INVESTORS would not have foreseen a net loss incurred by WBL Corp for its third quarter of fiscal 2007 and that financial information was material to WBL share price, asserted capital markets expert Christopher Chong Meng Tak.

Mr Chong was called to testify yesterday as an independent witness by the Monetary Authority of Singapore (MAS). The authority is suing Kevin Lew, WBL's former general manager for enterprise risk management, for insider trading.

Mr Lew sold 90,000 WBL shares at $4.98 apiece two days after a group management council (GMC) meeting on July 2, 2007, where internal forecasts were presented. The group was then expecting a net loss for its Q3 results ended June 30, 2007 and an impairment of $26.6 million on Wearnes Precision Thailand Ltd (WPT).

The internal forecasts were not widely available while the impairment and Q3 loss constituted an unexpected event, Mr Chong told the court.

Though WBL's quarterly profits showed a decline in two preceding quarters, 'an investor on the 4th of July would not have been able to forecast a loss for the third quarter 2007,' he said. This resulted in 'no level playing field' that day.

Mr Chong also disagreed with the defendant's position that since WBL's forecasts were not definitive, they could not be reasonably relied on.

'I do not believe an investor requires that kind of accuracy for their decision to buy, sell or hold to be influenced,' Mr Chong said. 'Often, a direction can be enough.'

Mr Chong has more than 10 years of experience in analysing insider trading cases and has previously testified in court for the Commercial Affairs Department. He co-founded ACH Investments, a specialist corporate advisory firm, and sits on several boards of listed companies.

He also highlighted the impact on WBL share price after the group made its Q3 FY07 results on Aug 14, 2007. Its share price movement diverged significantly from a rising Straits Times Index after the announcement that day.

'This indicated that the market did not take the third quarter results well,' he said.

WBL chief executive Tan Choon Seng told the court on Wednesday that a decision to make an impairment on WPT was made on May 8, 2007.

He was cross-examined by the defendant's lawyer Senior Counsel Thio Shen Yi from TSMP Law Corp.

Mr Thio noted that the profit warning was not made immediately after knowing that there was going to be 'a significant, inevitable impairment' and 'it was virtually a certainty that the company will make a loss in Q3'.

Citing the minutes of the July 2, 2007 GMC meeting, Mr Thio said there was no clear decision made before or during the GMC meeting. The share sale in question took place on July 4, 2007.

Mr Tan said the group 'was caught between a rock and a hard place'. While it had to make an immediate disclosure in compliance with SGX listing rules, a premature announcement could compromise its listed subsidiaries.

WBL issued a profit warning on July 17, 2007, based on the advice from its legal counsel after its subsidiaries Multi-Fineline Electronix (M-Flex) and MFS Technology separately issued their profit warnings on July 11 and July 17, 2007, respectively.

But Mr Thio noted that the third-quarter FY07 net loss was due largely to the impairment on WPT, which was not a listed entity.

The first tranche of court hearings on this case will end today.