Tan Chong Koay and his Pheim Asset Management Sdn, each fined S$250,000 ($197,000) in Singapore’s first civil lawsuit for market manipulation, urged the city’s appeal court to overturn the ruling, saying the regulator was wrong in claims they tried to undermine the stock market.
“There was a genuine commercial intent to buy the shares,” Vinodh Coomaraswamy, Tan and Pheim’s lawyer, said at the appeal hearing today. The court reserved its decision, giving no indication of when it would rule.
The Monetary Authority of Singapore, which sued Pheim and Tan, urged the court to dismiss the appeal, saying the integrity of the city’s market would be undermined otherwise. The regulator has stepped up oversight of the industry even as the city attracts funds including Fortress Investment Group LLC to set up shop. The central bank published 54 enforcement actions on its website in 2010, three times more than a year earlier.
Pheim and Tan, named one of five successful Singapore-based boutique fund managers by the Government of Singapore Investment Corp. in 2002, have denied rigging the stock and said they’re “value” investors. They bought almost 90 percent of the traded shares of United Envirotech Ltd. (UENV) from Dec. 29 to Dec. 31, 2004. The shares rose 17 percent over the three trading days.
“This is a pretty awful case” of market manipulation, Cavinder Bull, the monetary authority’s lawyer, told the court today. “This is a very experienced man who does it and conceals it.”
Tan declined to comment after the hearing today.
Justice Lai Siu Chiu in her Sept. 17 ruling said Pheim and Tan, 61, had sought to boost their reputation instead of seeking monetary gains in rigging the stock. The jump in the share price boosted the net asset value of the fund’s accounts, triggering bonuses of S$50,790 and a S$115 management fee.
The monetary authority has said it won’t tolerate “window dressing” and allow fund managers to think they can get away lightly.
Pheim was prevented by foreign equity limits from buying the shares earlier, Coomaraswamy said today.
The judge’s decision would “curtail genuine market activity,” Pheim and Tan, who was named Malaysia CEO of the Year on Jan. 20 by the magazine Asia Asset Management, had said earlier. The firm and Tan wouldn’t have “risked their livelihood and business” by rigging the stock, they said.
The Pheim Group, including its Singapore operations, manages about $1.8 billion.
The case is Tan Chong Koay v Monetary Authority of Singapore, CA186/2010 in the Singapore Court of Appeal.
-- Editors: Joe Schneider, Garry Smith
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