Enforcement front – 43 active investigations as at Dec 31, 2018

IN 2018, the Securities Commission Malaysia (SC) received 17 referrals of possible violations of securities offences arising mostly from active surveillance of market and corporate activities as well as referrals from local authorities. More than half of these referrals related to securities fraud and market manipulation offences, which is a departure from the trend of previous years where the majority of referrals were in relation to insider trading offences.

As at Dec 31, 2018, there were 43 active investigations. A significant portion of investigative resources was deployed to work on cases relating to market misconduct involving insider trading and market manipulation. Additionally, one third of active investigations in 2018 involved corporate governance transgressions relating to the misconduct of public-listed company (PLC) directors and officers causing wrongful loss to the PLC as well as securities fraud cases.

In 2018, 80 administrative sanctions were imposed by the SC for various misconducts and breaches of securities laws including making false or misleading statements to the SC, breaches of licensing conditions, failure to comply with approved accounting standards in the preparation of audited financial statements and for late submission of documents under the Lodge and Launch (LOLA) Framework.

Sanctions imposed on the parties in breach comprised reprimands, revocation and suspension of licences, imposition of penalties and directives and issuance of public statements.

A total of RM6.39 million in penalties were imposed in 2018.

Apart from the administrative actions under its statutory powers, the SC also utilises other forms of non-statutory enforcement tools in the exercise of its monitoring, gate-keeping and supervisory functions.

Infringement notices are issued where breaches of securities laws or guidelines detected do not warrant the initiation of a formal enforcement action or the imposition of an administrative action. In 2018, 66 infringement notices were issued by the SC.

The SC had 51 ongoing cases in the Sessions Court, High Court and Court of Appeal last year. Of these cases, 49% related to insider trading while 23% related to corporate governance breaches such as financial misstatements and disclosure offences. Out of this number of ongoing cases, 6% involved questions of law and interlocutory applications in superior courts. Cases relating to unlicensed activities, market manipulation and securities fraud made up the remaining 22% of the total number of cases.

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