November 13, 2001 11:30 AM PST
Man fined for putting fake news online
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SINGAPORE--A former securities dealer was fined nearly $44,000 for posting a fraudulent news release on the Internet that said Singapore Exchange-listed Venture Manufacturing was being taken over.
Kenneth Chan Yen Yau had doctored an earlier news release by Toronto-based Celestica, saying it was taking over Venture, a locally based contract manufacturer. This came after Celestica's earlier purchase of Omni Industries, another local contract manufacturer.
He posted the fake news release on a ShareInvestor.com forum Sept. 5 under the pseudonym Jerrysoh.
The fake announcement sent Venture's price up 33 cents to $6.84, more than a 5 percent increase from the previous day's close. Venture informed ShareInvestor of the false posting and it was taken down about 30 minutes after it was originally posted.
The matter was reported to the Commercial Affairs Department (CAD), which traced the posting to a terminal in the UBS Warburg office at Republic Plaza. OCBC, Chan's employer, took over UBS Warburg last year.
Chan was suspended Sept. 10 and was arrested Sept. 13. The next day, the dealer was charged with knowingly making a false statement that was likely to induce the purchase of Venture shares by others.
He pleaded guilty under Section 99(b) of the Securities Industry Act. He faced a fine of up to $136,950 or a maximum jail term of seven years, or both.
Chan's lawyer, Manoj Nandwani, said Chan had posted the false notice "out of curiosity on that day to see if the market would react to the posting, rather than to profit from it." He called the act "an irresponsible prank."
District Judge Valerie Thean imposed the fine, noting that Chan was a first-time offender who showed remorse and did not commit the crime to amass a large profit.
Chan made just $13.15 in commissions from the incident, according to a report, when one of his clients sold one lot of Venture shares.
The judge also said sensible investors should have been careful about information posted on an online forum that was not subject to editorial control.
However, she noted that to maintain the integrity of Singapore's financial markets, people should make sure the integrity of information is being maintained.
Last year in the United States, a similar hoax briefly caused the stock of networking equipment company Emulex to lose more than half of its value. Mark S. Jakob, a 23-year-old former community college student, later pleaded guilty to federal fraud charges.
CNETAsia's Susan Tsang reported from Singapore.