Former Raffles United Holdings managing director fined S$430,000 for manipulating market to inflate share price

“According to the accused, it would be ideal for Raffles United’s share price to remain as low as possible so that he could launch a takeover,”  the Deputy Public Prosecutors Yee Jia Rong and Wong Shiau Yin said in their final submissions.

“In addition, the accused did not regularly monitor the price of Raffles United’s shares since 2014, as the share price did not concern him.”

FLIP-FLOPPED ON EVIDENCE

In delivering his verdict, District Judge Terence Tay said he found the oral testimonies of Teo and the Raffles United employee to be illogical, incoherent and reliable.

He noted that the investigation statements given by Teo and the employee to the police force’s Commercial Affairs Department were much clearer, detailed and corroborated with records of call logs, WhatsApp and WeChat messages.

While Teo came across as a mindful and cautious witness, he flip-flopped on various aspects of his evidence when he was asked to explain the inconsistencies between his oral testimony and investigation statements.

“The accused also resorts to bare denials when confronted with irrefutable facts without any logical or reasonable explanation,” said Judge Tay.

Noting that there was no authorisation form that allowed Teo to give instructions regarding his brother’s trading account, he added that the evidence supported the prosecution’s case that Teo had used the account to place orders for Raffles United shares to set a floor to the company’s share price.

Judge Tay was also satisfied beyond reasonable doubt that Teo instructed the Raffles United employee to make trades in company shares to create a false appearance for the company’s share price.

The investigation statements from Teo and the Raffles United employee, and their WhatsApp and WeChat messages show that Teo had asked the latter to execute trades to prop up the price of the company’s shares, he noted. 

NO JAIL TERM

After Teo was convicted, the prosecution asked for nine to 10 weeks’ jail for Teo, while the defence argued that a fine of S$400,00 was sufficient.

The public prosecutors highlighted that Teo’s actions spanned 10 months, and that he had a clear personal interest in ensuring Raffles United met SGX’s requirements.

He also abused the trust of his employee when he asked her to trade in company shares to inflate the share prices, the prosecution said, in arguing for a jail term.

The defence argued that Teo’s culpability was lower, warranting a fine.

In mitigation, Mr Thong noted the removal of the SGX rule in 2020 – and that experts thought it was a bad rule that caused hardship and did not serve its purpose.

At the heart of the case, the allegation is that Teo tried to circumvent the SGX rule, he added.

“My point is this: What is the damage here in terms of public interest? Again, I’m not saying that based on your honour’s findings that Gilbert (Teo) should not face any punishment,” he added, questioning the level of public interest involved in the case.

Teo’s actions also did not seem to be a concerted or deliberate effort over a sustained period of time, said his lawyer, also noting his client’s old age.

In meting out Teo’s sentence, Judge Tay agreed with the defence that the former managing director’s moves seemed ad hoc, but disagreed that the removal of the SGX rule should be taken into account.

The judge noted that the preceding cases cited by the prosecution involved washed trading and coordination between different parties, whereas Teo had only bought shares but did not sell them.

The case also showed no evidence of profiteering, which could have led to stock prices plummeting, which would have resulted in massive losses for other market participants, said Judge Tay.

While there was a need to generally deter others from committing the same crime, there was less of a need to deter Teo from doing so given his age and his possible future participation in such listed company activities, he added.

Agreeing that the case did not meet the threshold that warrants a jail term, Judge Tay said he would impose a significant fine to reflect the seriousness of the offence, and the breaching of a rule that was put in place to address the risks to investors of penny stocks.

After the judge delivered his sentence, Teo confirmed that he would be paying the fine, and asked for a week to do so, which the judge granted.