Securities Offence - Chapter 8 PDF

SECURITIES CHAPTER 8 OFFENCE Prepared by: Suhaily Maizan Abdul Manaf CONTENT 1. Offences dealing in securities under Capital Market Services Act 2007 2. Designated Securities 3. Corner 4. Penalties for contravention 5. Other offences 6. Compensation Fund LEARNING O...

SECURITIES CHAPTER 8 OFFENCE Prepared by: Suhaily Maizan Abdul Manaf CONTENT 1. Offences dealing in securities under Capital Market Services Act 2007 2. Designated Securities 3. Corner 4. Penalties for contravention 5. Other offences 6. Compensation Fund LEARNING OUTCOMES Explain the offences dealings in securities. Describe penalties for contravention. IRREGULAR MARKET ACTION Limit Up BM will suspend the counters when the market price of a share appreciates by more than 30 percent from the closing price of the previous trading session. Limit Down BM will suspend the counters when the share price drops by more than 30 percent from the closing price of the previous trading session. OFFENCES DEALING IN SECURITIES UNDER CAPITAL MARKET SERVICES ACT 2007 Issuing False/Misleading Fraudulent Inducements Insider Trading Statement to Deal in Securities An officer, agent or employee (SIA, Section 86) A person should also not of a corporation, or an officer A person who makes a make or publish any of a stock exchange, should statement that contains false misleading, false or deceptive not in dealings in the or misleading information that statement or forecast, or securities of a corporation, is likely to affect the price of dishonestly conceal material make improper use of specific securities in the stock market facts, with fraudulent intent to confidential information or is likely to induce the sale induce other persons to deal acquired by his position to of purchase or securities by in securities. gain an advantage for himself another person. or any other person. OFFENCES DEALING IN SECURITIES UNDER CAPITAL MARKET SERVICES ACT 2007 Stock Market Manipulation Short Selling (SIA, Section 85) False Trading and Market (SIA, Section 41) Rigging It is an offence for a person to effect A short sale is the sale of a or take part in two or more (SIA, Section 84) security that is not owned at the transactions in any securities of a a person takes part in any of the time of the transaction. A short corporation that will, or is likely to, following activities with the seller engages in a sell have the effect of raising, lowering, or intention of creating a false or transaction first, in anticipation maintaining the securities price on the misleading appearance of active of a fall price, with the intention stock market with the intention to trading, or a false or misleading of buying the securities up at a induce other person to purchase or appearance with respect to the lower price to collect the gain sell the securities of the corporation, market for, or the price of, any from the difference between the or the securities of a related securities on the stock market. buying and selling price. corporation. Designated Securities A listed counter will be declared as designated security if there has been manipulation or excessive speculation on such listed counter. Actions taken Impose a margin of cover on all 1 dealings in the counter. 2 Restrict dealings in the counter to immediate or prompt bargains. Restrict a stockbroking firm’s Prohibit any sale on the 3 trade in the counter such that 4 counter unless the seller the outstanding contracts of delivers the share script the firm at any one time do not together with the duly exceed 5 percent of the paid- executed transfer form at the up capital of the company, or time of entering into sale such other percentage the contract. Bursa Malaysia may prescribe.  CORNER HOW? A corner situation is created in a counter when These market manipulators will an individual or group buys lend the share scripts to short up large amounts of the sellers and then withdraw the stock such that they can scripts so that the short sellers are forced to buy them at the control and manipulate the prices dictated as they are not price of the shares in the able to get the scripts from the market. market. A corner is created when a single interest or group has acquired such control of the affected securities. Such operation is possible on the shares of companies with relatively small paid-up capital.  Postpone the date of delivery of the share scripts. Actions Further postpone the date of delivery of taken the share scripts. Declare that if the share scripts are still not delivered on any contract by the deadline fixed for the delivery of the scripts, such contract shall be settled not by delivery but by payment of the difference between the buying or selling price for the contract and the fair settlement price fixed by the Bursa Malaysia. PENALTIES FOR CONTRAVENTION Under the provisions of the Securities Industry Act, a person who commits an offence involving improper dealings in securities will be liable, on conviction, to a maximum fine of RM1 million, or ten years’ imprisonment, or both. BURSA COMPENSATION FUND END OF CHAPTER 8