Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded, fined and suspended four (4) Dealer’s Representatives (DRs) for engaging in manipulative/false dealing activities in the securities of ETI Tech Corporation Berhad (ETITECH). They are further required to undergo training on conduct or professionalism of DRs/market offences (Mandatory Training).
The DRs are as follows:-
No. | Details of DR | Sanctions Imposed |
---|---|---|
1. |
Ong Kok Aun (ONG) |
Public reprimand, fine of RM150,000, 18 months Suspension and Mandatory Training |
2. |
Chze Bao Phin (CHZE) |
Public reprimand, fine of RM20,000, 3 months Suspension and Mandatory Training |
3. |
Koh Pee Beng (KOH) |
Public reprimand, fine of RM110,000, 12 months Suspension and Mandatory Training |
4. |
Low Lay Ai (LOW) |
Public reprimand, fine of RM90,000, 12 months Suspension and Mandatory Training |
ONG, CHZE, KOH and LOW had 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 in regard to the manipulative/false trading activities of ETITECH shares over a period of time in several clients’ accounts.
The findings of the breach and imposition of the sanctions on ONG, CHZE, KOH and LOW were made pursuant to Rule 15.02 of the Rules of Bursa Malaysia Securities upon completion of the due process and after taking into consideration all facts and circumstances, including the severity of the breach and the conduct of the four DRs concerned.
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 which commensurate with the severity of the breach, including suspension/striking off a Registered Person from the Register and imposition of fines. In this regard, DRs must:-
- avoid or refrain from engaging in acts/practices that might lead to a false/misleading appearance of active trading in/the market for/price of the securities or directly/indirectly manipulate the securities, including engaging in order entries and deletions which could impact the price and/or volume of the order books for the securities concerned;
- observe professional standards of integrity and fair dealing including exercise due care and diligence in the execution of trades;
- conduct dealing in securities in a manner which contributes to the maintenance of a fair and orderly market;
- perform their duties as DRs efficiently and fairly; and
- not act as mere order-takers without making proper assessment of the orders received and executed and impact to the market in ensuring market orderliness/integrity.
BACKGROUND
(A) Breaches by ONG and CHZE
Both ONG and CHZE, who were at the material time of the breach the Salaried DRs of OSK Investment Bank Berhad (OSKIB) at its Principal Office, had engaged in manipulative/false trading activities of ETITECH shares in numerous clients’ accounts (including two directors of ETITECH) which involved:-
(a) The placing/entering of significant number of multiple large buy orders at different price levels, which were prominent/dominated the buy side of the order books (Artificial Buy Orders) during pre-opening and continuous trading phases. These Artificial Buy Orders gave rise to false/misleading appearance of increased/inflated/strong demand of ETITECH shares and the majority of these buy orders were untraded due to, amongst others, withdrawals or deletions of the same thereafter.
(b) The frequent order withdrawals of the large buy orders entered but not intended to be traded and/or which had facilitated the selling activities of ONG/CHZE or the identified DRs. These Artificial Buy Orders were withdrawn/deleted when market price approached the order price or when these buy orders were in the priority queue.
(c) The entry of opposing buy/sell orders in significant quantities or in quantities that took up each other’s orders which were entered at the same price and in close proximity of time with that of the identified DRs’ orders giving rise to the execution of trades that constituted on-market coordinated trades/cross trading activities (Coordinated/Cross Trading Activities).
By engaging in the above manipulative trading activities, the DRs were able to sell most of the sell orders entered for their clients and at profits even though the selling were done during the period of down trending of ETITECH share price.
ONG was the primary person taking charge of these clients’ trading activities at OSKIB and had supervisory role over CHZE, who had received trade instructions for clients’ orders from ONG. CHZE played a secondary role in the execution of trades that gave rise to the manipulative trading activities.
(B) Breaches by KOH and LOW
In regard to the breaches committed by KOH and LOW:-
(i) KOH, who was at the material time of the breach the Commissioned DR (CDR) of AmInvestment Bank Berhad at its Principal Office; and
(ii) LOW, who was at the material time of the breach the CDR of HwangDBS Investment Bank Bhd at its Principal Office,
had engaged in manipulative/false trading activities of ETITECH shares in numerous clients’ accounts (and for KOH, including the account of his spouse) which involved the following:-
(a) The series of/active buying and selling of ETITECH shares at or about the same price continuously which were devoid of economic sense and tantamount to churning activities.
(b) The placing of large buy orders which were subsequently withdrawn (Artificial Buy Orders) to avoid priority queue and facilitate selling activities by the DRs indicating that these buy orders were entered with no intention to be traded.
(c) The entry of buy/sell orders in close proximity of time with the opposing orders of the identified DRs which were entered at the same price and in significant quantities that took up each other’s orders resulting in coordinated trades/cross trades between KOH/LOW and the identified DRs (Cross Trades/Cross Trading).
(d) The entry of a series of buy orders at seller’s price (Bidding Up activities) on some trading days which had the effect of pushing up/maintaining the share price at a higher level and thus facilitated the selling activities at a better price or at the maintained price levels.
By engaging in the aforesaid trading misconducts/facilitating the clients to trade through creation of false market activities/manipulative trading, the investing public’s interests were compromised. The investing public were deceived/induced to enter into the market to buy upon seeing the increased/inflated/strong demand of ETITECH shares artificially created by, amongst others, the significant quantity of Artificial Buy Orders, not knowing that the inflated demand of these buy orders were not intended to be traded as evidenced by the subsequent deletion of the same to avoid priority queue/to facilitate the selling activities.
The four DRs had not acted responsibly as expected of DRs who were obligated under the rules to undertake dealing activities in such a manner so as to ensure fair dealing and contribute to the maintenance of a fair and orderly market for the securities concerned and to observe professional standards of integrity. In carrying out dealing activities in the clients’ accounts, these four DRs had:-
(a) acted as mere order-taker without due regard to market orderliness;
(b) acted recklessly/failed to exercise reasonable due care and diligence in undertaking dealing activities for the clients that involved, amongst others, the Artificial Buy Orders and the withdrawals of these buy orders which avoided priority queue/facilitated selling activities as well as the Coordinated/Cross Trading Activities which constituted manipulative trading; and
(c) failed to be alerted of the irregularities of the trades and to undertake due inquiry in light of the characteristics and implications of the trades.
In imposing the sanctions on the four DRs, various factors were taken into account including the severity of breach committed by each of them, the differing roles played by/extent of the involvement of the DRs (including the primary and secondary roles of ONG and CHZE respectively), the financial benefits derived and the impact to the market arising from these DRs’ manipulative trading activities.