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Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded, imposed a fine of RM20,000 and ordered to strike off Darul bin Abdullah (Darul) for misconducts/breaches relating to account opening, unauthorised trades and misapplication of client’s monies.
Darul, who was at the material time of the breach, a Commissioned Dealer’s Representative (CDR) of PM Securities Sdn Bhd (PMSEC) at its EAF-PA Damansara Utama office and thereafter at its Principal Office, had contravened and/or triggered the provisions of Rules 404.3(1)(a) & (b), 404.3(6)(b), 404.4(6)(a) and 1302.1(1)(a), (g), (i)(i)(aa), (i)(iii) & (i)(vi) of the Pre-Revamped Rules of Bursa Malaysia Securities.
Bursa Malaysia Securities views seriously misconducts that impinge on the integrity and professional conduct of Registered Persons and compromise clients’ protection as such misconducts may adversely affect and damage market integrity and confidence. Bursa Malaysia Securities will not hesitate to take appropriate action against anyone who engages in such misconducts, including suspension/restriction/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 imposition of the sanctions on Darul were made pursuant to Rule 15.02 of the Rules of Bursa Malaysia Securities upon completion of due process and after taking into consideration all facts and circumstances, including the severity of the breach which involved several misconducts. In particular, the following were noted:
1. In relation to the opening of a client’s account (Client A), Darul had failed to authenticate the application to open an account for Client A in the manner required under the rules and falsely declared authentication of the account opening forms. In this regard, the account opening forms were not executed by the authorised personnel of Client A before Darul in person but instead, the forms were submitted to him by a third party (the Third Party).
2. Darul had executed trades meant to be undertaken in Client A’s account in another client’s account (Client B) based on the instructions of the Third Party, without the written authorisation of Client B. Darul had used/allowed Client B’s account to be used by the Third Party to execute the said trades and hence unlawfully transacted in Client B’s account.
3. In relation to substantial sums of monies deposited by Client A into PMSEC’s trust account, based on purported instruction by the Third Party, Darul had applied or caused PMSEC to apply/pay the said monies to/for the benefit of Client B/Client B’s account, who was not entitled to the said monies.
4. Darul had failed to effectively and efficiently discharge his obligations as a Dealer’s Representative (DR) for despite various red flags (i.e. immediate withdrawal of large sum of monies shortly after being deposited and Client B’s financial background vis a vis the huge sums) which ought to have raised Darul’s suspicion as to Client B’s ability to undertake the trades in his accounts and/or make payments of big sums of monies, Darul did not undertake appropriate/further enquiries/verifications to ascertain if:
a) the trades in Client B’s account were authorised by the client and obtain Client B’s written authorisation to allow the Third Party to give instructions to trade on Client B’s behalf; and
b) the monies were deposited by Client B/the monies rightfully belonged to Client B.
5. The imposition of the sanctions of public reprimand, fines and striking off on Darul had taken into account various factors including Darul’s multiple misconducts and circumstances, the severity of the breaches committed by him and the significant losses caused to his client.
6. As a DR, Darul must, amongst others:
- observe professional standards of integrity and fair dealing;
- act honestly and in the best interests of his client;
- perform his duties efficiently, honestly or fairly;
- ensure that the application forms for account opening are completed and all particulars and information of the client therein are verified against relevant supporting documents and duly executed by the client in person before him;
- not falsely declare authentication of an account opening application;
- obtain prior written authorization from his client before accepting or acting on any instruction received from any other person purporting to act on behalf of that client;
- not unlawfully transact in another person’s account; and
- not apply any amount paid or securities deposited by a client to any person not entitled thereto or for payment other than his client’s trading account.
