Goldman Sachs in penny stock saga

PHOTO: Goldman Sachs in penny stock saga

In the latest twist in the penny stocks meltdown over Blumont Group, Asiasons Capital and LionGold Corp, two shareholders are mounting legal action against global bank Goldman Sachs.

A shareholder with stakes in all three stocks, Ms Quah Su-Ling, has filed a lawsuit against a unit of Goldman Sachs. Ms Quah, the chief executive at Ipco International, has alleged that the bank had breached its duty.

Court papers cited in an article in The Edge magazine on Monday stated that Goldman Sachs had force-sold Ms Quah's shares in the three counters from Oct 2.

This came within hours of the bank demanding that she repay her entire loan in cash by 1.30pm that same day.

Since she had opened her account in February this year, Ms Quah's loan with Goldman Sachs grew from $12.4 million to more than $61 million by Oct 1.

When contacted by The Straits Times, Ms Quah declined to comment as the suit has commenced.

Separately, another shareholder Ng Su Ling, 49, has commenced legal proceedings against Goldman Sachs.

Ms Ng told The Straits Times that the case is over the "involuntary sale" of her Blumont and LionGold shares by the bank.

The force-selling started from Oct 2, and included part of the period the stocks were labelled as "designated securities" by the Singapore Exchange (SGX) between Oct 6 and 20.

Ms Ng said she could not disclose more details as her lawyers are still working on the case, which will be heard in Britain.

While she resigned from Blumont Group as an independent director on Monday last week, Ms Ng remains an independent director of LionGold.

The force-selling of shares for both women took place a day after the SGX issued an unusually detailed query to Blumont on Oct 1.

The bourse wanted the mining group to explain how its market value had jumped from $508 million to $6.3 billion within nine months.

When queried by The Straits Times, a Goldman Sachs spokesman in Hong Kong declined to comment on the two cases.

A third shareholder James Hong, an executive director at Blumont, is reported by The Edge to have received a notice of demand from Goldman Sachs early last month to repay his outstanding loans to the bank.

Mr Hong could not be reached for comment Monday.

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