Bursa Malaysia Securities Berhad (Bursa Malaysia Securities) has publicly reprimanded, imposed a fine of RM100,000 and ordered to strike off Goh Hong Lim (GOH) for engaging in manipulative dealing activities in the securities of Tomei Consolidated Bhd (TOMEI).
GOH, who was at the material time of the breach, a Commissioned Dealer’s Representative of HwangDBS Investment Bank Bhd at its Taman Tun Dr Ismail, Kuala Lumpur branch, had contravened and/or triggered the provisions of Rules 401.1(3), 404.3(1) and 1302.1(1)(a)&(g) of the Pre-Revamped Rules of Bursa Malaysia Securities.
Bursa Malaysia Securities places a strong emphasis on the need to maintain a fair and orderly market and will not tolerate any acts or practices which could lead to false trading, manipulative activities and/or compromise the integrity of the market. Bursa Malaysia Securities will not hesitate to take appropriate actions against anyone who engages in such misconduct which commensurate with the severity of the breach, including striking off a Registered Person from the Register and imposition of fines.
BACKGROUND
The finding of the breach and the imposition of the sanctions on GOH 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 that:
- GOH had engaged in numerous manipulative/false dealing activities over a period of time in several clients’ accounts including activities involving bidding down, bidding up, front-running and cross-trading/coordinated trading activities which had the effect of creating a false/misleading appearance of active trading in, the market for and/or the price of, the securities of TOMEI (Manipulative Dealing Activities of TOMEI), as follows:-
- GOH had influenced TOMEI share price by pushing the price down during the period of fixing the price of the placement shares pursuant to a private placement exercise undertaken by TOMEI through his entries of sell orders in small quantities using his spouse’s account to trade lower than the last done/prevailing market price (Bidding Down activities) causing TOMEI share price to decrease. This had allowed the issue price of the placement shares of TOMEI (Placement Shares) which were allotted to 2 of GOH’s clients (Placee Clients) to be fixed at a lower price compared to the price if no Bidding Down activities was undertaken by GOH.
- GOH had engaged in dealing activities in pushing up TOMEI share price including the entry of buy orders in small quantities at prices higher than the last done price (Bidding Up activities) which resulted in the upwards price movement of TOMEI shares, thus facilitating the disposal of the Placement Shares by his Placee Clients.
- GOH had also engaged in front-running activities (Front-Running Activities) with preference of orders for some clients which involved the execution of sell orders for his spouse and another client ahead of the sell orders executed by him for a Placee Client. These sell orders by GOH for his spouse and another client were done/completed within a few seconds ahead of the execution of one of the Placee Client’s sell orders.
- GOH had engaged in a scheme/device of manipulative/false trading activities to facilitate the disposal of the Placement Shares of the Placee Clients including but not limited to the manipulative coordinated/cross trading activities with entries of opposing sell/buy orders by GOH and third parties (Cross Trades/Cross Trading), which were mainly undertaken during the early hour of trading on some trading days when the disposal of Placement Shares were carried out by GOH.
The characteristics of these Cross Trading activities by GOH were the rapid entries of opposing sell/buy orders by GOH and third parties in close proximity of time, at the same price or at the price close to each other and for quantities that were taken up by each other’s orders and this indicated that these matched trades were pre-arranged on-market trades/Cross Trading activities instead of having their trades done according to natural market forces of supply and demand.
These Cross Trading activities had:-
- (aa) given rise to false/misleading appearance of active trading in/market for TOMEI shares and generated investing public’s interest to also enter the market to trade in TOMEI shares; and
- (bb) facilitated the disposal of the Placement Shares by GOH resulting in significant profits made by the Placee Clients.
- GOH had influenced TOMEI share price by pushing the price down during the period of fixing the price of the placement shares pursuant to a private placement exercise undertaken by TOMEI through his entries of sell orders in small quantities using his spouse’s account to trade lower than the last done/prevailing market price (Bidding Down activities) causing TOMEI share price to decrease. This had allowed the issue price of the placement shares of TOMEI (Placement Shares) which were allotted to 2 of GOH’s clients (Placee Clients) to be fixed at a lower price compared to the price if no Bidding Down activities was undertaken by GOH.
- As a Registered Person acting in the capacity as a Dealer’s Representative (DR), GOH was obligated to carry out his duties efficiently/fairly 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 standards of integrity for the best interest of his clients/market integrity, which would include proper assessment of the orders and execution of the same including their impact to the market. As such, it is not acceptable for GOH as a Registered Person to merely execute the orders as instructed by the clients/act as a mere order-taker without making proper assessment of the orders and exercising reasonable due care and diligence in undertaking dealing activities for his clients so as to avoid manipulative/false dealing activities.
- These Manipulative Dealing Activities of TOMEI shares by GOH without due regard to his overriding/ultimate responsibility as a Registered Person to ensure a fair and orderly market and his acting to the detriment to his client to the advantage of some other clients including his spouse, indicated that he was not fit and proper to be a Registered Person
- As a DR, GOH must at all times:
- observe professional standards of integrity and fair dealing including exercise due care and diligence in the execution of trades;
- carry out his duties efficiently and in a manner which contributes to the maintenance of a fair and orderly market; and
- avoid or refrain from engaging or becoming a party to, or getting involved in any acts or practices which might lead to a false/misleading appearance of active trading in, the market for or price of the securities
- observe professional standards of integrity and fair dealing including exercise due care and diligence in the execution of trades;
