Singapore finance professionals need to learn lessons from the Ng Yu Zhi fraud case
The Ng Yu Zhi fraud case provides a salutary lesson in “buyer beware” to investors in Singapore, including finance professionals. Ng has been charged with four counts of fraud for allegedly raising at least S$1bn from investors for commodity trades that didn’t exist. The allegations centre on his dealings at two companies he controlled, Envy Asset Management and Envy Global Trading. Ng reportedly attracted investors by touting very high average quarterly gains of 15%, returns that would have placed him in the same league as the world’s top-performing hedge fund managers, according to Bloomberg.
“This guy largely wasn’t targeting uneducated investors; he wasn’t going after construction workers,” says a buyside professional in Singapore. “I know financial professionals who invested. I think smart people saw the potential returns and thought ‘I’ll just invest a small percentage of my portfolio into this; it’s worth a punt’, but for Ng, these smallish amounts added up to a lot, so he was able to gain momentum,” he adds.
“I would say it takes both hands to clap. The investors have to bear some amount of responsibility as well; they can’t just solely rely on the regulator,” says a senior capital markets banker in Singapore. “These kind of returns are too unbelievable. Given past cases of fraud, this should have been an immediate red flag. Buyers need to do their own due diligence; buyers need to beware,” he adds.
The buyside employee hopes that the Ng case will serve as a “warning to financial professionals”. “Singapore is seeing a resurgence of growth in investment management. Partly driven by assets coming in from Greater China, new players big and small are setting up – hedge funds, traditional funds, and hybrid models,” he says. “There are more and more investment choices for us all. Reading about this trial should be a good and timely reminder to the industry about the importance of research and due diligence in making investments,” he says.
“Like it or not, even in sophisticated markets like Singapore, you’re going to come across fraud. Our regulations are robust and will continue to improve. It’s often difficult to stop fraud when you have someone intent on committing it, and investors – including some for the finance sector – who probably should have taken more care,” he adds.
“I don’t think the case has much of an implication for Singapore’s reputation as a financial centre. There are scams in all countries. Singapore remains one of the best places to set up a business,” says the banker.
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