Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded, imposed a fine of RM360,000 and ordered to strike off Oh Kok Boon (OKB) for engaging in manipulative dealing activities in the securities of 6 counters (the 6 Counters), namely:
(i) Biosis Group Berhad (BIOSIS);
(ii) Metronic Global Berhad (MTRONIC);
(iii) Ariantec Global Berhad (AGLOBAL);
(iv) Luster Industries Berhad (LUSTER);
(v) Harvest Court Industries Berhad (HARVEST); and
(vi) Naim Indah Corporation Berhad (NICORP).
OKB, who was at the material time of the breach a Commissioned Dealer’s Representative (CDR) of TA Securities Holdings Berhad at its Principal Office, had contravened and/or triggered the provisions of Rules 401.1(3), 404.3(1) and 1302.1(1)(a) & (g) of the Pre-Revamped Rules of Bursa Malaysia Securities.
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 striking off a Registered Person from the Register and imposition of fines.
BACKGROUND
The findings of the breach and the imposition of the sanctions on OKB 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:
(1) OKB had engaged in numerous manipulative/false dealing activities over a period of time in the accounts of several clients (involving clients who were his family members as well) as follows:-
(a) The rollover of the clients’ on-market purchases in HARVEST and NICORP shares on/before the due date for settlement by passing on these on-market trades to other clients via married Direct Business Transactions (DBTs), which were executed at prices higher than the prevailing market price. These married DBTs were used as a tool/device that provided savings/avoided losses to the selling clients in the down trending market of these securities.
In this regard, there were numerous instances of married DBTs executed for OKB’s clients which were preceded/followed by on-market trades which included cross/co-ordinated trading (as further elaborated below) between OKB’s group of clients with the on-market cross trades being in the reversals of orders of the married DBTs executed for the clients. These trades clearly showed that the accounts of OKB’s clients were involved in the rollover activities.
By doing so, it had allowed OKB/his clients to prolong the holding period of these shares whilst OKB continued to carry out manipulative trading activities for his clients such as purchases at incremental price during late trading hour by taking up sellers and driving up the price which had impacted/influenced the price movement of, and contributed towards artificial inflated/increased volume for, these counters.
(b) The on-market trading activities undertaken by OKB over a period of several months in the 6 Counters with the execution of opposing buy/sell orders for a group of his clients resulting in their opposing orders being matched against each other. These cross trades showed patterns or characteristics of co-ordinated trades (i.e., the proximity in the timing of the orders/opposing orders as well as the significant number/incidences of these trades matching between the clients) (Cross Trades/Cross Trading activities). These Cross Trades between OKB’s clients at the dictated increased or decreased share prices had impacted/influenced the price movement/trading volume of the 6 Counters.
(2) The aforesaid manipulative trading activities by OKB had the effect of creating a false/misleading appearance of active trading in, the market for and/or the price of, the securities of the 6 Counters (False/Misleading Appearance of the securities) as these trades were not due to natural market forces of supply and demand.
(3) As a Registered Person acting in the capacity as a Dealer’s Representative (DR), OKB was obligated to carry out his duties efficiently/fairly and in a manner which contributed to the maintenance of a fair and orderly market and ensure a fair dealing in the observance of the professional standards of integrity for the best interest of his clients/market integrity. As such, it was not acceptable for OKB as a Registered Person to merely execute orders as instructed by his clients/act (i.e., act as a mere order-taker) without making proper assessment of the orders and exercising reasonable due care and diligence in undertaking dealing activities for his clients so as to avoid manipulative/false dealing activities.
(4) The imposition of the sanctions including the fines and striking off on OKB had taken into account the ill-gotten gain of commission generated/earned by him in undertaking manipulative/fictitious trading activities including the married DBTs and Cross Trading (which were continued to be undertaken despite being queried by Bursa Malaysia Securities) and the extent of these manipulative activities which impacted price direction of the relevant counters and created artificial trading activities that had affected market integrity/orderliness.
(5) As a DR, OKB must at all times:
(a) observe professional standards of integrity and fair dealing including exercise due care and diligence in the execution of trades;
(b) carry out his duties efficiently and in a manner which contributes to the maintenance of a fair and orderly market; and
(c) 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 of active trading in, the market for or price of the securities.