- Bursa Malaysia Securities Berhad (“Bursa Securities”) publicly reprimands, imposes a fine of RM10,000 and orders to strike off Kwong Ming Mean (“Kwong”) from the Register had he still been a Registered Person of Bursa Securities for carrying out dealings in securities in regard to trades with no change in the beneficial ownership (“NCBO Trades”). NCBO Trades are prohibited under the Rules as these trades might lead to a false or misleading appearance of active trading in or with respect to the market for or price of any securities on the stock market of Bursa Malaysia, or directly/indirectly be tantamount to stock market manipulations (“False Trading and Market Manipulations”). Kwong had carried out NCBO Trades for the period between 1 December 2008 to 5 February 2009 (“the Relevant Period”) in respect of securities of 20 counters totalling 47 transactions of 1,759,600 units of shares, valued approximately RM1,345,370.
- Kwong, who was the holder of a Capital Markets Services Representative’s License and a Dealer’s Representatives from Malacca Securities Sdn Bhd at the time when the breach was committed violated Rules 401.1(2) & (3), 404.3(1)(a) & (c) read together with Paragraph 6.7(a) of Participating Organisations’ Circular No. R/R 17 of 2006 (R/R 17/2006”) and 1302.1(1)(g) of the Rules of Bursa Securities (“the Breach”).
- Rules 401.1(2)&(3), 404.3(1)(a)&(c) and 1302.1(1)(g) of the Rules of Bursa Securities (“the Rules”) state, amongst others, that DRs shall :-
- in the conduct of their business for the sale, disposal, purchase, acquisition or exchange of securities, refrain themselves from engaging in, or be a party to ny unethical practices that may damage the confidence of investors and hamper the sound development of the stock market;
- avoid any act or practice which might:- (i) 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 (ii) directly or indirectly be tantamount to stock market manipulations, and shall not participate in any operation by others which might have the same result;
- 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
- perform their duties efficiently, honestly and fairly.
Further, Paragraph 6.7(a) of R/R 17/2006 provides that a Proprietary Day Trader (“PDT”) authorised to carry out activities of a PDT shall at all times comply with the Rules save and except where the compliance thereof is expressly mentioned as not applicable to PDT.
- in the conduct of their business for the sale, disposal, purchase, acquisition or exchange of securities, refrain themselves from engaging in, or be a party to ny unethical practices that may damage the confidence of investors and hamper the sound development of the stock market;
- The NCBO Trades which were executed by KWONG and matched during the Relevant Period were as high as 474,900 units per NCBO Trade.
The Breach by KWONG for failing to avoid act or practice which might lead to False Trading and Market Manipulations are reflected in his execution of the NCBO Trades which have the following characteristics :-
- his large buy orders matched against his subsequent corresponding orders (sell orders) (and vice versa); and
- his large buy or sell orders, which were matched against his subsequent corresponding orders of small quantities,
causing the same account holder becoming both the buyer and seller.
- his large buy orders matched against his subsequent corresponding orders (sell orders) (and vice versa); and
- In relation to this, KWONG had entered corresponding orders without first ensuring that his earlier buy or sell orders (some of which were entered simultaneously/within seconds of each other for both sides of the orders) were completely executed against the orders of the others in the market prior to him entering the subsequent orders. In addition, it was further noted that the subsequent corresponding orders entered by KWONG were at the same price as his earlier orders for the transactions involved the NCBO Trades. In this regard, 45 of the 47 instances of the NCBO Trades had their buy and sell orders entered at the same price by KWONG and resulted in these orders being matched against each other resulting the same account holder becoming both the buyer and seller.
In executing orders in such a manner, KWONG failed to exercise due care and diligence by not monitoring the earlier orders entered by him for the buy and the subsequent sell orders (and vice-versa) resulting in these orders being matched against each other. In this regard, he should have been more cautious particularly when the earlier orders were in large quantity and in view of the close proximity in time of his subsequent orders.
- In addition, despite Bursa Securities having raised its concern and instructed KWONG to refrain from engaging in the NCBO Trades, there were further NCBO Trades done by KWONG.
- Bursa Securities emphasizes and reminds all licensed persons including DRs that they must act responsibly as they have obligations under the Rules to conduct their business not only in the best interest of their clients but also in the best interest and for the integrity of the market. The DRs must not execute orders where:-
- the order could potentially interfere with the orderly dealing of securities through genuine market forces; or
- the order or its execution may mislead the market or create a false appearance of active trading, or with regard to the market for, or the price of the securities.
Further, the DRs must:-- exercise proper skill, due care and diligence in undertaking their dealing activities to avoid the possibility of the subsequent orders being matched with their earlier orders resulting in NCBO Trades, which could lead to artificial increase/fluctuation in trading volume and/or the shares price and give rise to False Trading and Market Manipulations; and
- carry out their duties as a Registered Person 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.
- the order could potentially interfere with the orderly dealing of securities through genuine market forces; or
- The need to maintain a fair and orderly market is imperative and Bursa Securities will not tolerate any acts or practices which might lead to False Trading and Market Manipulations and which may affect the integrity of the market that Bursa Securities operates. Bursa Securities believes that the market should reflect genuine supply and demand. Bursa Securities will not hesitate to impose fine and/or suspension or to strike off a person from the Register and bar the person from trading on or through the stock market of the Exchange for any acts/omission which hampers the maintenance of a fair and orderly market.
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Bursa Malaysia Securities Reprimands, Fines And Orders To Strike Off Kwong Ming Mean, A Former Malacca Securities Sdn Bhd's Dealer's Representative For Violation Of Rules
Date 21/04/2010