sec law present

8/3/2019 Sec Law Present

1/35

Khairul Bahyah Bt Samah ZP00784

Parini Bt Osman ZP00364

Andi Nurul Hamimah Halidek ZP00762


2/35

EVALUATE THE CONCEPT OF INVESTOR

PROTECTION IN MALAYSIA. ARE THE

PRESENT LAWS ADEQUATE?


3/35

Types of investors. Concept of investor protection. Regulatory bodies responsible in investor

protection. Securities Commission Bursa Malaysia Central Bank of Malaysia

Current scenario of investor protection inMalaysia.

Examples of cases of misconduct. Where we are now? Suggestion for improvement in investor

protection. Conclusion.


4/35

Angel investors.

Invest in high-growth companies.

Have knowledge of the industry and alsohave contacts.

Venture capitalist.

Investment companies or fund managers

who give cash for part ownership.


5/35

Corporate investorUsually in the form of large multi-national

companies.

Often buy companies for long haul anddont want to exit.


6/35

Safeguarding the interest of investors.

Relates to corporate governance.

Why investor protection in crucial?


7/35

Important for the development of capital

markets.

Promotes investors confidence.

To promote market integrity.


8/35

Securities Commission (SC)

Bursa Malaysia Securities Berhad

(Bursa Malaysia)

Bank Negara Malaysia

(Central Bank of Malaysia)


9/35

Main regulator of the securities andcapital market.

Ultimate responsibility of protectinginvestor.

The regulator of the Bursa MalaysiaSecurities Berhad.


10/35

An exchange holding company.

Committed to maintaining an efficient,secure and active trading markets for localand global investors.


11/35

Promote financial sector stability Fostering a sound and progressive financial

institutions and financial infrastructures.

Formulates and implements policies andstrategies towards building and positioning Malaysia as a

premier integrated Islamic Financial Centre andenhance the financial capability of consumers.


12/35

Capital Markets and Services Act 2007

The Capital Market Master Plan (CMMP)

Securities Industry Act 1983


13/35

Comes into force on 28 September 2007.

the investor protection provisions of sections 91,92, 93 and 97 (Appendix 3 of the CMSA).

The main intention to accord protection to thecustomers through appropriate disclosures byregistered persons to mitigate conflict of interestsituations. The investor protection provisions arenot intended to be used by any parties to securemarket advantage.


14/35

Section 91: Disclosure of certain interests insecurities

Section 92: Recommendations by registeredperson

Section 93: Priority given to clients order

Section 97: Dealings as principal


15/35

Enhance protection to investor by

enhancing SC's power to take civil & administrativeactions

allowing the SC to recover three times the amount oflosses through civil action for a wider range of marketmisconduct including market manipulation

requiring application monies of sophisticated

investors to be held on trust in fund raising exercises,and

enhancing the standards of trustees for debentureholders.


16/35

Covered 2001 to 2010 plan.

SCs commitment to expand the role ofcapital market

took into consideration many of the lessons

learnt as a result of the 1997/98 Asianfinancial crisis.


17/35

The CMP can be characterized into three distinct phases:


18/35

9 DECEMBER 2010

Covered for 2011 to 2020 plan.

to expand the role of capital market to next

level.

Raise intermediary capabilities and standards ofconduct

Strengthen oversight of products and marketsand enhance system-wide risk management


19/35

An act to make provisions with respect to stockexchanges and persons dealing in securities, andfor certain offences relating to trading in securities,and for other purposes connected therewith

Enforce 7 July 1983

Part IX : Trading in Securities

Division I : Prohibited Conduct Division 2 : Insider Trading

Division 3 : Liability for Unlawful Activity


20/35

Early 2011 - The Securities Industry DisputeResolution Center (SIDREC).

an alternative to the existing dispute resolution

body.

specifically caters for small claims (RM100,00) &disputes relating to capital market products andservices.

available to both local and foreign clients of capitalmarket intermediaries in Malaysia.


21/35

09 APRIL 2008 - The Guidelines on MarketConduct and Business Practices

promote responsible conduct amongstockbrokers and their licensed representatives.

BODs & senior management of stock brokingcompanies primarily responsible in ensuring

adequate policies, procedures, and resources.


22/35

Key Capital Market Measures (2003)

improving retail investors participation andprotection, enhance market liquidity and

efficiency, easing the process for capital-raisingand listing, and strengthening intermediation inthe Malaysian capital market.

3rd June - Guide on Areas of Compliance andInternal Controls for Management Companies andTrustees


23/35

Key Capital Market Measures (2001)

to enhance investor protection, especiallyminority shareholders.


24/35

January 2001-The new Listing Requirements

enhancing corporate governance andtransparency, and efficiency in capital market

activities.

strengthening investor protection and promotinginvestor confidence

to make the Malaysian capital market thepreferred fund-raising venue for Malaysiancompanies.


25/35

CASES OFMISCONDUCT

Fountain View

Suremax

Bursa Malaysia

cases


26/35

Case : manipulation of Suremax Group Berhad (Suremax) shares

7 January 2011 :

Datuk Phillip Wong Chee Keong, 48, and Francis Bun Lit Chun, 41, wereconvicted under s84(1) of the SIA for creating a misleading appearance ofactive trading in the shares of Suremax by trading in nine accounts withoutany change in the beneficial ownership of the shares on the stock exchange

DPWCK : 24 months imprisonment and a fine of RM 3million (in default 6months imprisonment ) and

FBLC : 3 months imprisonment and a fine of RM2 million (in default 6 monthsimprisonment)

Judge Komathy SM Suppiah :

The Court has to set imprisonment terms as the new benchmark in securitiescases. The securities market should be real and genuine. Market manipulationis a serious offence affecting the confidence of investors and thusimprisonment sentence should be meted out.


27/35

Case : Manipulation of Fountain View Development Bhd shares(18 November 2003 and 20 January 2004)

Dato' Chin Chan Leong, 57, a former director of Fountain View : undersection 84(1) of the Securities Industry Act 1983 create a misleadingappearance of active trading of Fountain View shares on Kuala LumpurStock Exchange (now known as Bursa Malaysia Securities Bhd) through at

least 20 CDS accounts which were beneficially owned by the accusedthrough the companies that he controlled

Hiew Yoke Lan, 48 a former remisier : under section 84(1) read togetherwith section 122C(c) of the Securities Industry Act 1983 executing andrelaying orders for the sale and purchase of the shares during thematerial time to various stockbroking firms

DCCL : fine of RM1.3 million (in default 13 months imprisonment) aswell as a one-day imprisonment under section 88B of the same ActHYL : was fined RM1 million (in default 10 months imprisonment)


28/35

engaging in intra-day short selling which was carried out by the DRin his siblings account, the DRs dealing activities was not closelymonitored by the PO and the DR continued with his intra-day shortselling activities

sales of shares were carried out by the DR when the clients accountdid not have the requisite tradable balance of the shares for the sale

transactions to be carried out

PO has subsequently implemented corrective action by suspendingthe DRs dealing activities and establishing a monitoring mechanismthereafter to identify possible short selling activities on the nexttrading day

DR was imposed a fine of RM10,000 and a deferred suspension (6months suspension deferred for 2 years).


29/35

Transparency

Liability for

Self-Dealing

StrengthEase of SHs

suit

The World Bank Group's report on DoingBusiness 2010


30/35

Asian Countries Protection index (0-10)(Yr. 2010)

Singapore 9.3Hong Kong 9.0

Malaysia 8.7

Japan 7.0

Thailand 7.7

Indonesia 6.0

India 6.0

Korea 5.3

Cambodia 5.3

China 5.0

Philippines 4.0

Vietnam 2.7

Laos 1.7

Strength of Investor Protection

Securities IndustryAct 1983

SecuritiesCommission Act1993

Capital Market andServices Act 2007

Capital MarketMaster Plan 1 and 2


31/35

Transparency of Transactions

Asian CountriesExtent of Disclosure Index

1-10(Yr. 2010)Singapore 10Hong Kong 10

Malaysia 10

Thailand 10China 10

Indonesia 10

Japan 7

India 7

Korea 7Vietnam 6

Cambodia 5

Philippines 2

Laos 0

Extend of disclosureprinciples

helps the public tounderstand thecompanys activities,

policies and performancewith regard toenvironmental and ethicalstandards as well as therelationship of thecompany with the

stakeholders andcommunities which areaffected by its operation


32/35

Liability for Self-dealing

Asian CountriesExtent of Director Liability Index

1-10(Yr. 2010)Singapore 9Malaysia 9

Cambodia 9

Hong Kong 8China 1

Thailand 7

Japan 6

Indonesia 5

India 4Laos 3

Korea 2

Philippines 2

Vietnam 0

Directors can use theirpowers to make a profitfor themselves at theexpense of the company

self-dealing case cause

minority shareholders tolose out & decreasevalue of investment

refrain from exercisingthose powers for their

personal benefit, and toconsider the paramountinterest of the company


33/35

Shareholders Ability to Sue Officers &Directors for Misconduct

Asian CountriesEase of shareholder suits index

(0-10)(Yr. 2010)Singapore 9Hong Kong 9

Japan 8

Philippines 8India 7

Korea 7

Malaysia 7

Thailand 6

China 4

Indonesia 3

Vietnam 2

Cambodia 2

Laos 2

Related to cases ofdirectors self-dealingand misconduct

These kind of activitiesmake them lose ordecrement in value of

their investments


34/35

Regulators must be more aggressive in ensuring consistentinvestor protection for all capital market products andservices

Instill awareness among investors and educate them on theirrights

Broaden participation in governance


35/35

The regulators has been proactively protectinvestors and handle market misconduct casesbecause such activities will severely undermineinvestor confidence and tarnishes the reputation of

the Malaysian capital market. Regulators should continue to be vigilant and take

whatever action necessary to protect investors andto maintain a fair and orderly capital market.

sec law present

Documents