Singapore police probe suspected trading irregularities in penny stocks

Singapore police have started investigations into suspected trading irregularities of three penny stocks, the police said on Wednesday.

The three counters such as Asiasons Capital, Blumont Group and LionGold were at the center of a penny stock debacle late last year. Their share prices were also unusually volatile over a period of time.

The Commercial Affairs Department of the police said it has started "an investigation into possible breaches of the Securities and Futures Act arising from suspected trading irregularities in the shares" of the firms.

It is working jointly with the Monetary Authority of Singapore, it added.

The mainboard-listed Blumont Group said its subsidiary G1 Investments has been asked by the Commercial Affairs Department to assist with investigations.

The department has asked for all corporate electronic data from January 2011 to now related to its executive chairman Neo Kim Hock and executive director James Hong.

Blumont also said Hong is helping with investigations into a possible infringement under the Securities and Futures Act.

The share prices of the three firms accumulated significant gains over a period of time, before falling back to being penny stocks. Billions of dollars were wiped out in their combined market value in just two days.

The Singapore Exchange then declared them as "designated securities" so that traders could not short-sell them and had to pay for any purchases with cash upfront.

Blumont issued its statement on Wednesday afternoon and its shares fell 15 percent, while Asiasons lost 9.4 percent and LionGold declined 0.7 percent.