Ex-DBS Trader Convicted in Singapore's First Spoofing CaseBy and
Tey admitted to deleting fraudulent orders after trades
Case is first joint effort by financial regulator and police
A former trader at DBS Group Holdings Ltd’s brokerage unit on Friday was convicted by a Singapore court for spoofing the securities market in the city’s first such criminal case.
Dennis Tey Thean Yang, 33, pleaded guilty to eight of the 23 charges he faced including his attempts to artificially move prices through fraudulent securities orders and misusing other people’s trading accounts without consent. Tey was a broker at DBS Vickers Securities (Singapore) Pte when he committed the offenses over four months in late 2012 and early 2013. He made a profit of S$30,239 ($21,310).
Regulators and exchanges are stepping up scrutiny of market misconduct and Tey’s case is the first by the Monetary Authority of Singapore and the white-collar crime police since they banded together in 2015 to probe offenses. Singapore Exchange Ltd., which runs the city’s securities and derivatives venue, last month said it would focus on cases that threaten market integrity after punishing traders for false trading.
In the U.S., Citigroup Inc. was ordered to pay $25 million for spoofing U.S. Treasury futures market and a trader named Michael Coscia was sentenced last year to three years in prison for the illegal technique.
Deputy Public Prosecutor Kwek Chin Yong called Tey’s scheme sophisticated, saying it was one that wasn’t easy to pull off. The prosecution sought a jail term of as long as six months.
"This is one of the hardest fraud cases to be executed by one person," he said. “We can’t encourage this sort of behavior to continue gaming the system.”
According to court papers, Tey tried to manipulate prices of so-called contracts for differences, where investors can profit from the price fluctuations of underlying assets without actually owning them. After purchasing the CFDs, he would make fake orders in the underlying securities which he would then delete.
The trades, which involved underlying securities in companies such as Samudera Shipping Line Ltd. and Asia Power Corp., had little or no market impact and Tey’s orders were ultimately not filled, his lawyer Adrian Wee said. The trading strategy was formulated through observation as well as trial and error and Tey stopped trading when he realized it might be unlawful, the lawyer added.
"This was one guy, in a room, in front of his computer," Wee said, adding that Tey’s actions weren’t as sophisticated as what the prosecution had made it out to be. "These trades do not require special access or for one to be a licensed individual."
Tey, a Malaysian national, left DBS Vickers in March 2014 and was arrested in May 2015. He will be sentenced on March 22.
In a statement, DBS said it had zero tolerance for criminal behavior and cooperated with the probe into Tey’s activities. "We continue to be vigilant, and today, controls have been enhanced to mitigate against similar situations," it added.