Administrative Actions in 2011

No.

Nature of Misconduct

Parties Involved

Brief description of misconduct

Action Taken

Date of Action

1. Breach of Section 17(1)(d) read together with the Schedule to the Securities Industry Act 1983 for not carrying out her regulated activity efficiently and breach of Condition 2 of the dealer’s representative licence Zuridah Mohamed

(a Capital Markets Services Representative’s Licence holder carrying out dealing in securities for ECM Libra Investment Bank Berhad)

 

Failure to supervise a trading clerk and had allowed the said trading clerk to carry out duties customarily performed by a licensed dealer’s representative, which led the trading clerk to shortsell on a client’s account

 

Suspension of one (1) month

 

24 February 2011

2. Breach of Section 41(1) of the Securities Industry Act 1983 (“SIA”) read together with Section 11(1)(b) of the SIA Ho Sze Lip

(a trading clerk with ECM Libra Avenue Securities Sdn Bhd, at the material time, now known as ECM Libra Investment Bank Berhad. As at 15 Dec 2010, Ho had ceased to be registered as a trading clerk with Mercury Securities Sdn Bhd)

Ho had used the account of a client to shortsell

Reprimand

24 February 2011

3. Breach of Section 92 of the Securities Industry Act 1983 for failure to give priority to a client’s order Ng Chin Sing

(a Capital Markets Services Representative’s Licence holder carrying out dealing in securities for AmInvestment Bank Berhad, at the material time. At the time of sanction, Ng is not a licence holder)

Ng Chin Sing had failed to give priority to a client’s orders when a person connected to him (Ng Chin sing) had purchased securities prior to Ng complying with the instructions of the client’s order to purchase the same class of securities Reprimand

28 February 2011

4. Breach of Section 354 (1) (b) (ii) of the Capital Markets and Services Act 2007 for failing to comply with, observe, enforce or give effect to the Asset Valuation Guidelines
(a) Noraini Jaafar Sidek (V-523), a director of Messrs Raine & Horne International Zaki + Partners Sdn Bhd and the registered valuer who signed the valuation reports
(b) Messrs Raine & Horne International Zaki + Partners Sdn Bhd, a valuation firm

 

Failure to comply with several requirements of the Asset Valuation Guidelines including to ensure that-

  • the valuation was properly carried out and reviewed for quality control;
  • the data applied in carrying out the valuation was properly verified and correctly analysed; and the adjustments made were appropriate and justified.
(a) Noraini:
(i) Reprimand
(ii) Refusal to accept or consider any submission to the SC for six (6) months from 2 February 2011.
   
(b) International Zaki + Partners Sdn Bhd:
(i) Reprimand

5. Breaches of Sections 214(1)(b)(A) and 214(1)(b)(B) of the Capital Markets and Services Act 2007, read together with Section 354(1) of the CMSA for submitting to the SC, statements or information that were false or misleading and from which there was material omission. ECM Libra Investment Bank Berhad

(A Capital Markets Services Licence holder carrying out advising on corporate finance)

  • Misrepresented SC’s term of approval in a circular; and
  • Omitted to include material information in the circular, relating to SC’s term of approval.

Note: To ensure correct and accurate information was disseminated, ECM Libra Investment Bank Berhad was instructed to issue an Errata prior to the unit holders’ meeting.

Reprimand

2 March 2011

6. Breaches:

Section 122(1) of the CMSA on the appointment of a custodian for clients’ assets

Paragraph 16.03(b) of the Guidelines on Compliance Function for Fund Managers

Navis Management Sdn Bhd (“NMSB”), a holder of Capital Market Services Licence carrying out fund management NMSB did not fulfil the requirement under Section 122(1) of the CMSA. As a holder of a fund management license, NMSB is required to appoint a custodian for all clients’ assets.

NMSB did not fulfil the requirement under paragraph 16.03(b) of the Guidelines on Compliance Function for Fund Managers for investments made, whereby NMSB did not reconcile the firm’s internal records against those issued by third parties.

A directive was issued to require NMSB to obtain written agreement from its clients acknowledging that NMSB would not be appointing a custodian to maintain a trust account for clients’ assets.

A directive was also issued to require NMSB to appoint an independent auditor to carry out a verification exercise of the investments made by NMSB.

21 March 2011
7. Breached section 28 of the Malaysian Code on Take-overs and Mergers 1998 for entering into an agreement which attached favourable conditions not extended to other shareholders Amphoteric Capital Limited (“ACL”) ACL had entered into an arrangement with several shareholders of Ramatex Berhad, to purchase shares in Ramatex which attached favourable conditions that were not extended to other Ramatex shareholders during the exit offer. Directive to compensate Ramatex shareholders to which the exit offer relates. 19 April 2011
8. Breach of Section 28B(1)(b)(i) read with Section 27(2)(a)(v) of the Securities Industry Act 1983 Ranjit Singh a/l Nashter Singh

(a Capital Markets Services Representative’s Licence holder carrying out dealing in securities at AmInvestment Bank Berhad)

Failed to perform his duty honestly and fairly when he amended his client’s purchase orders to a higher price, thereby jeopardising his client’s interest

 

1) Suspension of three (3) months
2) Reprimand

21 April 2011

9. Breach of subsection 35(1) of the Malaysian Code on Take-overs and Mergers, 1998 by disposing assets of a material amount without obtaining the prior approval of shareholders during the course of a take-over offer Mutiara Goodyear Development Berhad (Mutiara) On 30 July and 27 August 2010, Mutiara had, through its subsidiaries, entered into agreements to dispose of assets of a material amount on an aggregate basis subsequent to the announcement of the possible take-over offer by ATIS Corporation Berhad and ATIS IDR Ventures Sdn Bhd without obtaining the prior approval of Mutiara’s shareholders. Reprimand

19 April 2011

10. Breach of Paragraphs 3.08 and 3.15 of the Guidelines on Due Diligence Conduct for Corporate Proposals read together with Section 354(1) of the Capital Markets and Services Act 2007(“CMSA”), Section 246(1)(b) of the CMSA and Paragraph 1.09 of the Prospectus Guidelines – Equity and Debt. OSK Investment Bank Berhad (14152-V)
(a) Failure to ensure that the information contained in corporate proposals was accurate and/or had no material omission.
(b) Failure to undertake reasonable investigation to ensure the accuracy of information and that there were no material omissions.
(c) Failure to conduct proper and sufficient due diligence which caused the issuance of a prospectus that contained a material omission.

 

Reprimand

25 May 2011

11. Breach of Section 356 of the Capital Markets and Services Act 2007 for failure to comply with the Securities Commission’s Guidelines on Prevention of Money Laundering and Terrorism Financing For Capital Market Intermediaries (“AML Guidelines”) and Guidelines on Market Conduct and Business Practices for Stockbrokers and Licensed Representatives (“Market Conduct Guidelines”) HwangDBS Investment Bank Berhad (“HDBSIB”) (a Capital Markets Services Licence holder carrying out dealing in securities and advising on corporate finance)
(a) Failure to identify and report suspicious transactions
(b) Failure to take reasonable steps to minimise HDBSIB’s exposure to money laundering risk; and
(c) Failure to conduct enhanced Customer Due Diligence (“CDD”) on ‘high risk’ clients.

 

(a) Reprimand;
(b) Penalty of RM250,000; and
(c) Directive to develop and implement a comprehensive Anti-Money Laundering training programme for its staff.

 

4 April 2011

12. Breach of Section 356 of the Capital Markets and Services Act 2007 for failure to comply with the Licensing Handbook and the Securities Commission’s Guidelines on Prevention of Money Laundering and Terrorism Financing for Capital Market Intermediaries (“AML Guidelines”) Kenanga Deutsche Futures Sdn Bhd (a Capital Markets Services Licence holder carrying out trading in futures contracts)
(a) Allowing unlicensed person to carry out licensed activity
(b) Failure to identify and report suspicious transactions by facilitating the transfer of a client’s funds to third parties
(c) Failure to have in place an effective system for detecting and reporting suspicious transactions
(d) Failure to provide adequate training on requirements of AML Guidelines and failure to conduct independent audit on compliance programme
Penalty of RM200,000

17 October 2011

All administrative actions taken by the Securities Commission is subject to the aggrieved person’s right to appeal to the Commission for a review of the decision under section 146 of the SCA or section 364 of the Capital Markets & Services Act 2007 within 30 days of the decision at first instance.