Bursa Malaysia Reprimands, Fines And Orders To Strike Off Ruzelman Bin Che Khamarulzaman For Engaging In Manipulative Trading Activities

Bursa Malaysia Securities Berhad (Bursa Securities) has publicly reprimanded, imposed a fine of RM100,000 and ordered to strike off Ruzelman Bin Che Khamarulzaman (Ruzelman) from the Register as a Dealer’s Representative (DR) for engaging in manipulative trading activities involving Tracoma Berhad (Tracoma) shares.

Ruzelman, who was at the material time of the breach a Commissioned DR of AmInvestment Bank Berhad, triggered the provision of Rule 1302.1(1)(g) and breached Rules 401.1(3) and 404.3(1)(a)&(c) of the Rules of Bursa Securities.

Bursa Securities views all manipulative/false trading activities seriously and does not tolerate such activities or any acts/practices which might lead to false trading and market manipulations.

The need to maintain a fair and orderly market is imperative and Bursa Securities strongly emphasises the crucial obligations of all Registered Persons/DRs to act with integrity in maintaining market confidence and upholding the interest of the investing public and the market. Bursa Securities will not hesitate to take the appropriate stern action against anyone who engages in such misconduct, including striking off a Registered Person from the Register, or to impose a substantial fine commensurate with the severity of the breach. 

BACKGROUND

The finding of the breach and the imposition of the aforementioned sanctions on Ruzelman were made pursuant to Rule 1301.2 of the Rules of Bursa Securities upon completion of due process and after taking into consideration all facts and circumstances, including that:-

1. Ruzelman had undertaken dealing activities in the shares of Tracoma involving the execution of orders through the accounts of four clients, which he matched against one another (Cross Trading/Cross Trades). Ruzelman executed numerous trades through these accounts which did not result in any change in the beneficial ownership (NCBO Trades). He had also entered orders at or near the close of the market at prices higher than the prevailing market price which had an impact on the closing price of the shares on several trading days (Marking the Close). 
2. These improper trading activities by Ruzelman, which were irregular/manipulative, spanned over a period of about 5 months (the Relevant Period). His actions resulted in the share price of Tracoma being maintained at a certain range and at unusually high trading volumes. This led to the false/misleading appearance of active trading in the market for the shares of Tracoma (False Trading). 
3. Ruzelman dominated the trading activities of Tracoma shares during the Relevant Period with more than 70% of the trades involving Cross Trades between his clients’ accounts. On certain dates, Ruzelman’s dealing activities in the said securities accounted for over 90% of the total trades done for the day. 
4. There were 31 trading days out of 95 trading days during which Ruzelman had deliberately entered buy orders in his clients’ accounts at a price higher than the previously traded price, resulting in Tracoma shares closing higher than the last done price. The increase in the closing price ranged from 0.91% to 56%. 
5. As a DR, Ruzelman must:-
   1. observe professional standards of integrity and fair dealing;
   2. carry out his duties efficiently and in a manner which contributes to the maintenance of a fair and orderly market and to ensure a fair dealing in the observance of the professional standard of integrity; and
   3. avoid/refrain from engaging or becoming a party to, or getting involved in, the manipulative trading/False Trading activities. 

ADDENDUM

Rules 1302.1(1)(g), 404.3(1)(a)&(c) and 401.1(3) of the Rules of Bursa Securities (the Rules) state, amongst others, that:-

• any Participant who, in any circumstances, directly or indirectly fails to perform his duties efficiently, honestly or fairly shall be liable and be dealt with in accordance with the provisions of the Rules relating to the same; 
• DRs shall at all times observe professional standards of integrity and fair dealing and conduct their business in a manner which contributes to the maintenance of a fair and orderly market; and 
• DRs shall avoid any act or practice which might lead to a false or misleading appearance of active trading in any securities on the stock market of the Exchange or a false or misleading appearance with respect to the market for, or the price of, any such securities or directly or indirectly be tantamount to stock market manipulations.