SINGAPORE: A man was jailed eight months on Monday (Feb 7) for deceiving the Bank of East Asia into giving him a S$3 million loan under a share financing facility, which he was later unable to pay back.

The deception by Joel Aloysius Choy Kwok Shing, 37, was part of a larger scheme to manipulate the share price of SGX-listed Skyone, which came to light in 2013 after Skyone's shares fell drastically by 90 per cent in a day.

The scheme was allegedly masterminded by Choy's childhood friend and co-accused, Justin Goh Hanshi. According to the prosecution, Goh directed trading representatives to use proxy trading accounts belonging to family, friends and clients to buy and sell Skyone shares in order to maintain and push up their price.

At the time of his offence, Choy had no knowledge of the market manipulation scheme, according to court documents.

Choy is the first to plead guilty out of four co-accused allegedly involved in the scheme. He admitted to one count of cheating the Bank of East Asia. Another count of cheating Maybank over a S$650,000 loan was taken into consideration for sentencing.

FAVOUR FOR A FRIEND

The court heard that in November 2012, Goh asked Choy to apply for a share financing facility with the Bank of East Asia to obtain loans that he wanted to use for personal trading. Choy agreed as a favour.

Under the agreement between the two men, Choy opened the share financing facility in his own name and then handed over full and effective control of the account and all transactions to Goh. Choy did not receive any commission or financial benefit for this, said the prosecution.

Share financing facilities are secured by securities. Account holders can use the loans disbursed under the facility to buy more securities that can be pledged with the bank as collateral for the loans.

Acting on Goh's instructions, Choy signed a sale and purchase agreement in November 2012 which falsely stated that he had purchased 6 million Skyone shares for a total of S$1.86 million.

In fact, Choy had made no such payment. Despite this, an off-market transfer of the Skyone shares to Choy's Central Depository (CDP) account was made a few days later, allegedly arranged by Goh.

Later that month, based on information Choy gave a Bank of East Asia relationship manager about owning 6 million Skyone shares, he was offered a share financing facility of S$3 million.

By obtaining the share financing facility in his own name, Choy made false representations to the Bank of East Asia that he had effective control over the account and was the beneficial owner of the account and the pledged shares, according to court documents.