Global broking giant Interactive Brokers has launched the largest legal action so far in the wake of October's penny stock collapse, taking aim at at least 10 clients as it seeks to recover about US$68 million (S$85 million) of losses.
BT understands that Interactive Brokers launched arbitration proceedings earlier this month against 10 individuals and entities through the American Arbitration Association.
Pending the start of arbitration proceedings, the global broker has also obtained court orders in Singapore and Malaysia to freeze the assets of eight of those clients, including certain directors and shareholders of Asiasons Capital, Blumont Group, LionGold Corp and Innopac Holdings - four of the stocks at the centre of last month's selldowns.
According to court documents inspected by The Business Times and confirmed by sources, Interactive Brokers on Nov 8 sought court orders to freeze the assets of Malaysian nationals Neo Kim Hock, Peter Chen Hing Woon, Tan Boon Kiat, Quah Su-Ling, Lee Chai Huat and Kuan Ah Ming; and two British Virgin Islands-registered companies, Sun Spirit Group Ltd and Neptune Capital Group Ltd.
One of the eight defendants on Tuesday sought to get the injunction discharged.
The injunction will keep the assets from being dissipated until the start of arbitration proceedings, which are expected to begin in January, against those eight defendants, and another two whose assets have not been frozen, BT understands.
BT also understands that Interactive Brokers is asking for Singapore to be the seat of arbitration for the 10 cases and that an emergency arbitrator has been appointed.
Mr Neo is executive chairman of Blumont. As at 2012, he held more than 20 per cent of Neptune, which in turn controlled 50 million shares of Blumont and a 1.7 per cent stake in LionGold. He declined to comment.
Ms Quah held a 2.15 per cent interest in Blumont as at March 18 and is chief executive of Ipco International, which held a 9.7 per cent stake in Blumont as at March 2013. Sun Spirit is a wholly owned subsidiary of Ipco and a stakeholder in both Blumont and LionGold. Ms Quah could not be reached for comment.
Mr Chen is director of business and corporate development at LionGold and is one of Asiasons' largest shareholders, with a 2.09 per cent stake as at March 28, 2013.
Interactive Brokers' case is the latest shot to be fired in the wake of October's penny sell-off, when sudden drops in the share prices of Asiasons, Blumont and LionGold on Oct 4 led to rare intervention measures by the Singapore Exchange and a subsequent run on small counters.
The Monetary Authority of Singapore and the Singapore Exchange have said they are reviewing the circumstances surrounding the trading of those stocks.
Days after her assets were frozen, Ms Quah on Nov 20 filed a suit in the United Kingdom against Goldman Sachs International, claiming that the bank had been unreasonable in how it demanded the repayment of a $61 million loan facility for which her holdings in the three stocks had been pledged as collateral.
According to UK court documents that BT saw, Ms Quah said about 28 million of her Asiasons shares and 29 million of her LionGold shares had been force-sold from Oct 2 to 23 for a total of $19.4 million.
Blumont executive director James Hong Gee Ho and LionGold independent director Ng Su Ling have also filed suits in the UK against Goldman on allegations similar to Ms Quah's. Neither could be reached for comment.
Ms Quah and Mr Hong are represented by UK firm Thirty Nine Essex Street.
Goldman Sachs declined to comment.
Shares in Asiasons closed flat at 13.5 cents on Wednesday. Blumont slipped 0.9 per cent, or 0.1 cent, to close at 10.8 cents, while LionGold added 2.3 per cent, or 0.4 cent, to head out at 18.1 cents. Innopac gained 3.1 per cent, or 0.1 cent, for a 3.3 cent close.
Get The Business Times for more stories.