SINGAPORE: A sole director of a company providing commercial market making services for securities was involved in four conspiracies to rig the market or price for share or unit counters listed on the Singapore Exchange (SGX).
Through his involvement, his company GTC earned S$3.48 million (US$2.72 million) in fees from the market-making services.
Huang Yiwen, a 41-year-old Singaporean, pleaded guilty on Wednesday (Jul 23) to 24 charges under the Securities and Futures Act, with another 88 charges to be taken into consideration for sentencing.
The court heard that Huang, also known as Leo, was the sole director, shareholder and operator of GTC Group and holds a Masters in Finance from the University of New York.
The role of a market maker is to continuously provide both bid and ask quotes for a given security, helping to provide liquidity and reduce volatility in the security.
In return, the market maker earns a profit from the bid-ask spread, which is the difference between the market maker’s buying and selling price, and may also receive a commission from the issuer of the security.
While SGX allows companies to engage market makers to provide liquidity in the market, a market maker is not allowed to do anything to create a false or misleading appearance of active trading.
However, when the officers of three listed companies that engaged him asked him to rig the prices of their securities, he did so.
Using his expertise, he created a false impression in the prices of the securities.
Among other methods, he used the technique of “marking the close”, by purchasing small amounts of shares at the close of each trading day, in order to push up the price and secure a favourable closing price for the day.
To create a favourable impression of his performance as a market maker and in hopes of attracting genuine market participants to trade, Huang roped in two licensed representatives to cross-trade shares with him to create a false trading volume in five listed entities, without any genuine change in beneficial ownership.
The prosecution said he was the mastermind of this conspiracy, giving directions to the two licensed representatives and promising them a profit for their involvement.
The four conspiracies involve three schemes for three companies: New Silkroutes Group and Tee International Limited, both companies listed on the SGX, and AGV Group Limited, a company listed on the Catalist board of SGX.
Officers from those companies are accused along with Huang. They include: New Silkroutes Group’s then-chief executive Goh Jin Hian, 56, who is the son of former prime minister Goh Chok Tong; then-group chief executive of Tee International Phua Chian Kin, 65; and then-CEO of AGV Ang Nam Wah Albert, 58.
The fourth conspiracy is a cross-trade scheme involving two other two men approached by Huang: Tay Sze Chien, a 41-year-old trading representative with Philip Securities, and Tan Wei Liang, a 46-year-old trading representative with Maybank Kim Eng Securities.
Huang approached the men for help to increase the traded volume of his clients’ counters, as the liquidity of the counters was poor.
The men could buy shares and units from Huang on the market before selling them back at a higher price, allowing the men to profit from the trades.
Deputy Public Prosecutors David Koh and Sheldon Lim said Huang abused his position as a commercial market maker and was motivated by the “significant personal gain he stood to make”, as GTC earned more than S$3 million in fees from the companies over the entire period.
His actions caused “severe distortion” to the market for the relevant counters, added the prosecutors, who sought about 27 months and six weeks’ jail for Huang.
He will return to court in August for sentencing.
The cases for several of the co-accused are pending, including Goh’s. New Silkroutes Group’s former finance director Teo Thiam Chuan William was sentenced to jail last year.
