Bursa raps and fines dealer’s rep for false trading, market manipulation

PETALING JAYA: Lee Beng Huat, a commissioned dealer’s representative of Kenanga Investment Bank Bhd, could be charged for false trading and market manipulation by Bursa Malaysia.

According to a Bursa statement on Thursday, Lee had triggered the provisions of Rules 1302.1(1)(a) and (g) of the Rules of Bursa Securities and breached Rules 401.1(3) and 404.3(1)(a) & (c) of the Rules of Bursa Securities.

“Rules 1302.1(1)(a) and (g) state that a person commits a breach of or violates any of these rules and fails to perform his duties efficiently, honestly or fairly. If proven, he can be liable,” said a legal practitioner who requested anonymity.

The Securities Commission, when contacted, declined to comment when asked if it would consider taking any action on Lee.

On Thursday, Bursa said it had publicly reprimanded, imposed a fine of RM100,000 and ordered to strike off Lee from the register for false trading and market manipulation.

“These sanctions were imposed by Bursa after assessing all facts and circumstances of the matter, which included analysing extensive trading data, conducting investigation with the relevant parties, and upon due process being accorded to Lee.

“In this regard, it was noted that Lee had carried out false trading and market manipulation in his dealing activities in the shares of Axis Inc Bhd of about 41 million shares out of the market turnover of 104 million Axis shares for 87 trading days in 2006-2007,” it said.

According to Bursa, Lee had dealt in Axis shares mainly through the accounts of 10 clients.

“He had entered buy and sell orders which were manipulative in nature and which had led to false or misleading appearance of active trading in, or market for, Axis shares and tantamount to stock market manipulations.”

Bursa said Lee managed to sell about 72% of the sell orders entered for the 10 clients (40.98 million out of 56.67 million units of sell orders entered for the 10 accounts) and bought about 55% of the buy orders entered for the 10 accounts (41.6 million out of 76.14 million units of the accounts’ buy orders).

“The higher volume and percentage of the buy orders were subsequently cancelled and or lapsed due to the orders being lower than the market-last-done price, resulting in lower percentage of buy orders matched.

“This gave an impression of and created an inflated demand for Axis shares and led to a false or misleading appearance of active demand for Axis shares.”