Kuala Lumpur, 16 December 2013
Former fund manager fined RM1 million for providing misleading disclosures to SC
The Court of Appeal on Friday (13 December 2013) found Mohamed Bin Abdul Wahab, who was previously both a licensed fund manager and executive director of Metrowangsa Asset Management Sdn. Bhd. (Metrowangsa), guilty of authorising the furnishing of misleading statements to the Securities Commission (SC) in Metrowangsa’s semi-annual report from 2000 to 2001.
The offences under section 122B(b)(cc) of the Securities Industry Act 1983 (SIA) were in relation to misleading statements provided to the SC regarding the amount of funds managed by Metrowangsa in 2000 and 2001. During the material time, Metrowangsa had in its reports made to the SC, excluded funds received from two of its clients, Lembaga Tabung Haji and Mimos Berhad, in the amounts of RM134,298,279 for the year 2000 and RM231,020,000 for the year 2001.
Mohamed was charged in 2003 with 2 offences under section 122B(b)(cc) for authorising the misleading statements to be made to the SC and one offence under section 47C(5) of the SIA for having abetted Metrowangsa in using RM50 million of Lembaga Tabung Haji’s moneys to pay its other clients.
On the charges under section 47C, he was convicted by the Sessions Court on 1 April 2009, together with Dr Ghazali Atan, the then Managing Director of Metrowangsa and ordered to pay a fine of RM200,000 (in default of one year imprisonment). He was however acquitted by the Sessions Court and thereafter by the High Court of the charges under section 122B.
In reversing the High Court’s decision to acquit Mohamed, the Court of Appeal sentenced him to RM 500,000 for each charge, making the total fine of RM1 million. In default of payment, he is to serve one year imprisonment.
Justice Dato’ Abdul Aziz Bin Abdul Rahim, in delivering the decision of the Court of Appeal, stated that fund managers cannot adopt a simplistic approach when reporting to the SC the funds under their management. The Court of Appeal rejected the defence that Metrowangsa did not declare the full amounts to the SC because it had transferred a portion of the funds under its management to a third party, namely one Asasi Trade and Marketing Sdn Bhd which was managed by an individual named Ahmad bin Hassan. This, he said, was not acceptable as it runs contrary to the agreement entered into between Metrowangsa and its clients. He further stated that the failure to appreciate this issue resulted in the misdirection by the Sessions and High Courts and hence the acquittal orders.
In pressing for a deterrent sentence, Deputy Public Prosecutor Ahmad Fairuz Zainol Abidin stressed that fund managers who are the custodians of client funds must be accountable and responsible over all sums of monies they collect. He also submitted that the failure of fund managers to uphold their duties professionally to safeguard the interest of their clients is a fundamental breach of the trust and confidence placed upon them which will lead to the breakdown of the fund management industry. This industry, he submitted, forms an integral part of a healthy and vibrant capital market.
SECURITIES COMMISSION MALAYSIA