A Malaysian trader has become the first to be found guilty of spoofing the prices of contracts for differences on listed companies in a landmark criminal case for Singapore’s authorities.
District Judge Jasvender Kaur on Wednesday found Dennis Tey Thean Yang, 33, guilty on 8 counts, including a count of intending to defraud other traders by flooding the securities market with small orders with the intent of cancelling them.
The scheme allegedly gained the former trader at DBS Group Holdings’ brokerage unit a profit of S$30,239 ($21,572) over four months in late 2012 and early 2013. He was sentenced to 16 weeks in jail after being convicted in Singapore’s first criminal spoofing case where he used an algorithm custom designed to artificially move prices through fraudulent securities orders.
The Malaysian investor allegedly manipulated the stock prices of 17 listed companies, including GuocoLand and Asia Power Corp, by entering contracts for differences (CFDs) transactions.
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The criminal case was a test of authorities’ attempts to stamp out computer-driven misleading trading on the one of the world’s most active markets. Spoofing is rapidly placing orders with the intent to cancel them before they trade in order to trick other investors by creating the illusion of demand.
“It is in the interest of the community to root out spoofing to ensure that the financial markets are genuine. If such misconduct is not efficiently deterred, then the manipulators would be protected at the expense of the market participants whom the law is supposed to protect,” said Judge Kaur.
Mr. Tey’s attorneys argued that his trades had no market impact, and it wasn’t the sophisticated scheme that prosecutors made it out to be. “This was one guy, in a room, in front of his computer,” Adrian Wee, Tey’s lawyer said in the court, adding that Tey stopped trading when he realized his strategy, formulated through observation, might be unlawful.
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 offences.