Compounds not to be taken lightly - SC Chairman

Kuala Lumpur, 18 March 1999

The Securities Commission (SC) has compounded offences committed by a stockbroking company, an investment adviser, a dealer's representative and two individuals under the Securities Industry Act 1983 (SIA). This is the second time in the first quarter of this year that the SC has exercised its compounding powers.

The newly appointed SC Chairman, Encik Ali Abdul Kadir warned offenders to take the SC's actions seriously. "While compounds may seem to be a relatively swifter way of enforcement, this does not detract the SC from prosecuting for breaches of securities laws, especially serious violations and repeat offences", he said.

"In considering these cases, the SC had the option of either compounding or prosecuting the offenders depending on the facts and evidence of a particular case. While the perceived severity of the actions differ, they both result in a negative record for the offender," added Encik Ali.

At his inaugural press conference earlier this month, the new SC Chairman had said that the SC would exercise its enforcement powers as far as is permitted by the law.

In its latest actions, the SC compounded Smith Zain Securities Sdn Bhd for RM100,000 for committing an offence under section 13 which is to be read with section 122C(c) of the SIA. The stockbroking company had abetted its former management trainee to deal in securities without a license from May 1996 to September 1997. The company has paid the compound.

In another case, a compound of RM25,000 was meted out on Tan Eng Leong and Zulkhairi Zali @ Mat Tali for offences committed under sections 13 and 21(2) of the SIA, respectively. Tan Eng Leong had dealt in securities without a dealer's representatives licence while Zulkhairi Zali @ Mat Tali had breached a condition of his dealer's representatives licence by allowing Tan, an unlicensed person, to perform the functions of a licensed dealer's representative on his behalf.

The SC also compounded another individual, Low Mai, for RM30,000 for committing an offence under section 22 of the SIA. Low Mai had willfully made a false statement to the SC in connection with his application for renewal of dealer's representative licence on 6 February 1996.

In another separate action, Santander Investment Research (M) Sdn Bhd was compounded for RM10,000 by the SC for breaching section 18(2) of the SIA. The investment advisor had contravened a condition of its license when it failed to seek the written consent of the SC to change its name from Santander Research (M) Sdn Bhd to Santander Investment Research (M) Sdn Bhd. The investment adviser has paid the compound.

According to the SC Chairman, "These actions, made possible through the enlarged scope of SC's compounding powers, are necessary to rid the market of unethical and unfair practices and, in essence, for us to have a safe and well-functioning capital market".

The compoundable powers of the SC was recently broadened when, in November of last year, the Securities Commission Act (SCA) 1993 was amended to, inter alia, incorporate a new section 39C on the compounding of offences under the SCA. The Securities Commission (Compoundable Offences) Regulations 1998 which prescribe certain offences under the SCA to be compoundable offences came into effect on 1 January 1999. All compounds received by the SC are payable to the government's Federal Consolidated Fund.

SECURITIES COMMISSION MALAYSIA

Issued on behalf of the Securities Commission. For assistance please contact the Corporate Affairs Department at tel no 03-6548513 (Ann Teoh)/ 023-6548107 (Ida Mariana Azmi) or fax no: 036515078

Background information:
The Securities Commission (SC), a statutory body reporting to the Minister of Finance, was established under the Securities Commission Act 1993. It is the sole regulatory agency for the regulation and development of capital markets. The SC has direct responsibility for supervising and monitoring the activities of market institutions, including the exchanges and clearing houses, and regulating all persons licensed under the Securities Industry Act 1983 and Futures Industry Act 1993.