SGX lifts ISR suspension but urges trading caution

Shares of ISR Capital will resume trading on March 6 under a cautionary warning, following the revelation that investigators believe the company and its stock were influenced and manipulated by the chief suspect in the 2013 penny stock crash, the Singapore Exchange (SGX) announced on Wednesday.

Separately, ISR reported that it fell into a S$8.3 million net loss in 2016, compared with a S$667,519 profit a year earlier, as revenue fell, employee benefits rose and impairments were incurred on unspecified debt securities.

SGX suspended the stock on Nov 27, 2016, because of concerns that trading was not taking place on an informed basis.

The counter had dived 55 per cent on Nov 24 to 12.7 Singapore cents after more than trebling between Sept 1 and Nov 23.

The plunge came the same day that Malaysian businessman John Soh Chee Wen, former Ipco International chief executive Quah Su-Ling and former Annica Holdings and ITE Electric independent director Goh Hin Calm were arrested in connection with investigations into the 2013 penny stock crash.

The Commercial Affairs Department and the Monetary Authority of Singapore began their probe into ISR on Dec 2.

During a bail hearing for Mr Soh on Tuesday, the prosecution alleged that evidence obtained in the ISR probe suggested that Mr Soh was influencing management decisions at the company, that he was manipulating the stock, and that he may have facilitated insider trading in the counter.

On Wednesday, SGX said it would lift the suspension: "However, taking into account the above-mentioned disclosure of information in the State Courts, SGX urges shareholders and investors to exercise caution when dealing in ISR shares once trading resumes."

In announcements made after the suspension, ISR's management has consistently asserted that there are no issues with governance at the financial services company, and rejected any links to the 2013 crash.

Those assertions were made even though investigators into the 2013 episode, which centred on the stocks of Asiasons Capital (now Attilan Group), Blumont Group and LionGold Corp, had in 2014 requested information and documents related to key executives at ISR, among other companies.

On Dec 7, recently appointed executive chairman Chen Tong stated his "full faith that the company practises the highest levels of corporate governance and ethics".

On Dec 31, then-chief executive and executive director Quah Su-Yin, who is the sister of Quah Su-Ling, resigned "to focus on family business".

Richard Chan Sing En, who was CEO and director of ISR unit Dynamic Return, also resigned on Dec 23 "to pursue other business opportunities".

Beyond the issue of governance, questions have also been raised about ISR's plans to buy a 60 per cent stake in a rare-earths mining asset in Madagascar.

Those questions involved potential conflicts of interest related to ISR executive director David Rigoll and the financial adviser hired by ISR for the deal; ISR has consistently asserted that there are no conflicts of interest.

SGX has also raised doubts about the two valuations that ISR used to value those assets; ISR is obtaining a third valuation report.

ISR reported a net loss after the market closed, dragged down by a S$6.2 million increase in other operating expenses from impairments of debt securities and receivables.

The company's cash improved to S$1.2 million from S$0.02 million, but that was only after raising S$7.9 million of cash from issuing convertible bonds and new shares.

This article was first published on March 2, 2017.
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