders to purchase shares without making full payment upfront; the brokerages generally required the accountholders to “settle” the trade (i.e. make payment for the shares purchased) within three days after the trade (known as the contra period). If the accountholder sold the shares before the end of the contra period, the buy and sell trades were offset. If the trades were profitable, the brokerage credited the profits to the account. However, if the trades incurred a loss, the accountholder had to pay the loss incurred to the brokerage. a. For example, assume that an accountholder purchases 100 shares of a company, X Ltd, at $1 per share, on Day 0. The accountholder will have three days to settle the trade, i.e. to pay his brokerage $100 for the purchase of the shares. b. If the accountholder sells the 100 shares of X Ltd on Day 3, which is within the contra period, the brokerage would offset the buy and sell trades. If the accountholder sells the sales at $1.10 per share, the brokerage would credit his trading account with the $10 profit earned. If the accountholder sells the shares at $0.90 per share, he would have to pay the loss of $10 to the brokerage. 9 The accounts used in the scheme were also subject to trading limits – i.e. a limit set by the brokerage on the total value of shares that could be purchased on a “contra” basis without the accountholder making payment for the shares purchased upfront. 10 The scheme members traded amongst accounts under their control – i.e. Koyo shares were sold by one trading account under the control of the scheme members, and purchased by another trading account also under the control of the scheme members (“cross trades”). The scheme members also traded with third parties – i.e. an account under the control of the scheme members bought Koyo shares from or sold Koyo shares to an account controlled by a member of the public who was not involved in the scheme. (“non-cross trades”) By buying and selling Koyo shares using the accounts under their control over the relevant period, at progressively higher prices, the scheme members pushed up the market price, and thereby created a false appearance as to the price of Koyo shares. Some of the strategies used by the scheme members included: a. For non-cross trades, the scheme members bought Koyo shares at a price that was generally higher than the...