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Bursa Malaysia Derivatives Reprimands, Fines And Orders To Strike Off Mojingkin Bin Majimu For Misconducts / Unethical Conducts

Date 26/08/2013

Bursa Malaysia Derivatives Berhad (Bursa Malaysia Derivatives) has publicly reprimanded, imposed a fine of RM30,000 and ordered to strike off Mojingkin Bin Majimu (Mojingkin) as a Registered Representative/Registered Person from the Register of Bursa Malaysia Derivatives and Bursa Malaysia Securities Berhad arising from his several misconducts/unethical conducts which involved, amongst others, trading in a discretionary manner for his clients, misuse or misapplication of clients’ funds and dishonest conducts.

Mojingkin, who was at the material time of the breach a Futures Broker’s Representative (FBR) of OSK Investment Bank Berhad (OSKIB) at its Lintas branch office and a dual license holder, triggered the provisions of Rules 510.2(b) & (m), 322.3(a) & (b) and 322.1(c) of the Rules of Bursa Malaysia Derivatives for failure to comply with/give effect to the provisions of Rules 609(a), 603.3(a) and 601.2B(f) of the Rules of Bursa Malaysia Derivatives.

Bursa Malaysia Derivatives views seriously misconducts that impinge on the integrity and professional conduct/etiquette of FBRs and Registered Representatives and which compromise client’s protection as such misconducts may adversely affect and damage market integrity and market confidence. Bursa Malaysia Derivatives will not hesitate to take appropriate actions against anyone who fails to carry out their duties honestly, with utmost integrity and compromises protection of clients’ interest, accounts and monies, including suspending or striking off a Registered Representative from the Register or imposing a fine commensurate with the severity of the breach. 

 

BACKGROUND

The finding of the breach and the imposition of the sanctions on Mojingkin were made pursuant to Rule 507 of the Rules of Bursa Malaysia Derivatives upon completion of due process and after taking into consideration all facts and circumstances, including the severity of the breach. In particular, the following were noted:-

  1.  Mojingkin had traded on a discretionary basis for his clients through a common account i.e. the account of his brother-in-law (Client A), without written authorisation of the first mentioned clients as well as without the instructions, knowledge and/or consent of Client A.

  2. In relation to this, Mojingkin had traded in derivatives for several clients from one common account as if it was an omnibus account instead of opening an account for each client and carrying out their respective trades from their own accounts.

  3. In addition, Mojingkin had failed to ensure that monies received from his clients were deposited into the accounts of each of the respective clients.  Instead, Mojingkin had deposited/caused the monies to be deposited into Client A’s account and paid monies to various clients by withdrawing the monies from Client A’s account.

  4. Furthermore, Mojingkin had failed to consistently voice log his clients’ trading instructions as required under the Rules of Bursa Malaysia Derivatives for the finding showed that not all order instructions from clients and trade confirmations were voice logged or being recorded.

  5. Arising from Mojingkin’s misconduct of using one account to trade for several clients, he had also allowed the sharing of or shared the profits amongst some of his clients and/or compensated his client(s) against losses suffered.

  6. In addition, the evidence indicated that Mojingkin had tampered with/falsified some documents relating to clients’ deposits to procure OSKIB to deposit the clients’ monies into the account of Client A.

The duty to safeguard clients’ interest and monies and to act honestly and in the best interest of the clients is a fundamental duty of a FBR which must be observed at all times.  Hence, Bursa Malaysia Derivatives views Mojingkin’s misconducts seriously as he had breached the standard/code of conduct and etiquette expected of a FBR.  Mojingkin’s misconducts/acts when viewed as a whole impinged on/brought into question his professional conduct/etiquette, honesty and integrity which is expected of a Registered Representative and rendered him not fit and proper to remain in the industry.

As Registered Representatives, all FBRs must at all times:

  • observe professional standards of integrity;
  • act honestly and in the best interest of their clients;
  • safeguard their clients’ interest, monies and accounts; and
  • ensure that clients’ trading instructions are consistently voice logged. 

 

ADDENDUM

Rules 510.2(b) & (m), 322.1(c), 609(a), 603.3(a), 601.2B(f) and 322.3(a) & (b) of the Rules of Bursa Malaysia Derivatives (the Rules) state, amongst others, that:-

  • Major offences shall include:-
    • being guilty of fraud or any act of bad faith or of any dishonest conduct;
    • committing an act, which is substantially detrimental to the interest of the Exchange/Exchange holding company and of its Participants or a Client of a Participant;
  • A Trading Participant (TP) must not operate a discretionary account on behalf of a Client unless written authorisation of the Client has been obtained, and the account has been approved in writing by a person appointed by the TP to approve such accounts. Where a TP is properly authorised in writing by a Client to operate a discretionary account on behalf of that Client, it shall:
    •  maintain full and complete records of each exercise of that discretionary authority showing the name of the Client, the details of the Contract and the date and time the transaction is effected and the name of the Registered Representative executing the order;
    •  ensure that in the exercise of the discretion no trading is entered into which is excessive having regard to the financial resources of that Client; and
    •  ensure that in the exercise of the discretion, no conflict of interest arises;
  • A Registered Representative, on receiving a Client’s order shall immediately thereafter enter the order in the market by entering it into the trading system provided always that such Client’s order was relayed through a telecommunication device equipped with a voice logger or such other features that would enable details of the order to be audibly captured on an electronic storage media. In the event of temporary unavailability or such a feature which automatically captures the order details on an electronic storage media, the TP shall require the Registered Representative to (and the Registered Representative shall) complete an order form in the accordance with the Rules and time stamp the same prior to entering of the order in the market. On execution of the Client’s order, the Registered Representative shall check the particulars of the Contract and confirm to the Client that the Contract is done;

  • It shall be the responsibility of the TP to ensure that neither the TP nor any of its Registered Representatives shall share directly or indirectly in the profits or losses on any Client Account or indemnify or compensate a Client against losses suffered on any Client Account or in any transaction effected with or for such Client; and

  • The Exchange shall have the authority to revoke or suspend such registration if the Registered Representative:-
    • violates any of the provisions of the Rules;
    •  is found guilty of misconduct or wilful neglect.
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