Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded, imposed a fine of RM500,000 and ordered to strike off Melvin Yap Han Khoon (MELVIN YAP) if he was still a Registered Person of Bursa Malaysia Securities, for engaging in manipulative dealing activities in the securities of three (3) counters, Bright Packaging Industry Bhd (BRIGHT), Asia Media Group Bhd (AMEDIA) and Cybertowers Bhd (CYBERT) (collectively referred to as the 3 Counters).
MELVIN YAP, who was at the material time of the breach a Commissioned Dealer’s Representative (CDR) of OSK Investment Bank Bhd (OSKIB) at its Seri Petaling 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 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 findings of the breach and the imposition of the sanctions on MELVIN YAP 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:
(1) MELVIN YAP had engaged in numerous manipulative/false dealing activities over a period of time in several clients’ accounts including activities involving marking the close up and down, driving up the price and rollover 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 (False/Misleading Appearance of Securities) of the 3 Counters, as follows:-
(a) In regard to MELVIN YAP’s manipulative trading activities involving BRIGHT shares, MELVIN YAP had, amongst others:-
(i) on a trading day, entered a series of sell orders for BRIGHT shares towards the close of market at successively lower prices in a client’s account which caused the share price to drop and close sharply lower (Marking the Close Down) and this had enabled the client to buy the shares at a lower price on the following day;
(ii) on another trading day, entered a series of buy orders for BRIGHT shares during late trading and towards the close of market at successively higher prices in another client’s account which caused a substantial increase in the share price and close higher (Marking the Close Up);
(iii) on at least 2 trading days, engaged in driving up the price activities (Driving Up the Price activities) during the continuous trading hours (intraday) which caused/influenced the share price to rise/increase and facilitated the selling of BRIGHT shares at higher price for a client of MELVIN YAP who had earlier bought the shares at lower price; and
(iv) during the relevant period, undertaken rollover activities in the accounts of a group of his clients on or prior to the due date for settlement which were repeatedly done (Rollover activities) and gave rise to appearance of active trading of BRIGHT shares.
(b) In regard to MELVIN YAP’s manipulative trading activities involving the other two counters, namely AMEDIA and CYBERT, MELVIN YAP had, during the relevant period, undertaken numerous Rollover activities by having the clients’ purchase positions rolled over by the due date for settlement and having another set of clients buying the shares which had given rise to appearance of active trading in the market for the counters concerned.
(c) The Rollover activities by MELVIN YAP in the 3 Counters which constituted churning activities with active buying and selling including entries of series of successive buy/sell orders in smaller quantity at the same price in any one of the clients’ accounts (order splitting) had given rise to an appearance of inflated demand and supply/rapidly increased trading of the shares. These activities also had the effect of prolonging the holding period/retaining the holding of these shares among MELVIN YAP’s clients (by him alternating the trades i.e., the buying and selling between one account and another).
(d) MELVIN YAP’s aggressive buying/selling activities in multiple clients’ accounts in the Rollover activities repeatedly done over a period of time indicated his deliberate acts without due regard to the orderliness of dealing activities/market integrity and without ensuring fair dealing of these 3 Counters. His Rollover activities had resulted in the creation of False/Misleading Appearance of active trading in/market for the 3 Counters and affected the relevant share price movements/caused the share price to move upwards and thus dictated the direction of the price.
(2) MELVIN YAP’s manipulative dealing activities in the 3 Counters were not abated and he continued with his manipulative trading/dealing activities despite Bursa Securities issuing him a letter setting out Bursa’s concern on his trading activities. MELVIN YAP’s blatant disregard of Bursa Securities’ trading concern on his dealing activities demonstrated his lack of professional integrity in the observance of fair dealing and orderliness of trading activities/market integrity.
(3) As a Registered Person acting in the capacity as a Dealer’s Representative (DR), MELVIN YAP was obligated to carry out his duties including ensuring maintenance of a fair and orderly market and fair dealing. As such, it is not acceptable for MELVIN YAP to merely execute orders as instructed by his clients/act (i.e. 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 /prevent manipulative/false dealing activities.
(4) The imposition of the sanctions including the amount of fines and striking off on MELVIN YAP had taken into account the extent of his manipulative trading activities and impact of the said activities as well as the ill-gotten gain of significant commission generated/earned by him in undertaking a multitude of manipulative trading activities (which were not abated despite concern raised to him) including rolling over of trades that spanned over a period of time. These manipulative trading had impacted price direction of the relevant counters and created artificial trading activities which constituted false trading with adverse impact on market orderliness/integrity.
(5) As a DR, MELVIN YAP must at all times:
(a) observe professional standards of integrity and fair dealing including exercise due care and diligence in the execution of trades;
(b) carry out his duties efficiently and in a manner which contributes to the maintenance of a fair and orderly market; and
(c) 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.
ADDENDUM
Rules 401.1(3), 404.3(1) and 1302.1(1)(a) & (g) of the Pre-Revamped Rules of Bursa Malaysia Securities (the Rules) state, amongst others, that:
- 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;
- every DR employed or engaged by the Participating Organisation shall at all times observe professional standards of integrity and fair dealing, act honestly and in the best interest of their clients and conduct their business in a manner which contributes to the maintenance of a fair and orderly market; and
- any Participant who, in any circumstances, directly or indirectly commits a breach of or violates any of the Rules or fails to perform his/her duties efficiently, honestly or fairly shall be liable and be dealt with in accordance with the provisions of the Rules relating to the same.