Bursa Malaysia Securities Berhad (Bursa Malaysia Securities) has publicly reprimanded, fined and ordered to strike off Ng Kok Kiong (NKK) for engaging in manipulative dealing activities in the securities of Metech Group Berhad (METECH).
NKK, who was at the material time of the breach, a Commissioned Dealer’s Representative of Public Investment Bank Berhad at its Kuala Lumpur branch office, had contravened and/or triggered the provisions of Rules 401.1(3), 404.3(1)(a) & (c) and 1302.1(1)(a) and (g) of the Pre-Revamped Rules of Bursa Securities (prior to the Revamped Rules of Bursa Securities which came into effect on 2 May 2013).
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, including striking off a Registered Person from the Register and/or imposing fine, commensurate with the severity of the breach.
BACKGROUND
The finding of the breach and the imposition of the sanctions on NKK were made pursuant to Rule 1301.2 of the Pre-Revamped Rules of Bursa Malaysia Securities upon completion of due process and after taking into consideration all facts and circumstances, including that:
- NKK had engaged in manipulative trading activities over a period of several months (Relevant Period) in 15 clients’ accounts including his parents’ accounts.
- During the Relevant Period, NKK had engaged in the following manipulative trading activities in the 15 clients’ accounts (Manipulative Trading Activities of METECH shares):
- the aggressive or active buying and selling activities with domination of trades for both sides of the order book (churning activities) which created a false or misleading appearance of active trading in, market for and/or the price of METECH shares during the Relevant Period (Trade Domination);
- the entry of buy and sell orders in the 15 clients’ accounts giving rise to these clients being both the buyers and sellers in numerous transactions for METECH shares resulting in their opposing buy and sell orders being matched against each other (Cross Trading/Cross Trades);
- the entry of a series of buy orders at successively rising prices which are higher than the last done price including the entry of small quantity buy orders to take the seller at seller price which was higher than the last done price (Bidding up activities);
- the entries of buy orders to take the sellers, including his sell orders for other clients which were entered towards the close of the trading session/before market closed giving rise to the increase or maintenance of the closing price of METECH shares (Marking the Close Trades); and
- during the pre-opening phase on a trading day, NKK had entered a series of large buy orders at a price substantially lower than the previous day closing which were undertaken in a client’s account within a short time interval and caused a depression of METECH share price. Subsequently, when the market opened NKK entered a large sell order in another client’s account at similar price, giving rise to the matching of the orders with a substantial decrease in price as compared to the previous day closing price.
These Manipulative Trading Activities of METECH shares by NKK, which were undertaken without due regard of the impact of his trading activities on market orderliness, had created a false or misleading appearance of active trading in and market for METECH shares during the Relevant Period and impacted METECH share price with:
- the upward price movement of METECH shares during the Relevant Period; and
- a substantial decrease of METECH share price from its previous day closing on a trading day.
- the aggressive or active buying and selling activities with domination of trades for both sides of the order book (churning activities) which created a false or misleading appearance of active trading in, market for and/or the price of METECH shares during the Relevant Period (Trade Domination);
- It is not acceptable for a Registered Person to execute trades through clients’ accounts or otherwise in the manipulative manner described above, and not making a proper assessment of the orders and exercising reasonable due care and diligence in undertaking dealing activities for his clients. These Manipulative Trading Activities of METECH shares by NKK without due regard to his overriding/ultimate responsibility as a Registered Person to ensure a fair and orderly market whilst acting to achieve his personal objective indicated that he was not fit and proper to be a Registered Person.
- As a Dealer’s Representative (DR), NKK must, amongst others:
- observe professional standards of integrity and fair dealing including exercise due care and diligence in the execution of trades;
- carry out his duties efficiently and in a manner which contributes to the maintenance of a fair and orderly market; and
- 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 with respect to the securities.
- observe professional standards of integrity and fair dealing including exercise due care and diligence in the execution of trades;