Lawsuits shine light on Goldman’s role in Asiasons, Blumont and LionGold crash

(01-12-2013, 10:24 PM)opmi Wrote: why all use US based Interactive Brokers? Cheaper comm?? or better executions?

Wow, what will happen tomorrow?

Three penny stocks suffer further pounding
No end to woes as Asiasons, Blumont, LionGold are bumped off MSCI index
Published on Nov 30, 2013, ST
By Goh Eng Yeow Senior Correspondent

ASIASONS Capital, LionGold Corp and Blumont Capital suffered further selling this week as they were bumped off an international stock index widely tracked by fund managers.

All three counters had been components of the MSCI Global Small Cap Index.

But on Nov 7, the index provider said it would be dropping the trio from the prestigious market benchmark.

The changes took effect after the market closed on Tuesday.

It was the latest humiliation in their fall from grace after suffering a staggering $8 billion in losses in their combined market value in just two days of sell-down last month.

For the first nine months of this year, the three counters had been the toast of traders, as their share prices shot up, drawing fund managers and retail investors to load up on their shares.

Blumont had gained as much as 11 times in value, while LionGold rose about 57 per cent and Asiasons was up by 2.5 times during the period.

But all these gains evaporated during last month's still unexplained massive sell-off.

During the week just gone, they appeared to move in lock- step. The three counters managed to eke out small gains on Monday only to suffer a sell-off on Tuesday as investors dumped their shares to adjust for the changes to be made to the MSCI index at the end of that day.

They then struggled to recover part of their losses as the week progressed. Yesterday, LionGold ended the day 0.55 per cent lower at 18.1 cents, while Asiasons rose 1.47 per cent to 13.8 cents, and Blumont was up 1.83 per cent at 11.1 cents.

For long-suffering investors of the three counters, waiting for a lucky break to make an exit has turned out to be a hopeless task.

The latest bad news to hit the three counters is legal action taken by US-based Interactive Brokers against parties to claim the losses it had sustained, following the collapse of the trio.

These are Blumont chairman Neo Kim Hock, Ipco International boss Quah Su Ling, LionGold director of business and corporate development Peter Chen Hing Woon, JK Yiming director Tan Boon Kiat and two other people - Mr Lee Chai Huat and Mr Kuan Ah Ming.

Separately, Ms Quah and Blumont director James Hong had taken legal action against Goldman Sachs for the losses they sustained when the global bank force-sold the shares they pledged with it as loan collateral.

Interactive Brokers was earlier reported to have lost about US$68 million (S$85 million) owing to clients' exposure to the three counters. It had purportedly taken out a court order to freeze the assets of the parties named in its legal action.

That, in turn, raises another question: Mr Neo was reported to be selling 95 million Blumont shares to Mr Alexander Molyneux as part of a broader deal to allow the former banker to buy a 5.2 per cent stake in the mining play and become its chairman.

Now that Mr Neo's assets have been frozen, traders are wondering if Mr Molyneux will still be able to consummate the deal when the one-month extension expires next Friday.

IB commission is cheap but that may not be the reason why it was preferred. Very likely the 8 accts involved are sub-accounts operated under the advisor acct (Algo Capital). Trades can be easily transacted with one acct. I'm not aware of any Spore brokers that can offer this arrangement. I suspect trades thru IB platform are not easily detected and that's why only following IB court filings that we now know the details.

Why SGX had not raised any query when this acct chalked up majority of the daily volume (read below) of the 3 counters is puzzling. It looks like we are looking at potential criminals offence committed. It looks like SGX is still in the dark.

Rachel Scully, Straits Times
30 November 2013

A financial adviser and a bank have surfaced as new players in the saga involving penny stocks Blumont Group, Asiasons Capital and LionGold Corp.

On Thursday, it emerged that US discount broker Interactive Brokers Group had taken legal action against six Malaysians and two firms.

Interactive Brokers had sought an interim injunction to freeze the assets of the eight parties, including Blumont executive chairman Neo Kim Hock and Ipco International chief executive Quah Su-Ling.

The eight parties collectively owe Interactive Brokers more than $79 million (see box).

The Straits Times has obtained papers filed with the High Court which show that the eight account holders had asked for financial adviser Algo Capital Group to ?trade on their behalf?.

Algo Capital?s mailing address is in Bishan, which is the residential address of its owner and chief executive Ken Tai Chee Ming.

Interactive Brokers? deputy general counsel Jeffrey David Fox said in his affidavit filed earlier this month that there were ?suspicious trading activities through the defendants? accounts? made by Algo Capital.

?(Algo Capital) often bought and sold large amounts of the companies? shares in the same account(s) on the same day at the same price,? court papers state.

?(These put) the accounts back where they started, but (gave) the market the appearance that the stocks were more heavily traded than they were.?

Simply put, the defendants may have been involved in a ?pump and dump? scheme to artificially generate trading volume in Blumont, Asiasons and LionGold to maintain and drive up their share prices, said Mr Fox.

Trades by Algo Capital through the eight accounts also made up substantial portions in the daily trade volumes of the three stocks. For instance, it had accounted for more than 80 per cent of LionGold?s trades in a day, state court papers.

Separately, court records show that a unit of The Bank of East Asia has joined the fray.

Its Singapore branch has sought the court?s permission to change the injunction order which freezes the assets of six individuals and two companies.

Interactive Brokers' lossesTHE six people and two firms:
? Neo Kim Hock: $26,525,072.34
? Peter Chen Hing Woon: $16,438,225.94
? Tan Boon Kiat: $15,302,788.95
? Quah Su-Ling: $10,184,256.75
? Lee Chai Huat: $4,095,137.49
? Kuan Ah Ming: $1,460,881.50
? Sun Spirit Group: $4,779,593.44
? Neptune Capital Group: $264,372.45
? TOTAL: $79,050,328.86

SGX probably dont have the info on the Interactive Brokers omnibus account so cannot see the movement within IB.
SGX may have assumed they are done by many accounts. BUT still > 80% from 1 broker is a big red flag.

This news on AlgoCapital breaks new ground. It seems quite easy to nail down the guys responsible for the market manipulation from here.

CAD or SGX will invite this AlgoCapital guy for a coffee session.

- If he admit to mkt rigging, he will have to identify who is his "boss".

- If he does not admit to mkt rigging, then it raises more questions. It will mean that 8 account holders will have to responsible for the churnings of the stock. But that 8 will flatly deny as they have (on paper) gave Algo the absolute discretion on the trades.

(02-12-2013, 11:00 AM)morten Wrote: This news on AlgoCapital breaks new ground. It seems quite easy to nail down the guys responsible for the market manipulation from here.

CAD or SGX will invite this AlgoCapital guy for a coffee session.

- If he admit to mkt rigging, he will have to identify who is his "boss".

- If he does not admit to mkt rigging, then it raises more questions. It will mean that 8 account holders will have to responsible for the churnings of the stock. But that 8 will flatly deny as they have (on paper) gave Algo the absolute discretion on the trades.

Go Bishan and find Algo guy??

multiple legal jursidictions quite troublesome. but with help from IB court docs would make it easier.

The problem is SGX is directionless.

wow 8 billion wiped off and these eight defendents only lost less than 100 million? Dunno who is the bigger losers in this episode

Some of these guys don't really lose , their costs are very low , few cents a share before it shoot up to more than S$2.00.

saw a bulk of them are from Malaysia
from the gold buy back debacle to now penny scum...creative