Bursa Malaysia Securities Reprimands, Fines And Suspends Hussein Bin Abdullah For Engaging In Manipulative Dealing Activities

Bursa Malaysia Securities Berhad (Bursa Malaysia Securities) has publicly reprimanded, imposed a fine of RM50,000 and suspended Hussein bin Abdullah (Hussein) for twelve (12) months, from trading on or through the stock market of Bursa Malaysia Securities as a Dealer’s Representative (DR), for engaging in manipulative dealing activities in the securities of Hock Lok Siew Corporation Berhad (HLSCORP). Hussein is also required to undergo training on the conduct or professionalism of DRs and market offences. 

Hussein, who was at the material time of the breach a Commissioned DR of Hong Leong Investment Bank Berhad at its Principal Office, contravened and/or triggered the provisions of Rules 401.1(3), 404.3(1)(a) & (c) 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 or manipulative activities. Bursa Malaysia Securities will not hesitate to take appropriate actions against anyone who engages in such misconduct, including imposing suspension/striking off a Registered Person from the Register and/or imposing a substantial fine, commensurate with the severity of the breach.


BACKGROUND

The findings of the breach and the imposition of the sanctions on Hussein 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. (a)    Hussein had engaged in manipulative trading activities over a period of several months (Relevant Period) in the accounts of 3 clients who are his family members.
2. During the Relevant Period, Hussein had engaged in the following manipulative trading activities in the 3 clients’ accounts (Manipulative Trading Activities of HLSCORP):
   1. the entry of buy and sell orders in the 3 clients’ accounts giving rise to these clients being both the buyers and sellers in numerous transactions for HLSCORP shares resulting in their opposing buy and sell orders being matched against each other (Cross Trades/Cross Trading);
   2. rolling over the trades in the 3 clients’ accounts to the next trading cycle on/prior to the due date of settlement (Settlement Date) without his clients having to pay for the purchases in their accounts on the Settlement Date (Rollover activities); and
   3. the entry of a series of buy orders at successively rising prices which were higher than the last done price (Bidding up activities) including:-
      
      • buying activities in the 3 clients’ accounts taking Hussein’s own sell orders that were entered earlier at price higher than the last done price prior to the entry of Hussein’s buy orders; and 
      • the entry of small quantity buy orders to take the seller at seller’s price which was higher than the last done price,
      
      which caused the upward price movement/maintained the share price of HLSCORP at certain levels.  
      
      The buying/selling activities of HLSCORP shares for the 3 clients had resulted in domination of trades during the Relevant Period (Trade Domination).
3. These Manipulative Trading Activities of HLSCORP shares by Hussein, which were undertaken without due regard of impact of his trading activities on market orderliness, had created a false or misleading appearance of active trading in and market for or the price of HLSCORP shares during the Relevant Period.
   
   
4. It is not acceptable for a Registered Person to execute trades through the clients’ accounts or otherwise in the manipulative manner described above without making any proper assessment of the orders and exercising reasonable due care and diligence in undertaking dealing activities for his clients so as to avoid manipulative trading activities.
   
   
5. As a DR, Hussein must, amongst others:
   1. observe professional standards of integrity and fair dealing including exercise due care and diligence in the execution of trades; 
      
      
   2. carry out his duties efficiently and in a manner which contributes to the maintenance of a fair and orderly market; and
      
      
   3. avoid or refrain from engaging in or becoming a party to, or getting involved in any acts or practices which might lead to a false/misleading appearance of active trading or with respect to the market for or price of the securities.

ADDENDUM

Rules 401.1(3), 404.3(1)(a) & (c) 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 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.