Public Prosecutor v Lin Eng Jue

• Jurisdiction: Singapore
• Judge: Chay Yuen Fatt
• Judgment Date: 21 June 2023
• Neutral Citation: [2023] SGDC 120
• Court: District Court (Singapore)
• Docket Number: DAC-928633-2019 & Ors (49), Magistrate’s Appeal No. 9105-2023-01
• Hearing Date: 16 May 2023,31 May 2023
• Citation: [2023] SGDC 120
• Year: 2023
• Plaintiff Counsel: Suhas Malhotra, Tan Zhi Hao & Ronnie Ang (Attorney-General's Chambers)
• Defendant Counsel: Shashi Nathan, Harjeet Kaur & Laura Yeo (M/s Withers KhattarWong LLP)
• Subject Matter: Criminal Procedure and Sentencing,Securities and Futures Act - Market Manipulation,Sentencing,Plea of Guilt
• Published date: 15 July 2023

District Judge Chay Yuen Fatt: Introduction

The accused, a 46-year-old male Singaporean, faced 50 charges for offences under the Securities and Futures Act (Cap 289, 2006 Rev Ed) (“SFA”) for market rigging activities between 12 August 2014 and 15 January 2016 in respect of the shares of Koyo International Ltd (“Koyo”) which is listed on the Catalist board of the Singapore Exchange (“SGX”).

He is represented by Counsel and initially claimed trial to all the charges. The trial commenced on 4 August 2022. After 16 days of trial spanning three tranches of hearing dates, he decided to plead guilty to 16 of those charges. He admitted and consented to the remaining 34 charges to be taken into consideration by the court for purposes of sentence.

The accused was sentenced to an aggregate of 42 months’ imprisonment. He filed an appeal through Counsel against the sentence imposed. The sentence is stayed pending the appeal.

Charges

The 16 charges to which the accused pleaded guilty (“proceeded charges”) comprise of: One charge under s 197(1)(b) SFA read with s 109 Penal Code for market manipulation (“market-rigging charge”); and 15 charges under s 201(b) SFA for trading with another person’s account without the brokerage’s authorisation (“deceptive practice charge(s)”).

He admitted to the remaining 34 charges (also deceptive practice charges) to be taken into consideration “TIC charges”.

I reproduce the single market-rigging charge (without the annex of trading accounts) for easy reference as follows:

DAC-928633-2019 (1st Charge)

You…are charged that you, sometime between 12 August 2014 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), for the purpose of creating a false appearance with respect to the price of Koyo shares, and you have thereby committed an offence under section 197(1)(b) of the Securities and Futures Act (Cap 289, 2006 Rev Ed) (“SFA”), punishable under section 204(1) of the SFA.

I also set out one of the 15 proceeded deceptive practice charges for easy reference:

DAC-929648-2019 (3rd Charge)

You…are charged that you, sometime between 3 September 2015 and 15 January 2016, were directly engaged in a practice which was likely to operate as a deception upon KGI Fraser Securities Pte Ltd (aka 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 controlling the orders and trades in Koyo shares in the account of one Koh Cheo Leng (“Koh”) (account no. XXX) (the “Account”) maintained with the Firm, 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 Koh, and you have thereby committed an offence under section 201(b) of the Securities and Futures Act (Cap 289, 2006 Rev Ed) (“SFA”) punishable under section 204(1) of the SFA.

Sentences Imposed

The accused was sentenced as follows in respect of the 16 proceeded charges:

Case No(s).	Section Convicted Under	Sentence
DAC-928633-2019	s 197(1)(b) SFA (Market-Rigging)	Forty (40) months' imprisonment (Consecutive)
DAC-929648-2019, DAC-929649-2019, DAC-929651-2019, DAC-929652-2019, DAC-929656-2019, DAC-929659-2019, DAC-929661-2019, DAC-929664-2019, DAC-929669-2019 to DAC-929672-2019, DAC-929674-2019, DAC-929690-2019 and DAC-929694-2019	s 201(b) SFA (Deceptive Practice)	One (1) month’s imprisonment per charge (Two to run consecutively)
Further Orders:	Sentences in DAC-928633-2019, DAC-929648-2019 and DAC-929649-2019 to run consecutively. Sentences in DAC-929651-2019, DAC-929652-2019, DAC-929656-2019, DAC-929659-2019, DAC-929661-2019, DAC-929664-2019, DAC-929669-2019 to DAC-929672-2019, DAC-929674-2019, DAC-929690-2019 and DAC-929694-2019 to run concurrently.
Total Sentence:	Forty-two (42) months' imprisonment with effect from 31-May-2023 (Sentence stayed)

As soon as the sentence was pronounced, Counsel informed the court that he had instructions from the accused to appeal against the said sentence. The notice of appeal was then filed the same day. The accused was released on bail pending his appeal.

Statement of Facts

The accused admitted to the following statement of facts (“SOF”) without qualification¹:

“The accused

1 The accused is Lin Eng Jue (“Andrew”), a 46-year-old male Singaporean (NRIC: XXX). 2 The co-accused are as follows: a. Lau Wan Heng (“Janice”), female, 65, Singaporean (NRIC: XXX). At the material time, Janice was initially a broker and later a remisier with CGS-CIMB Securities (Singapore) Pte Ltd (“CIMB”). b. Ang Wei Jie Simon (“Simon”), male, 33, Singaporean (NRIC: XXX) c. Yeo An Lun (“Yeo”), male, 48, Singaporean (NRIC: XXX). d. Koh Cheo Leng (“Koh”), female, 58, Singaporean (NRIC: XXX). e. Chong Yew Mun Alan (“Alan”), a 42-year-old male Singaporean (NRIC: XXX). At the material time, Alan was employed by RHB Securities Singapore Pte Ltd (“RHB”) in the “e-brokering” team. f. Teo Boon Cheang (“Steven”), male, 55, Singaporean (NRIC: XXX). At the material time, Steven was a remisier with KGI Fraser Securities Pte Ltd (“KGI”). g. Goh Qi Rui Rayson (“Rayson”), male, 39, Singaporean (NRIC: XXX). At the material time, Rayson was a remisier with OCBC Securities Pte Ltd (“OSPL”). 3 Andrew 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.

Facts relating to the 1st charge (DAC-928633-2019)

The scheme to manipulate the price of Koyo shares

7 Between 12 August 2014 and 15 January 2016 (the “Relevant Period”), Andrew conducted a scheme to manipulate the price of Koyo shares (the “market-rigging scheme”). The purpose of the market-rigging scheme was to create a false appearance as to the price of Koyo shares. Andrew, based on his own observation of the trading pattern, knew that the Koyo shares were illiquid, as there was a lack of buyers or sellers interested in these shares. Therefore, if he was able to control the majority of the trading of Koyo shares on the market, Andrew knew that he would be able to gradually push up the price at which Koyo shares were traded on the SGX. 8 The plan was to drive the price of Koyo shares up to a target of at least 40 cents, with the aim of achieving a reverse takeover (“the RTO”) – which according to the plan meant that, Andrew would find a buyer who would acquire all of Koyo’s shares at the target price, subject to the ultimate approval of Foo Chek Heng, the Chief Executive Officer and majority shareholder of Koyo (“Mr Foo”). From time to time, Andrew also approached individuals and sold a portion of his existing holding of Koyo shares at a 10% discount from the prevailing market price (a “married deal”). These individuals accepted the terms of the married deal because they believed that an eventual reverse takeover would happen, and hoped to earn an eventual profit from the sale of the company. Through these married deals, Andrew earned a profit because even with the discount, the selling price represented a mark up from the price at which he originally bought Koyo shares. 9 Most of the trades conducted under Andrew’s directions were on a “contra” basis. Contra trading involves buying shares without paying the full price of the shares upfront. Over the Relevant Period, the brokerages 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, assuming 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 shares 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. 10 The accounts used in the market-rigging 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. 11 ...