Bursa Malaysia Securities Reprimands, Fines And Suspends Lee Kake Chuan For Engaging In Unlawful Trading Practices

Bursa Malaysia Securities Berhad (Bursa Malaysia Securities) has publicly reprimanded, imposed a fine of RM50,000 and suspended Lee Kake Chuan (LEE) for six months, from trading on or through the stock market of Bursa Malaysia Securities as a Dealer’s Representative (DR), for engaging in intraday shortselling activities in a client’s account. LEE is also required to undergo training on the conduct or professionalism of DRs and market offences. 

LEE, who was at the material time of the breach a Commissioned DR of Mercury Securities Sdn Bhd at its Principal Office, contravened and/or triggered the provisions of Rules 401.1(1)(f), 404.3(1)(a) and 1302.1(1)(g) of the Pre-Revamped Rules of Bursa Malaysia Securities.  

Bursa Malaysia Securities views misconducts that compromise the integrity of the market and the protection of clients’ interests seriously and will not tolerate any unlawful trading practices. Registered Persons, including DRs, must undertake trading activities in strict compliance with the Rules of Bursa Securities, including acting with integrity in maintaining market confidence and upholding the interest of the client. Appropriate actions will be taken against anyone who engages in such misconducts, including suspending or striking off a Registered Person from the Register or imposing a fine that commensurate with the severity of the breach.


BACKGROUND

The finding of the breach and the imposition of the sanctions on LEE 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. LEE had undertaken the sales of securities for his client in numerous instances involving several counters when the client’s account did not have the requisite tradeable balance of the securities for the sales transactions (intraday shortselling activities).
   
   
2. Arising from these intraday shortselling activities, there were gains made in his client’s account.  
   
   
3. The intraday shortselling activities which involved numerous instances of shortsales, various counters and substantial volume over several months showed that LEE had failed to:-
   1. exercise due care and diligence in executing his client’s orders to ensure that shortselling did not occur; and
      
      
   2. review and/or monitor and detect the intraday shortselling activities in his client’s account.  
      
      
4. As a DR, LEE must, amongst others:
   1. refrain from engaging in unlawful practices which involved intraday shortselling activities;
      
      
   2. observe professional standards of integrity and fair dealing; and
      
      
   3. carry out his duties efficiently and exercise proper skill, care and diligence so as to ensure that he did not enter sell orders for the shares that were not available in his client’s account.

ADDENDUM

Rules 401.1(1)(f), 404.3(1)(a) and 1302.1(1)(g) of the Pre-Revamped Rules of Bursa Malaysia Securities (the Rules) state, amongst others, that:- 

•  no DR shall, in the conduct of his business for the sale, disposal, purchase, acquisition or exchange of securities engage himself in, or be a party to, any unlawful practices;
  
  
• every DR shall at all times observe professional standards of integrity and fair dealing; and
  
  
• any Participant who, in any circumstances, directly or indirectly fails to perform his duties efficiently, honestly or fairly shall be liable and be dealt with in accordance with the provisions of the Rules relating to the same.