Beware of impostor targeting spot commodity victims

The Securities Commission (SC) would like to warn the public of a man who has been impersonating as an SC officer to gather bank account details from the public. He is believed to target victims of spot commodity/index trade scams to whom he promises refunds of monies lost in these illegal trades.

SC has not authorised any officers to solicit details of individuals’ bank accounts for this purpose, and the public is reminded not to give out such details. They are to contact the Police or the SC immediately, if they are approached. The SC Complaints Unit tel. no. is 03-6204 8999 and e-mail

The SC was alerted early this week about this by a person who claimed to have been approached by a Encik Kamal bin Shamsul, allegedly from the SC’s office in Petaling Jaya (PJ), asking for his bank account number and identity card number to return his money which he had lost in a spot commodity trade. The SC does not have any staff member by that name, and its office is based in Kuala Lumpur, not PJ. The SC does not have any branch outside Kuala Lumpur.

Through the operations of these illegal spot commodity/index companies, many have fallen victim and have lost thousands of ringgit, in attempts to make fast money. It is feared that this could be a spin-off scam possibly to get even more money out of the victims.

The SC urges all victims to lodge reports to the SC Complaints Unit if they are approached with such requests by unknown parties.

Caution to potential investors

The SC reiterates that these spot commodity and index traders, which have set up operations in big and small towns around the country and are unlicensed, are carrying out illegal futures trading.

Many people have been cheated by allowing themselves to believe that it is possible to get rich quick without risks. Investors can visit the SC website or the Investor Education website at for details on wise investment.

The SC strongly urges the public to be vigilant when investing with local or foreign investment companies. There are many unscrupulous parties who may be taking advantage of the current economic climate to lure investors to seemingly high-return investment activities.

The SC would also remind all investors that “get-rich-quick” opportunities touted by these promoters often turn out to be “get-poor-quick” schemes.

The public should note that almost all types of investments are regulated by Government agencies such as the SC. The public should check with the SC or the relevant authority on the licensing status of the local or foreign company they are investing through.
Caution to job-seekers

Job-seekers should also be cautious when taking up jobs which promise lucrative salaries, without corresponding requirement for experience or academic qualifications.

Many of the spot commodity companies put up advertisements for normal office executive positions, and try to impress interview candidates with posh offices, in up-market locations. Interview candidates should check with the SC if they are unsure. Many of these companies are also registered with the Companies Commission and will even display their company registration number.

However, job-seekers and potential investors are reminded that in order for any person to carry out any futures trading activities, a licence from the SC is required, and all futures brokers representatives must also be licensed.

How to identify a bogus spot commodity/index trading firm
Members of the public may identify firms that undertake trading of spot commodities/indices by looking out for the following features:

  • Many of these companies claim to be “agents” for foreign trading houses, usually incorporated in jurisdictions such as Macau, Indonesia, Singapore, Hong Kong, the British Virgin Islands and the Bahamas.
  • Although they claim to trade their products in the foreign market, they are usually unable to provide substantial evidence of these trades being transmitted to foreign futures exchanges. The traders in these companies practise what is known as “bucketing” i.e. where they execute customers’ orders for their account instead of on the market, with the hope of profiting from an off-setting transaction at a future time.
  • These companies frequently place recruitment advertisements for positions such as executives, administrative assistants or clerks. Job seekers are enticed by promises of lucrative four-figure salaries among others. The short-listed candidate goes through an “interview” and upon becoming an employee, is put through a brief period of “training”. At the end of the training, the employee is then encouraged to invest their savings in the products as well as solicit new investors which usually turn out to be their relatives and friends. In some cases, the employee is threatened with no pay unless they invest their money or bring in new investors.
  • Investors are usually asked to pay an initial sum known as a “margin deposit” which ranges from USD3,000 to USD5,000. Investors are then told that their investments have been relayed to the company’s foreign principal and that they are to sign a trade agreement with the company’s purported foreign principal.
  • The trading hours of such companies correspond with the trading hours of the foreign exchanges they purportedly deal in. For example, a company dealing in the Hang Seng index would trade during daylight hours while one that supposedly trades in the US stock or commodities markets would do so late at night until the early hours of the morning.
  • Based on the experience of victims, the initial so-called “margin deposits” are usually depleted within a matter of days, resulting in “margin calls”. Margin calls are requests by the company from their clients for additional deposits to be placed for trading to continue. The company usually encourages investors to continue trading to recoup their losses. Convinced investors would then make the additional deposits and the process is then repeated resulting in the investors’ losses increasing.
  • As part of a ploy to trick investors, the company will occasionally show some trading profit in the investors’ accounts. However, investors will find that they are unable to cash-in those gains.
  • Eventually, investors lose all their money. In almost all cases, investors have no control over how their trading accounts are managed as they would have signed over authority to the company’s traders to execute trades on their behalf.

23 May 2003