The Monetary Authority of Singapore (MAS) and the Commercial Affairs Department of the Singapore Police Force (SPF) have launched an investigation into various companies under CoAssets Ltd for possible regulation breaches.
The joint investigation stems from complaints and feedback from the public regarding suspected misconduct by CoAssets’ companies. According to a joint statement by MAS and the police on Monday (Feb 1).
In early December last year, media reports on the Singapore-based alternative lending platform stated that the company had transferred US$30 million (S$39.9 million) of its borrowings to a little-known debt recovery firm Sunfits. This news sent hundreds of CoAssets retail investor reeling.
Aggrieved investors filed police reports against CoAssets’ co-founders Getty Goh and Seh Huan Kiat. Some have grouped on social media channels such as Telegram to pursue legal action.
Authorities uncover lapses in CoAssets
Last month, MAS said it would review and take necessary action if CoAssets’ licensed subsidiary – CA Funding Pte Ltd (CAFPL) – had breached regulations. MAS only regulates CAFPL as capital markets services licensee.
In March 2020, MAS had issued directions to CA Funding to prohibit the company from first, listing new issuances. Second, onboarding new investors. Lastly, accepting subscription of securities. After its inspection uncovered lapses in the company’s credit assessment process, MAS’s issued these directions, inadequate disclosure of information to investors, and failure to address conflicts of interests arising from dealings that the CoAssets Group had with entities related to issuers that CA Funding had listed on its platform.
Problem with the Promissory Notes
In an interview with Tech in Asia, Lawrence Lim highlighted the main issue with the PNs offered by CoAssets. Firstly, Lim alleges that CoAssets set up over ten plus unregulated subsidiaries to issue PNs to investors. Secondly, investors were denied information on how funds from the PNs. Mainly one company received these diverted funds. These funds were used to invest in a range of projects like tech startups and film productions. Thus, increasing the concentration risk. Thirdly, CoAssets did not inform investors that the companies in its portfolio had trouble repaying the loans. Even worse, they proceeded to continue raising funds.
In early 2020, CoAssets continued issuing notes. It even lied to investors that it had 17 kilograms of emeralds worth about US$6 million (~S$8 million) in its possession and that the emeralds could be used as collateral. An independent valuation by Sunfits later revealed that the emeralds are only worth US$15,000.
Lawrence also alleges that Dr Seh and Getty Goh’s both gave their spouses sweetheart deals to cash out in early 2020. Lim states that he attempted to put a stop to these practices. However, even as COO, he was powerless to do so due to CoAssets’ actions.
As such, he left the company in July 2019.
Lawrence was Getty’s former Boss in SAF
Interestingly it was Goh who hired Lawrence Lim then. Lawrence last served as a colonel in the Singapore Armed Forces. His last position was that of Chief Artillery Officer. He left as a Colonel to join CoAssets as the chief operating officer (COO). Lawrence was previously Goh’s direct boss back when working for the Singapore Armed Forces.
Many CoAssets investors had agreed to extend their payment deadlines for promissory notes set to mature as then-chief executive Mr Goh had told them that DWG and Denka Wee contractually guaranteed them. However, these agreements were voided due to authenticity disputes, and Mr Wee told The Business Times earlier that he “does not recall signing the document”.
Investors have since grouped to explore legal options to claw back investments.