Kuala Lumpur , 6 June 2007

Frequently Asked Questions: “Do Not Invest in Illegal Internet Investment Schemes”

Following the recent announcement by the Securities Commission (SC) that it would start blocking access to illegal investment websites commencing 11 June 2007, the SC has received more than 340 public enquiries on the matter over three working days. As a general guide to the public, the SC today issued a set of frequently-asked-questions covering various facets of the impending move to block illegal investment websites.

1) Why is the SC blocking access to these illegal investment websites?
The SC has issued repeated warnings to investors on the risks of investing with illegal schemes and also continuously reminded the public to only invest with licensed persons to be accorded the protection provided under the securities laws. However, despite the repeated warnings, the rising number of public enquiries and complaints, shows that the public continues to participate in such illegal investments. Therefore, the SC has to take stronger enforcement measures including preventing the public from accessing these illegal investment sites.

The SC will continue to take all measures to fight illegal investment activities in order to protect investors and the integrity of the Malaysian capital market as a whole.

2) How does the SC know that these websites are illegal?
The illegal investment websites are detected through the SC’s surveillance and investigation, and information received from members of the public.
3) Which websites will be blocked? Why isn’t the SC blocking access to all the websites on its list of unauthorised websites?
On 11 June, the SC will start blocking a selection of websites on its list of unauthorised websites. Blocking of websites is only one of the many steps that can be taken. It will be done in stages and is an ongoing process. The SC will continue to take all measures to fight illegal investment activities including taking enforcement action against operators and agents of illegal investment websites. The SC will determine the appropriate steps to be taken on a case-by-case basis.
4) Besides the blocking of websites, what else will the SC do?
The SC will take all measures to fight illegal investment activities including taking enforcement action against operators and agents of illegal investment websites. The SC will also continue with its investor awareness programmes.
5) If SC already knew these websites were unauthorised, why did it not close them earlier and take action?
Prior to this, the SC has been conducting nationwide educational and awareness programmes on these schemes. We have also collaborated with other local and foreign authorities to issue warnings and alerts to investors. To further deter the public from investing in such illegal schemes, a list of unauthorised websites was published on the SC website and also distributed to the public.

Despite the repeated warnings and awareness programmes, the rising number of public enquiries and complaints, shows that the public continues to participate in such illegal investments. Therefore, the SC is moving to the next stage which involves the SC taking stronger actions to stop more people from falling prey to these scams, as well as enforcement action against the perpetrators.

6) Does it mean that websites that have not been blocked on 11 June are authorised to offer investment schemes?
No, the websites that remain on the SC’s list after 11 June continue to be unauthorised under the securities laws to deal in securities, provide investment advice and/or fund management services related to securities or futures. These websites will remain under the SC’s surveillance. The public is advised not to make any investment with parties that are not licensed by the SC.
7) When will the SC complete its operations to block these illegal investment websites?
The SC’s exercise to block access to illegal investment websites will be on a continuous basis.
8) Some operators have claimed on their websites that they are legal and are not under SC investigation. Are these claims true?
These claims are false. The SC has not clarified with any of the illegal investment website operators as to whether they are under investigation or not. If an operator is licensed, they would be listed on the list of licensed intermediaries, which is available on the SC website.
9) Although the SC says that access to illegal investment websites will be blocked starting 11 June, I am already unable to enter some websites. Why is that so?
Websites that are not accessible before 11 June 2007, may have been closed by their operators.
10) How will I get my money back if I am unable to access my account to withdraw my investments?
The public making investments via unlicensed parties are not accorded protection under the securities laws. This is why the SC has consistently been reminding the public to deal with licensed parties as they would have recourse under the securities laws. Licensed intermediaries are also required have in place a host of investor protection measures which includes the requirement to keep client’s monies in a trust account.
11) Will the websites be unblocked in the future?
No, illegal investment websites will not be unblocked at any point in the future.
12) If the websites were to re-open, does it mean they have legalised their investment schemes?
If parties are not in the list of licensed intermediaries available on the SC website, they are not licensed to carry out or operate investment activities under any website(s). If you have any doubts, please check with the SC before investing.
13) Should I continue to invest with operators/agents of illegal investment websites who are able to contact me via e-mail/SMS/telephone/etc?
No, you should not. If the websites have been blocked, investors should discontinue their investments immediately. If parties are not in the list of licensed intermediaries available on the SC website, they are not licensed to carry out or operate investment activities.
14) Will I be able to access the same website from another country?
You may be able to do so, as access is only blocked within Malaysia . However, it would be unwise to continue to invest in these illegal investment schemes when investors have been duly warned by authorities that these parties are unlicensed for such investment activity. Investors are strongly advised to check on the licensing status of any investment scheme that they intend to invest in, with the relevant local or foreign authorities.
15) Would I be violating any laws if I were just an investor in an illegal investment scheme?
Yes, an investor in an illegal investment scheme may be violating the law by abetting the commission of an offence.
16) What is the penalty for promoting or abetting illegal investment activities?
A person found to be promoting or abetting any illegal investment activities may be fined up to RM1 million or liable to imprisonment for a term not exceeding 10 years, or to both.

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