Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded, fined and ordered to strike off two former Dealer’s Representatives (DRs), if they were still Registered Persons of Bursa Malaysia Securities, for engaging in unethical/unlawful activities and misconducts that involved front-running activities, pre-arranged/coordinated trades, abuses of clients’ trade information and the undertaking of unauthorised trades in a client’s account.
Details of DR | Sanctions Imposed |
---|---|
Sazali Bin Shaharudin (Sazali) | Public reprimand, fine of RM50,000 and order to strike off from the Register if he was still a Registered Person of Bursa Malaysia Securities |
Wong Lup Mun @ Wong Cheng Hoh (Wong) | Public reprimand, fine of RM55,000 and order to strike off from the Register if he was still a Registered Person of Bursa Malaysia Securities |
Sazali, who was at the material time of the breach, a Salaried DR (SDR) of AmInvestment Bank Berhad (AIBB) at its Principal Office had contravened and/or triggered the provisions of Rules 401.1(2) & (3), 404.3(1) & (10) and 1302.1(1)(a),(g) & (i)(iii) of the Pre-Revamped Rules of Bursa Securities.
Wong, who was at the material time of the breach, a Commissioned DR (CDR) of Kenanga Investment Bank Berhad (KIBB) at its Principal Office, had contravened and/or triggered the provisions of Rules 401.1(2) & (3), 404.3(1) & (6)(b), 404.4(9)(b) and 1302.1(1)(a),(g) & (i)(iii) of the Pre-Revamped Rules of Bursa Malaysia Securities.
Bursa Malaysia Securities views seriously all breaches involving unethical/unlawful trading activities/practices, misconducts that impinge on the integrity and professional conduct/etiquette of DRs and registered persons and which compromise clients’ protection and does not tolerate such misconducts which may adversely affect and damage market integrity and market confidence. Bursa Malaysia Securities will not hesitate to take appropriate actions against anyone who engages in such misconducts or fails to carry out his duties honestly, with utmost integrity and act in the best interest of the clients and compromises the confidentiality of clients’ information, including striking off a Registered Person from the Register and imposing a fine commensurate with the severity of the breach.
BACKGROUND
The findings of the breaches and the imposition of the sanctions on these two DRs 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:
- (During the Relevant Period:-
- Sazali had, whilst undertaking dealing activities for AIBB’s institutional clients:-
- inappropriately made use of trade information of certain institutional clients of AIBB (Trade Information) for his own benefit giving rise to profitable trades for several counters (Front-running activities) which were undertaken in an individual/third party (Third Party)’s account with trade instructions from Sazali to Wong (Improper Use of Clients’ Trade Information). As such, he had engaged in unethical/unlawful trading activities using the Third Party’s account to undertake Front-running activities; and
- traded in a coordinated manner that some of Sazali’s buy/sell for AIBB’s institutional clients were matched to the opposing sell/buy undertaken in the Third Party’s account handled by Wong that gave rise to pre-arranged/cross trades (Pre-arranged/Cross Trades) between AIBB’s institutional clients’ accounts and the Third Party’s account,
and by engaging in the aforesaid trading misconducts/unethical activities, Sazali had failed to act in the best interest of AIBB’s institutional clients and gained an unfair advantage by making use of AIBB’s institutional clients’ Trade Information to trade through the Third Party’s account operated by him resulting in ill-gotten gains/profits made in the Third Party’s account. - inappropriately made use of trade information of certain institutional clients of AIBB (Trade Information) for his own benefit giving rise to profitable trades for several counters (Front-running activities) which were undertaken in an individual/third party (Third Party)’s account with trade instructions from Sazali to Wong (Improper Use of Clients’ Trade Information). As such, he had engaged in unethical/unlawful trading activities using the Third Party’s account to undertake Front-running activities; and
- Wong had:-
- failed to refrain from/engaged in/facilitated the Front-running activities undertaken by Sazali for he had allowed himself to be a conduit for Sazali to unlawfully operate Wong’s client’s (i.e. the Third Party) account, thus enabled the Front-running activities/Pre-arranged Trades to be undertaken in the Third Party’s account. In this regard, he had failed to be alerted of the red flags of consistent profitable trades with intraday buy and sell in his client/Third Party’s account with trade instructions given to him by Sazali whom he knew/should have known to be a SDR of another broker and the possible abuses of clients’ trade information by Sazali by having trades executed through the Third Party’s account;
- taken trade instructions from Sazali who did not have written authorization from the Third Party to trade on the Third Party’s behalf and by doing so, Wong had allowed his client’s account to be used by Sazali to undertake trading activities giving rise to Front-running activities by Sazali in the Third Party’s account; and
- failed to exercise due care and diligence in handling his client’s account so as to avert the misuse of the client’s account which resulted in market abuses with Front-running activities and Pre-arranged Trades being undertaken in his client’s account by Sazali.
- failed to refrain from/engaged in/facilitated the Front-running activities undertaken by Sazali for he had allowed himself to be a conduit for Sazali to unlawfully operate Wong’s client’s (i.e. the Third Party) account, thus enabled the Front-running activities/Pre-arranged Trades to be undertaken in the Third Party’s account. In this regard, he had failed to be alerted of the red flags of consistent profitable trades with intraday buy and sell in his client/Third Party’s account with trade instructions given to him by Sazali whom he knew/should have known to be a SDR of another broker and the possible abuses of clients’ trade information by Sazali by having trades executed through the Third Party’s account;
- Sazali had, whilst undertaking dealing activities for AIBB’s institutional clients:-
- As DRs, Sazali and Wong must, amongst others:
- refrain from engaging in, or be a party to, any unethical practices;
- observe professional standards of integrity and fair dealing;
- not knowingly enter into transactions in which the DR had an interest which conflicted with the interest of his clients and his duty to these clients;
- perform their duties efficiently and fairly; and
- not allow the client’s account to be used by third party to undertake trading activities based on the third party’s instructions/allow a third party to unlawfully transact in the client’s account.