Neo Kim Hock, executive chairman of Singapore commodities company Blumont Group Ltd. (BLUM), was sued by Coutts & Co, taking the sum banks and brokers are seeking to recover from an October crash to at least $140 million.
Neo owes Coutts S$19.9 million ($15.8 million) after his shares in Blumont, Asiasons Capital Ltd. (ACAP) and LionGold Corp. (LIGO) held as collateral fell in the selloff, according to a lawsuit filed in the Singapore High Court. A closed hearing is scheduled for tomorrow.
The 65-year-old Malaysian has also been sued by Interactive Brokers LLC after he failed to pay for a S$26.5 million shortfall in his margin account. The Connecticut-based online brokerage firm accused Neo and seven others of a “pump and dump” plan to manipulate shares of the three companies, according to a November lawsuit seeking to freeze S$79 million of their assets.
At least two of the eight defendants are seeking to set aside the freeze, claiming the brokerage was involved in a “commission-generating scheme,” which it denies. The eight haven’t otherwise commented on the claims and Neo didn’t reply to four e-mails and return two phone calls left with Blumont seeking comment.
The claims relate to Neo’s private share holdings, Blumont said in an e-mailed response. The company said it will update shareholders when appropriate.
Alexander Molyneux was appointed to succeed Neo as Blumont chairman pending the purchase of a stake in the company announced in October. The acquisition has been deferred and Molyneux remains chairman designate, Blumont said this month.
Shares in Asiasons, Blumont and LionGold fell at least 87 percent over three days in October, wiping out $6.9 billion in market value. The sudden declines after reaching record highs in the past year prompted Singapore regulators to probe stock activities, propose tighter trading rules and add circuit breakers to protect investors from excessive price swings.
The slump also triggered at least a dozen lawsuits and a 20 percent decline in Singapore equity trading in the last quarter of 2013 as brokerages curbed investments in riskier small-cap stocks. The three companies have said they don’t know what caused the share price declines.
Blumont, which invests in minerals and energy, soared more than 1,000 percent last year through the end of September to lead gains on the FTSE Straits Times All-Share Index. The shares plunged 97 percent from an all-time closing high of S$2.45 on Sept. 30 to 7.3 Singapore cents.
Asiasons slumped from its record close of S$2.83 on Oct. 1 to 9.6 Singapore cents. LionGold tumbled 92 percent from its peak on Aug. 29 to 14.1 Singapore cents.
Coutts also asked the Singapore court for a worldwide freeze of S$20 million of Neo’s assets. Neo, with a net worth of $155 million and an annual income of $2 million, “would not hesitate to preserve his self-interest” as he’s facing immense financial pressure, the wealth management unit of Royal Bank of Scotland Group Plc said in court filings.
Coutts has also sued another private banking client in Singapore after his shares in Asiasons, Blumont, LionGold and Innopac Holdings (INN) pledged as collateral plunged in October. The bank sued Cheng Wah and his British Virgin Islands-incorporated Alethia Elite Ltd. for S$6.5 million, according to court filings. A hearing is scheduled for March 17.
“Mr. Cheng is challenging the claim by Coutts as he wasn’t aware he had signed a guarantee under Alethia Elite,” his lawyer Rabi Ahmad said.
Other banks have also been embroiled in similar lawsuits over the October crash.
Julius Baer Group Ltd. (BAER) sued Alethia Elite in October for S$35.3 million for not paying for a margin shortfall, Switzerland’s third-largest wealth manager said in its complaint. Cheng isn’t able to comply with repayment demands as he doesn’t have sufficient means, he said in court papers. He isn’t one of the eight sued by Interactive Brokers.
Coutts and Julius Baer declined to comment on the lawsuits in e-mailed statements.
Goldman Sachs Group Inc. countersued two clients in London in December to recover $26.8 million it says it’s owed. The bank denied it “arbitrarily” sold shares of Blumont, Asiasons and LionGold held as collateral for loans after sudden repayment demands.
Edward Naylor, a Hong Kong-based spokesman at Goldman Sachs, declined to comment.
The cases are Interactive Brokers LLC v Neo Kim Hock, OS1077/2013, Coutts & Co. Ltd. v Neo Kim Hock, S20/2014, Coutts & Co. Ltd v Alethia Elite, OS1061/2013, CWU187/2013, Bank Julius Baer & Co. v Alethia Elite Ltd, S926/2013.
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