Public Prosecutor v Ng Geok Eng

• Jurisdiction: Singapore
• Judge: Wong Keen Onn
• Judgment Date: 31 May 2006
• Neutral Citation: [2006] SGDC 110
• Plaintiff Counsel: Low Cheong Yeow and Peter Koy (Deputy Public Prosecutors)
• Published date: 15 June 2006
• Court: District Court (Singapore)
• Defendant Counsel: Kesavan Nair & Suresh Damodara (David Lim & Partners)
• Subject Matter: Criminal Procedure and Sentencing,Sentencing,Principles,Aggravating factors,Offences premeditated and carefully planned,False trading and unauthorised transactions carried out on systematic and very large scale over prolonged period,Mitigating factors,Community service,Whether accused's contributions falling within category of distinguished public service or services of substantial value to the community to warrant substantial discount in sentencing,No breach of trust involved as accused not remisier or employee of broking firm,No profit from misdeeds or financial loss to another,Financial and Securities Markets,Securities,Trading,Offences,False trading and market rigging transactions,Creating misleading appearance with respect to price of securities,Accused placing orders to purchase shares listed on main board of Singapore Exchange Ltd (SGX) at price of at least one bid higher than last-traded price before commencement of SGX's pre-close routine,No suspension of trading in shares,Whether custodial sentence warranted,Sentence,Sections 197(1), 204(1) Securities and Futures Act (Cap 289, 2002 Rev Ed) [now 2006 Rev Ed],Employment of manipulative and deceptive devices,Engaging in act, practice or course of business operating as fraud or deception upon person in connection with subscription, purchase or sale of securities,Accused using share trading accounts of other persons to trade in shares without informing broking firm in writing or seeking its prior consent,Sections 201(b), 204(1) Securities and Futures Act (Cap 289, 2002 Rev Ed) [now 2006 Rev Ed]; ss 102(b), 104(1)(a) Securities Industry Act (Cap 289, 1985 Rev Ed) [now repealed]

31 May 2006

District Judge Wong Keen Onn

1 This is an appeal by accused against the sentence. The accused, Ng Geok Eng, pleaded guilty to four (4) charges under the Securities Futures Act (“SFA”), namely 1 count of false trading under section 197(1) punishable under section 204(1) SFA and 3 counts of engaging in a practice in connection with purchase of shares which operated as a deceit upon the broking firm under section 201(b) read with section 204(1) SFA and under Section 102(b) read with Section 104(1)(a) of the Securities Industry Act (“SIA”). The charges are reproduced below for easy reference:

“DAC 47239/05, 2^nd charge, (Exhibit P1)

You, Ng Geok Eng (M/52 years), NRIC NO. S0223774A, are charged that you, between October 2002 and April 2003, in Singapore, did create a misleading appearance with respect to the price of securities, namely shares in Autron corporation limited (“Autron”), a body corporate whose shares were traded on the mainboard of the Singapore Exchange Ltd, a securities exchange in Singapore, to wit by executing trades of Autron shares using your own share trading accounts, one Lim Man Peng’s and one Low Swee Seh’s share trading accounts, in order to maintain the price of Autron shares, and you have thereby committed an offence under Section 197(1) and punishable under Section 204(1) of the Securities and Futures Act (Chapter 289, 2002 revised edition).

DAC 47243/05, 6^th charge, (Exhibit P2)

You, Ng Geok Eng, (M/52 YEARS), NRIC NO. S0223774A, are charged that you, between October 2002 and April 2003, in Singapore, directly in connection with the purchase or sale of shares in Autron corporation limited (“Autron”), a body corporate whose shares were traded on the mainboard of the Singapore Exchange Ltd, a securities exchange in Singapore, in the account of one Low Swee Seh (“Low”) whose share trading account no. 01/0042171 was maintained with Fraser Securities Pte Ltd (the “firm”), did engage in a practice which operated as a deceit upon the firm, to wit by using low’s trading account to conduct trades in Autron shares without duly notifying the firm in writing nor seeking its prior consent, which trades were carried out for your own benefit, and you have thereby committed an offence under Section 201(b) and punishable under Section 204(1) of the Securities and Futures Act (Chapter 289, 2002 Revised edition).

DAC 47247/05, 10^th charge (Exhibit P3)

You, Ng Geok Eng (M/52 years), NRIC NO. S0223774A, are charged that you, between October 2002 and March 2003, in Singapore, directly in connection with the purchase or sale of shares in Autron Corporation Limited (“Autron”), a body corporate whose shares were traded on the mainboard of the Singapore Exchange Ltd, a securities exchange in Singapore, in the account of one Low Swee Seh (“Low”) whose share trading account no. 21/0350030 was maintained with Lim Eng Securities Pte Ltd (the “Firm”), did engage in a practice which operated as a deceit upon the firm, to wit by using low’s trading account to conduct trades in Autron shares without duly notifying the firm in writing nor seeking its prior consent, which trades were carried out for your own benefit, and you have thereby committed an offence under Section 201(b) and punishable under Section 204(1) of the Securities and Futures Act (Chapter 289, 2002 Revised Edition).

and

DAC 47248/05, 11^th charge (Exhibit P3)

You, Ng Geok Eng, NRIC NO. S0223774A, are charged that you, between April 2002 and August 2002, in Singapore, directly in connection with the purchase or sale of shares in Autron corporation limited (“Autron”), a body corporate whose shares were traded on the mainboard of the Singapore Exchange Ltd, a securities exchange in Singapore, in the account of one Low Swee Seh (“Low”) whose share trading account no. 28/0142588 was maintained with OCBC Securities Pte Ltd (the “Firm”), did engage in a practice which operated as a deceit upon the firm, to wit by using low’s trading account to conduct trades in Autron shares without duly notifying the firm in writing nor seeking its prior consent, which trades were carried out for your own benefit, and you have thereby committed an offence under Section 102(b) and punishable under Section 104(1)(a) of the Securities Industry Act (Chapter 289, 1985 Revised Edition).”

2. Upon his conviction on these four charges, accused consented to six charges to be taken into consideration for purposes of sentencing. Out of these six charges, five of them are charges of engaging in a practice that operated as a deceit under section 102(b) read with section 104(1)(a) of the Securities Industry Act (“SIA”) (DAC 47240/2005, DAC 47242/2005, DAC 47246/2005) and under section 201(b) read with section 204(1) SFA (DAC 47241/2005, DAC 47245/2005). The remaining charge is one under section 97(1) read with section 104(1)(a) of the Securities Industry Act (DAC 47328/2005). The accused was sentenced to a total of six months’ imprisonment and fined $250,000 in default 18 months’ imprisonment.

3. After he was sentenced, the prosecution applied to withdraw the seventh charge and sought an acquittal on this charge. The Court granted the accused a discharge amounting to an acquittal on the charge DAC 47244/05.

Facts

4. Briefly, the accused had, over a six month period from October 2002 till April 2003, created a misleading appearance with respect to the price of the Autron shares being traded on the mainboard of the Singapore Exchange Limited (SGX). He did this by placing orders at a price of at least 1 bid higher than the last traded price before the Pre-Close routine for SGX commenced. In order to conceal his actions, he had used his three trading accounts, one for himself and the accounts of Lim and Low to trade in Autron shares to support the share prices of Autron shares. He had done so to prevent margin calls to himself as a substantial amount of his Autron shares had been pledged to financial institutions to obtain credit. The accused had traded to maintain the price of Autron shares so as to prevent the financial institutions from demanding for margin calls should Autron share prices fall. The accused’s trades in the said three accounts had therefore created a misleading appearance with respect to the price of Autron shares between October 2002 and April 2003.

5. By using the share trading accounts in another person’s names in broking firms to trade in Autron shares for his own benefit without duly informing the broking firm in writing or seeking its prior consent, the accused had therefore engaged in a practice which operated as a deceit upon the firms. These offences occurred in the two periods from April 2002 to August 2002 and between October 2002 to April 2003.

6. The amended Statement of Facts (Exhibit C) to which the accused had admitted to without qualification is reproduced below:

1. The accused is one Ng Geok Eng (“Ng”), NRIC No. S0223774A, male, 52 years. Ng was previously the Managing Director of Keng Heng Construction Pte Ltd.

Other Persons Involved

2. There are two other persons involved in Ng’s offences:

a. Lim Man Peng (“Lim”), female, 54 years, NRIC No. S2001654Z, the wife of Ng. She is a housewife; and

b. Low Swee Seh (“Low”), male, 52 years, NRIC No. S0105841Z, the director of Siong Yu Seng Construction Pte Ltd.

3. Ng had arranged with Lim and Low to use their securities trading accounts to trade in the shares of Autron Corporation Limited (“Autron”) during the Relevant Period.

The Counter

4. Autron is a body corporate which was incorporated in Australia on 10 January 1985. It is dual listed on the Australian Stock Exchange (“ASX”) (since 30 January 1986) and the Singapore Exchange Limited (“SGX”) (since 3 May 2001), a securities exchange in Singapore. Its global headquarters is in Singapore. Its main businesses are:

(a) manufacture and distribution of specialty electronic equipment;

(b) supply, installation and service of capital machinery to major companies which manufacture printed circuit boards;

(c) development of software and hardware for printed circuit board and communications industries including ultrasonic cleaners and matrix switches.

5. Autron’s financial year is from July to June. In FY 2002, it incurred a net loss of A$17.2 million. However, in FY2003, it made a profit of A$11.5m.

Relevant Trades

6. Investigations revealed that between 1 April 2002 and 30 April 2003 (“Relevant Period”), Ng had used the securities trading accounts of himself, Lim and Low with Fraser Securities Pte Ltd, Kim Eng Securities Pte Ltd and OCBC Securities Pte Ltd to trade in Autron shares with the intention of maintaining its share price. Ng was the one who had placed the orders for the Autron trades done in these trading accounts.

7. Ng was the beneficial owners for the trades conducted in the trading accounts of himself, Lim and Low. Ng had paid for the losses incurred in these accounts.

Pre-close Routine

8. According to SGX circulars, the pre-close routine is a period of 6 minutes starting from 1700hrs, consisting of a pre-close period and a non-cancel period.

9. At 1700hrs of each trading day, all unmatched orders are carried forward to the pre-close routine. Orders can be entered, amended or cancelled during the pre-close period which runs from 1700 – 1705 hrs. During the non-cancel period from 1705 – 1706 hrs, orders are matched and executed at a closing price computed for the day. All unmatched orders will become void. The computation of the closing price is based on a methodology described in SGX’s circulars, generally determined at the price with the largest tradable volume.

10. The purpose of the pre-close routine is to make it difficult for closing prices to be manipulated with a single transaction at an unusually high or low price before the trading for the day ends.

11. During the Relevant Period, Ng’s trades conducted in his, Lim’s and Low’s trading accounts had constituted 22% of the total trades of 874.9 million shares in Autron...