KUALA LUMPUR — Bursa Malaysia Securities Berhad [Registration No.: 200301033577 (635998-W)] (Bursa Malaysia Securities) has publicly reprimanded, imposed a fine of RM59,000 and ordered to strike off Nurendran A/L Parathan (NURENDRAN) as a Registered Person (RP) of Bursa Malaysia Securities if he was still a RP, for engaging in manipulative trading activities in the securities of numerous counters (Relevant Counters).
NURENDRAN, who was at the material time of the breach a Salaried Dealer’s Representative (SDR) of CGS-CIMB Securities Sdn. Bhd. (CGS-CIMB) at its Principal Office, had contravened and/or triggered the provisions of Rules 3.14(d), (e) & (g), 5.01(a) & (b) and 15.09(a) & (g) of the Rules of Bursa Malaysia Securities and Paragraphs 1.1(1)(a), (b), (e) & (h) of Directives No. 5-001 of the Participating Organisations’ Directives and Guidance (Directives No. 5-001).
Bursa Malaysia Securities places strong emphasis on market integrity and maintenance of an orderly and fair market and will not tolerate any acts or practices which could lead to manipulative activities and/or compromise the integrity of the market. Bursa Malaysia Securities views seriously all breaches and any misconducts that impinge on the integrity and professional conduct of Registered Persons and those compromise market integrity as such misconducts may adversely affect and damage market integrity and public confidence. Bursa Malaysia Securities will not hesitate to take appropriate actions against anyone who engages in such misconducts, including striking off a Registered Person from the Register and imposing a fine which commensurate with the severity of the breach.
BACKGROUND
The finding of the breach and imposition of the sanctions on NURENDRAN were made pursuant to Rule 15.02 of the Rules of Bursa Malaysia Securities after according due process to NURENDRAN, taking into consideration all facts and circumstances including the following: –
(1) The manipulative trading activities by NURENDRAN in the Relevant Counters (Manipulative Trading Activities) were undertaken over a period of 4 months (Relevant Period) through the IVT account allocated to NURENDRAN at CGS-CIMB (IVT Account) and there were coordinated cross trading activities between the IVT Account and the trading accounts of his two family members maintained at another Participating Organisation (PO).
(2) In respect of the trading activities undertaken in the IVT Account and the Family Members’ accounts that displayed manipulative characteristics, the following were noted: –
(a) NURENDRAN had engaged in and failed to refrain from engaging in:
(i) the execution of manipulative on-market coordinated cross trades between the IVT Account and the trading accounts of his Family Members with the entries of opposing orders at the same price and in many instances, in close proximity of time in particular the IVT Account’s buy orders that repeatedly took up the Family Members’ sell orders (Cross Trades);
(ii) the execution of increasing bid buy orders in the IVT Account which moved the price higher to the price level of the Family Members’ sell order(s) (IB Trades) which caused the price of the securities concerned to rise or be maintained/sustained at certain price levels; and
(iii) the entry of buy orders in small quantities in the IVT Account in taking the seller(s) at the seller’s price repeatedly (Order Slicing).
(b) The manipulative coordinated cross trading activities as well as the activities of IB Trades/Order Slicing that repeatedly took up the sell orders of the Family Members at the dictated prices had enabled his Family Members to sell at higher prices, and created a false or misleading appearance of active trading in, and market or demand for, the securities concerned.
(c) The manipulative trading patterns observed which were repeatedly undertaken in the Relevant Counters with IB Trades/Order Slicing in the IVT Account that moved the price to the level of the Family Members’ sell order(s)’ price(s) and thus enabled his Family Members to sell at higher prices in the cross trades with the IVT Account’s buy orders indicated deliberate attempts and misconducts of NURENDRAN in using the IVT Account as a tool or device designed to enable and facilitate profitable trades executed in his Family Members’ accounts.
(d) The repeated cross trading between the IVT Account’s buy to NURENDRAN’s Family Members’ sell with consistent and similar trading patterns throughout the Relevant Period for many counters where his Family Members had profited from their trading/intraday trading activities signified a high level of coordination for the matching of his orders with his Family Members’ orders. These also demonstrated strong evidence of pre-arrangement and the coordinated trading activities for the Cross Trades between the IVT Account and NURENDRAN’s Family Members’ accounts.
(3) By engaging in Manipulative Trading Activities, NURENDRAN had failed to discharge his duties as a RP to exercise proper skill, care and diligence and observe professional conduct, standards of integrity and fair dealing and act in a manner that contributed to the maintenance of an orderly and fair market for the Relevant Counters during the Relevant Period.
(4) The sanctions were imposed having considered, amongst others, the following: –
(a) The materiality/extent/intensity/impact of the Manipulative Trading Activities.
(b) The sanctions underlined the severity and extent of the breaches by NURENDRAN and the importance of orderliness of dealing activities and trading in a manner which contributes to the maintenance of an orderly and fair market, one of the fundamental obligations/duties of a DR and cornerstone of market integrity which must be upheld at all times.
(5) The public reprimand was imposed to serve as a deterrence to other Registered Persons and create awareness on the serious view taken by Bursa Malaysia Securities against such misconducts that involved market offences. It further underlines the importance of the Registered Person’s duty to observe professional conduct, standards of integrity and ensure market integrity at all times.
(6) As a Registered Person acting in the capacity of a DR, NURENDRAN must at all times: –
(a) observe professional conduct, standards of integrity and fair dealing;
(b) act with due skill, care and diligence and with due regard for the integrity of the market;
(c) not engage in or avoid/refrain himself from: –
(i) any act or practice that might lead to a false or misleading appearance of active trading in the securities or a false or misleading appearance with respect to the market for, or the price of the securities or directly or indirectly be tantamount to stock market manipulation;
(ii) doing anything which may result in or has the effect of the market not being orderly and fair;
(iii) engaging in unlawful or irregular or unhealthy practice; and
(d) carry out his duties in a manner that contributes to the maintenance of an orderly and fair stock market.
—Bursa Malaysia
ADDENDUM
Rules 3.14(d), (e) & (g), 5.01(a) & (b) and 15.09(a) & (g) of the Rules of Bursa Malaysia Securities and Paragraphs 1.1(1)(a), (b), (e) & (h) of Directives No. 5-001 provide, amongst others, that:
- Throughout the term of a Registered Person’s (RP) registration, a RP must:
(a) observe professional conduct, standards of integrity and fair dealing;
(b) exercise proper skill, care and diligence; and
(c) carry out the RP’s duties in a manner that contributes to the maintenance of an orderly and fair stock market.
- A PO and RP must, in the conduct of the PO’s business: –
(a) adhere to just and equitable principles and act with due skill, care and diligence and with due regard for the integrity of the market;
(b) not through any act or omission, do anything which may result in or has the effect of the market not being orderly and fair.
- Any Participant, which includes a RP who, in any circumstances, directly or indirectly:
(a) commits a breach of or violates any of the Rules; and
(b) fails to perform his duties efficiently, honestly or fairly, will be in breach of the Rules and be dealt with in accordance with the provision of the Rules relating to the disciplinary proceedings.
A PO and RP must:
(a) observe professional conduct and high standards of integrity and fair dealing;
(b) conduct their business in a manner that contributes to the maintenance of an orderly and fair market;
(c) not engage in any unlawful or irregular or unhealthy practice; (d) not engage in any act or practice: –
(i) that might lead to a false or misleading appearance of active trading in any securities on the stock market of the Exchange or a false or misleading appearance with respect to the market for, or the price of, any such securities; or
(ii) directly or indirectly be tantamount to stock market manipulation, and must not participate in any operation by others that might have the same result.
