The appellants had lodged the appeal with the Commission after their claims for compensation were dismissed by the Committee of the KLSE ("the Committee") pursuant the Securities Industry (Compensation Fund) Regulations 1997 ("the Regulations"). The Commission is the appellate body for the Compensation Fund, as provided under provision 12 of the Regulations.
The Commission, after hearing and thorough consideration of the appellants' submission, has reviewed the decision of the Committee and decided that the remisiers satisfy the requirements to be entitled for compensation from the Compensation Fund, as stipulated in section 72(1) of the Securities Industry Act 1983 (SIA) ["section 72(1)"].
According to section 72(1), if a person suffers monetary loss that is caused by insolvency of a member company
or a defalcation or fraudulent misuse of monies or other property by a director, officer, employee or representative of a licensed dealer that is at that time a member company, he is entitled to claim for compensation from the Compensation Fund.
The Commission's decision is based on analysis, which, among others, concludes that "a person suffering loss" pursuant to section 72(1) can include a remisier. In addition, the appellants' security deposits were paid to Omega Securities in connection with its dealing in securities. It therefore, follows that the loss of the appellants' security deposits following Omega Securities' insolvency, are losses capable of recompense under section 72(1).
In meting out its decision, the Commission has also ordered that in those appeals
where the appellants do not dispute the quantum of their respective security deposits owing to them by Omega Securities as determined by the Committee, the appellants concerned shall be entitled to claim settlement of the said security deposits from the KLSE Compensation Fund up to a limit of RM100,000.00.
In those appeals where the
appellants dispute the quantum of their respective security deposits outstanding from Omega Securities, as determined by the Committee, they shall be entitled to submit further written and oral evidence to the Commission to enable the Commission to come to a conclusive determination of compensation to which the said appellants are entitled.
The Commission has stipulated that in the event that the appellants accept any payment of compensation from the KLSE Compensation Fund, the rights and remedies of the appellants shall be subrogated to the stock exchange, pursuant to section 79 of the SIA.
