Kuala Lumpur, 27 June 2012

Court of Appeal imposes 12 months jail sentence for market manipulation

In a landmark decision today, the Court of Appeal imposed a jail term of 12 months, and a fine of RM1.3 million on Dato’ Chin Chan Leong for market manipulation involving Fountain View Development Bhd (Fountain View) shares.

This is the third conviction for market manipulation which the Securities Commission Malaysia (SC) has successfully prosecuted.

The market manipulation took place over a two-month period from November 2003 to January 2004 during which the price of Fountain View shares increased from RM1.99 to RM6.05. Fountain View, was at the time, listed on the Main Board of the stock exchange.

Chin was charged by the SC in 2005 but had only pleaded guilty on 5 February 2010 to the offence of creating a misleading appearance of active trading in Fountain View shares, by indirectly being concerned in transactions for the sale and purchase of those shares, which did not involve any change in beneficial ownership.

Chin was found to be trading with 20 CDS accounts which he beneficially owned through the companies that he controlled.

Upon his plea of guilt, the Sessions Court had then imposed on him a one day imprisonment sentence and a fine of RM1.3 million. This sentence was later affirmed by the High Court in September 2010 leading to an appeal against the inadequate sentence by the Public Prosecutor to the Court of Appeal.

The Court of Appeal, presided by YA Dato’ Sri Abu Samah Nordin, together with YA Dato Linton Albert, and YA Dato Abdul Aziz Abdul Rahim, today held that the offence under section 84(1) of the Securities Industry Act 1983 was a serious one with adverse consequences on the stock market and the economy, and that the sentence earlier imposed did not reflect the gravity of the offence. In deciding to impose a 12 month jail term, the Court of Appeal took into account the fact that the offence committed was pre-planned and well thought out.

The Court of Appeal in addition upheld the fine of RM1.3million that was earlier imposed on Chin.

The SC has been proactively pursuing this and other market misconduct cases (such as manipulation, market rigging and insider trading) because such activities severely undermine investor confidence and tarnishes the reputation of the Malaysian capital market. The SC will continue to be vigilant and take whatever action necessary to protect investors and to maintain a fair and orderly capital market.