Repco case a reality check for those watching Singapore penny stock probe

The saga involving Malaysia's Repco Holdings, arguably the biggest market manipulation incident its stock market has witnessed - at the very least, it is the most jaw-dropping event in the country's mid-90s bull run - has reached closure almost two decades since the alleged offence took place.

The protracted timeline - highly disenchanting for impatient governance hawks - should serve as a reality check for investors here hankering for visible progress on Singapore regulators' probe into possible false trading and market rigging which could have triggered the epic rise and fall of certain penny stocks on the Singapore Exchange three years ago.

Malaysia's case involving Repco, a gaming concern, and its former executive chairman Low Thiam Hock who was found guilty this month for manipulating its share price, involves many twists and turns that almost match the stock's stunning gyrations during the "wild west days" of Malaysia's second-board bull run.

Wrap your head around this - Repco stock traded at around RM5 in 1996, would vault to a high of RM140 a year later and in 1998, one year later, plumb to RM2.98. The counter was subsequently suspended in 2000 and delisted three years later.

The stock's fallout, precipitated by the Asian financial crisis, left punters sorely burnt but as in many of these cases, there were lucky ones (among the outsiders) who pocketed gains.

"At that point, it (the rise) seemed unstoppable. As a trader, you feel you cannot lose. I made money," said an avid stock market investor who scooped up thousands of Repco shares at RM22 and got out at RM25, seemingly unregretful that he should have held out for more.

There were other counters which saw dizzying rises, although none as gravity defying as Repco, namely timber companies Aokam Perdana and Idris Hydraulic, PWE Industries, Hwa Tai Industries and Promet - names that may throw up bittersweet memories for old timers who punted big time on Malaysian stocks back then.

While it took two years for Malaysia's securities regulator to throw the book at Low for breaching securities laws - the offence he was convicted of took place in December 1997 - it was at the courts that the case would be prolonged.

An acquittal in 2006 after a seven-year trial involving 25 witnesses at the Sessions Court, a failed appeal by the prosecution in 2010 in the High Court and three years later, a reversal by the Court of Appeal of the acquittal which led Low to enter his defence culminated in a conviction this month; the sentencing has been deferred twice to next month.

The Singapore market has also had its poster boy(s) of wild swings - although none as colourful as "Rampco", the moniker earned by Repco from market watchers then - the latest involving the shares of penny stocks, chiefly Blumont Group, LionGold Corp and Asiasons Capital (now called Attilan Group).

These stocks are now trading at near-zero levels - LionGold at 0.4 Singapore cent, Blumont 0.1 Singapore cent and Attilan at 0.2 Singapore cent - a far cry from their highs reached in 2013 before the start of the ignominious descent in October of that year.

Many of the other penny stocks that were caught up in the rally and later, suffered from the rout, are also trading at humbling levels.

About six months following the mysterious collapse of their stock prices, Singapore's Commercial Affairs Department (CAD), working jointly with the Monetary Authority of Singapore, launched a massive probe into trading irregularities involving the penny stock trio.

This may have provided some comfort to victims of the fallout - afterall, if the regulators succeed in hunting down the culprits, it would be retribution of sorts for those who feel they may have been hoodwinked.

That was April 2014. While the regulators have visibly stepped up their policy response and enforcement powers in the wake of the penny stock rout and while the probe - CAD's "biggest securities fraud investigation" - is clearly ongoing, the outcome of the investigations remains uncertain.

If Malaysia's Repco case is anything to go by - notwithstanding the different regulatory and enforcement environment in varying markets and the complexities of proving market misconduct - closure for Singapore's penny stock saga could remain elusive awhile longer. But one hopes that it doesn't take two decades for that to come around.

This article was first published on Jan 26, 2016.
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