SC Files RM1.93 Million Restitution Suit against Powerhouse Asset Management and its Executive Director

Kuala Lumpur , 7 November 2007

The Securities Commission (SC) has filed a civil suit against Powerhouse Asset Management Sdn Bhd (Powerhouse) and its executive director cum shareholder, Tan Kok Kheng, a Singaporean, to compel them to restitute RM1.93 million to 75 investors.

At the time of the transgression, Powerhouse and Tan Kok Kheng were licensed as a fund manager and a fund manager’s representative respectively which allowed them to carry out fund management activities relating to securities only.

Powerhouse, through Tan Kok Kheng, had ventured into an investment scheme involving gold structured products in early 2006 without SC’s prior approval, which was in contravention of the licensing conditions. The investment scheme, which was not approved by the SC, promised a nett return of 10% on investors’ initial investment over a period of six months. With the investments, Powerhouse purchased and purified scrap gold into pure gold wafers which were sold at a premium in the gold market.

The fund management company had engaged unlicensed individuals to solicit and receive funds on its behalf for the unapproved scheme, which amounted to
RM12.8 million. In the course of soliciting investments for the scheme, Powerhouse had also breached the licensing conditions when it disseminated advertisements and promotional brochures to the public without the SC’s prior approval.

Following its findings, the SC had, amongst others, directed Powerhouse to cease all investment activities and restrained the company from dealing with the investors’ monies by transferring all the monies from Powerhouse’s bank accounts to a trust company appointed by the SC. In September 2007, the SC appointed United Overseas Bank ( Malaysia) Bhd and UOB Trustee ( Malaysia) Bhd as trustees to carry out the distribution of gold wafers and monies to Powerhouse’s investors.

To date, the trustees have completed the process of returning the monies to Powerhouse’s investors leaving a shortfall of RM1,925,539.10. In the suit filed on 5 November 2007, the SC sought to compel Powerhouse and Tan Kok Kheng to pay the said shortfall to the SC to enable the SC to complete the restitution process to Powerhouse investors.

This latest civil enforcement action is in line with the SC’s efforts achieve a more effective and holistic outcome in the interest of investors, whilst continuing to use its criminal powers in appropriate cases.

On 26 September 2007, the SC had filed a similar suit against Kenneth Vun @ Vun Yun Liun, the managing director and shareholder of FTEC Resources Bhd (FRB) to compel him to restitute RM2.496 million to the company. The sum represents part of proceeds raised by FRB in an initial public offering which Kenneth Vun had misutilised for his personal use.

Other civil actions taken by the SC include the disgorgement of companies’ ill-gotten gains and the freezing of assets to prevent them from being diverted. Notably, in the case of The Ayer Molek Rubber Company Berhad, the SC obtained an injunction to safeguard RM20 million of the company’s monies to prevent the company and its solicitors from disposing or dealing with the said monies representing the company’s sale proceeds of several pieces of lands in 2006 and 2007.

In the Swisscash Internet investment scam case, the SC obtained a worldwide Mareva injunction to prevent the disposal of assets by the defendants and also secured a Court Order to direct one of the defendants, Amir Hassan, to transfer RM35 million of Swisscash monies held in bank accounts overseas back to Malaysia.


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