The Monetary Authority of Singapore (MAS) headquarters in Singapore. MAS is investigating trading in shares of Blumont, Asiasons and LionGold for possible breaches of the Securities and Futures Act.
Singapore’s investigations into suspected stock-trading irregularities at three commodity companies whose shares plunged in October are seen as a test of credibility for Southeast Asia’s biggest equities market.
Authorities widened the probe this week to include executives from at least four more companies six months after the rout that triggered a plunge of least 87% in the shares of Blumont Group, Asiasons Capital and LionGold Corp over three days last October. Magnus Energy Group Ltd, Innopac Holdings, ISR Capital and ITE Electric Co said they or their units are being asked to assist. IPCO International Ltd said late yesterday it’s also probed.
The Monetary Authority of Singapore and the police’s white- collar crime unit are investigating trading in shares of Blumont, Asiasons and LionGold for possible breaches of the Securities and Futures Act, or SFA, according to an April 2 statement. The probe’s scale is unprecedented and reflective of what global regulators are doing, said Lan Luh Luh, an associate dean at the National University of Singapore’s business school.
“The Singapore Exchange and MAS have been promoting Singapore as a venue of listings where corporate governance is very high,” said Gabriel Yap, a former broker who now manages his own investment advisory firm, GCP Global Pte. “If nothing is done on these three stocks, it will make a mockery of the Singapore stock exchange as a listing venue of good stocks.”
The rout in October, which erased $6.9bn in market value, spurred brokers to clamp down on margin lending and hurt sentiment among investors. All three commodity companies have said that they don’t know what caused the declines.
Singapore Exchange, which runs the bourse, said in an e-mailed response to Bloomberg queries that it’s working with the Monetary Authority and the Commercial Affairs Department on the investigations. Stock trading in the city-state dropped 20% to a daily average of S$990mn ($784mn) in the three months ended December 31 from a year earlier, data compiled by Bloomberg show.
“We spare no efforts in investigating possible market misconduct that breaches the Securities and Futures Act,” the exchange said, declining further comment because of the probe.
LionGold slid 2.5% to close at 11.9 Singapore cents, extending yesterday’s 18% slump. Blumont lost 2.1%, while IPCO was unchanged. Asiasons rebounded 1.8% after a 15% slide over the past three days. Innopac and Magnus Energy dropped for a second day. ITE Electric and ISR Capital also fell.
“It’s good to proceed with a deeper investigation,” said Jimmy Ho, president of the Society of Remisiers in Singapore. “They haven’t done enough earlier,” Ho said by phone, referring to the city-state regulators.
The April 2 statement from the MAS and the Commercial Affairs Department said that the two agencies are working together on the probe, without citing the stock-price declines in October. Innopac’s board understands the investigation may be protracted and is unaware that any offence has been committed, according to a statement yesterday. Operations at the company will continue as normal, it said.
The police asked Blumont unit G1 Investments Pte to assist in its investigation, Blumont said in an April 2 statement. Investigators requested access to all corporate electronic data from January 1, 2011 to date, information-technology equipment and data-storage devices belonging to Executive Director James Hong and Executive Chairman Neo Kim Hock, Blumont said.
Blumont has been informed that Hong has been asked to assist the CAD’s probe into a possible infringement of the SFA, and Hong has indicated that he will cooperate fully, the Blumont statement said. Blumont’s G1 Investments owns a 5.2% stake in Innopac, data compiled by Bloomberg show.
Hong didn’t return calls from Bloomberg to his mobile phone and office, and didn’t immediately respond to an e-mail seeking comment. Neo didn’t immediately reply to an e-mail.
Police made the same request for data belonging to Innopac Chief Executive Officer Wong Chin-Yong, according to a company filing. He couldn’t be reached in his office today. They’re also seeking the same information from units of Magnus Energy relating to Executive Director Koh Teng Kiat and Chief Financial Officer Luke Ho Khee Yong, Magnus Energy said. Both Magnus Energy executives didn’t immediately reply to separate e-mails seeking comment.