Insider Trading and Stock Market Manipulation Quiz

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Questions and Answers

According to Section 188(1), what is the defining characteristic of an 'insider'?

Someone who works for a publicly traded company
Someone who has access to confidential information
Someone who trades securities frequently
Someone who possesses information that is not generally available and could materially affect the price or value of securities (correct)

Section 188(2) prohibits insiders from buying or selling securities based on their non-public information, regardless of whether they act as a principal or an agent.

True (A)

What is the maximum term of imprisonment for someone convicted of violating Section 188(2) or (3)?

Ten years

Section 188(3) prohibits insiders from communicating non-public information to another person if the insider knows or ought to know that the other person would likely ______ securities based on the information.

acquire, dispose of, or enter into an agreement with a view to the acquisition or disposal of Signup and view all the answers

Match the following actions with their corresponding penalty levels according to the provided content.

Insider Trading = Imprisonment for a term not exceeding ten years and a fine of not less than one million ringgit Communicating non-public information to another person with the intention of influencing their trading activities = Imprisonment for a term not exceeding ten years and a fine of not less than one million ringgit Administrative Actions = Penalty Level Not Specified in the Provided Content Signup and view all the answers

Which of the following activities is NOT considered a type of stock market manipulation?

Long-Term Investing (A) Signup and view all the answers

Stock market manipulation is illegal in Malaysia.

True (A) Signup and view all the answers

Explain how 'painting the tape' creates the illusion of heavy trading activity.

Painting the tape involves manipulators trading securities among themselves, creating a false impression of high trading volume and demand for the stock, which may entice other investors to buy. Signup and view all the answers

A ___________ involves a group of investors agreeing to manipulate stock prices by buying or selling in bulk.

pool Signup and view all the answers

Match the stock market manipulation technique with its description.

Pools = Involves spreading false or negative information about a company to drive down its stock price. Churning = Involves creating the illusion of heavy trading activity by trading amongst themselves. Stock Bashing = Involves investors agreeing to buy or sell stock in bulk to influence its price. Painting the Tape = Involves excessive trading of a security to generate commissions for a broker, often at the expense of the investor. Signup and view all the answers

What is the primary goal of 'stock bashing'?

To decrease the price of a stock. (C) Signup and view all the answers

Churning is a practice where investors buy and sell securities to generate commissions for themselves.

False (B) Signup and view all the answers

What is a 'bear raid', and what is the intention of the attackers?

A bear raid is a concerted effort by a group of investors to drive down the price of a stock by short-selling the stock and spreading negative news about the company. The intention is to profit from the decline in price and potentially take control of the company. Signup and view all the answers

According to Section 178(1), which of the following actions are considered illegal when inducing someone to deal in securities?

Concealing material facts dishonestly. (A), Recording false information in a device and making it available to others. (B), Making false or misleading statements. (C), Publishing reckless and misleading forecasts. (D) Signup and view all the answers

Section 182 prescribes a penalty of ten years imprisonment and a fine of at least one million ringgit for any violation of sections 175, 176, 177, 178, 179, or 181.

True (A) Signup and view all the answers

What is the legal term for the act of inducing someone to deal in securities through fraudulent means as outlined in Section 178?

Fraudulent Inducing Signup and view all the answers

In the context of insider trading, the term "information" encompasses matters relating to the ______________ of a corporation.

financial performance Signup and view all the answers

Match the following sections with their corresponding topics:

Section 178(1) = Fraudulent Inducing Section 183 = Insider Trading - Definition of Information Section 182 = Penalties for Violations Section 178(2) = Defence Against Recording False Information Signup and view all the answers

According to Section 183, which of these can be considered 'information' for the purpose of insider trading?

All of the above. (D) Signup and view all the answers

Officers of a company are prohibited from making misleading statements about their company prospectus under Section 178.

True (A) Signup and view all the answers

What is the minimum fine imposed for a violation of any of the sections mentioned in Section 182?

One million ringgit Signup and view all the answers

Which of the following is NOT a potential action for a breach of section 354(1)(a) of the Capital Markets and Services Act 2007?

Public Statements (B) Signup and view all the answers

A criminal prosecution for insider trading can result in imprisonment and fines.

True (A) Signup and view all the answers

What are the two main types of actions that can be taken against individuals involved in false trading and market rigging transactions?

Civil actions and regulatory settlements Signup and view all the answers

A person who submits misleading information to the SC in connection with a proposal can face a ______ or a criminal prosecution.

compound Signup and view all the answers

Match the following actions with their corresponding potential penalties:

Breach of section 354(1)(a) of the Capital Markets and Services Act 2007 = Restitution, Directives, Refusal to accept or consider any submission to the SC under Part VI of the CMSA Insider Trading = Imprisonment, Fines Submission of misleading information to SC in connection with a proposal = Compound, Criminal prosecution False trading and market rigging transaction = Restitutions, Restrained from trading in the stock exchange, Barred from becoming a director,Bursa Malaysia Signup and view all the answers

Under which rule are offenses dealing with securities classified into major and minor offenses?

Rule 510.2 (B) Signup and view all the answers

Bursa Malaysia has a zero-tolerance policy towards any activity that potentially undermines the integrity of the market.

True (A) Signup and view all the answers

What is the maximum fine that an offender can be subjected to for a continuing offense, as stated in Section 372(2)?

Five thousand ringgit for every day or part of a day that the offense continues after conviction. Signup and view all the answers

Which of the following actions, if taken with intent to deceive, would be considered a breach under Section 354(1)?

Providing false information to a stock exchange. (A), Contravening any provision of Part VI of the Act or any regulations made under the Act. (B), Failing to comply with the rules of a recognized self-regulatory organization. (D) Signup and view all the answers

Bursa Malaysia believes that the market should reflect genuine and .

supply, demand Signup and view all the answers

Match the following major offenses under Rule 510.2 with their descriptions:

Accepting orders from clients for contracts without causing such orders to be executed on an Exchanged or in accordance with the rules, by-laws, regulations, customs, and practice of such Exchanged = Failing to execute client orders properly Being guilty of fraud or any Act of bad faith or of any dishonest conduct = Engaging in fraudulent or dishonest activities Making or reporting a false or fictitious trade = Creating a false impression of trading activity Knowingly acting as both buyer and seller in the same transaction except when permitted under the Rules = Engaging in insider trading Manipulating prices or attempting to manipulate prices or to corner or attempt to corner any contract in the market = Engaging in market manipulation Making a material miss-statement to the Exchanged or to a committee, or an any information supplied to the Exchanged of its officers = Providing false or misleading information to the Exchange Knowingly disseminating false or misleading reports concerning market information or conditions that may affect the price of any instrument = Spreading false or inaccurate information about market conditions Signup and view all the answers

A person who suffers loss due to another person's violation of Part VI of the Act can sue that person for damages, regardless of whether the violator was charged with an offense.

True (A) Signup and view all the answers

What is the maximum fine a person can face for contravening any requirement or provision of the Act, where no specific penalty is stipulated?

One million ringgit Signup and view all the answers

The Commission may apply to the court for orders to remedy or mitigate the effect of a contravention, including making ______ to any aggrieved person.

restitution Signup and view all the answers

Match the following sections of the Act with their corresponding content:

Section 354(1) = Defines breaches related to non-compliance with rules or provisions Section 357(1) = Outlines civil liability for losses due to violations of Part VI Section 360(1) = Empowers the court to issue orders related to contraventions Section 372(1) = Specifies the general penalty for violating the Act Signup and view all the answers

Flashcards

Fraudulent Inducing

Encouraging others to deal in securities through misleading actions.

Section 178(1) Actions

Four actions that constitute fraudulent inducing: misleading statements, concealment of facts, reckless publishing, and false information storage.

Section 178(2) Defence

A defense in prosecution for storing misleading information if there were no reasonable grounds for expecting availability.

Penalty for Offence

Violation of specified sections results in up to ten years imprisonment and a fine of at least one million ringgit.