©Business Times (Used by permission)
Malaysian regulator Securities Commission is suing firms
and individuals, alleging they manipulated Iris Corp’s stock price and defrauded
THE Securities Commission (SC) has filed a landmark civil suit against Repco Low and four individuals, as well as five foreign firms, for manipulating shares of Iris Corp Bhd, which makes smart cards.
The regulator also fined two stockbroking companies and sanctioned three traders.
This marks the start of a new approach to combating market manipulation.
"The civil enforcement approach enables the SC to seek various reliefs from the High Court, including injunctions, compensation, restitution and declaratory orders," it said in a statement yesterday.
Two Malaysians named in the suit were Datuk Tan Mong Sing and Low Thiam Hock.
The action marks the SC's second attempt to persecute Low, popularly known as Repco Low, of Repco Holdings Bhd.
Low, the former executive chairman of Repco, was charged in 2000 for manipulating Repco shares. He was acquitted in November 2006, but the SC is appealing the case.
Tan is the former chief executive officer and director of Repco.
The SC is also suing three foreign individuals and five foreign fund management companies.
The five companies are Aeneas Capital Management, Priam Holdings Ltd, Aeneas Evolution Portfolio Ltd, Aeneas Portfolio Co and Acadian Worldwide Inc.
The three individuals are Aeneas Capital's managing partner Thomas R. Grossman, research analyst and Malaysian investment trader Richard Benjamin Cohen, and its principal officer and chief operating officer John Suglia.
The SC started its formal investigation after placing trading restrictions on Iris, making it a designated counter, on May 11 2006.
From September 2005 to May 2006, the price of Iris shares rose by 17 times from eight sen to a closing high of RM1.36 on the back of very strong demand with an average of 200 million shares traded daily.
The SC found that the manipulation was carried out through a complex layer of orders and transactions via foreign intermediaries in several jurisdictions.
The defendants had collectively used numerous trading accounts, which resulted in the strong demand for Iris shares during the period.
The foreign defendants and their representatives worked closely with the Malaysian defendants to create an artificial demand for Iris shares.
The SC unravelled their activities through painstaking and careful analysis of trading data of more wthan 100 trading accounts at 15 local and 16 foreign brokers.
It also had communication records, including more than 200,000 e–mail messages, and statements from witnesses locally and overseas.
The SC also fined and suspended both MIDF Amanah Investment Bank Bhd and PM Securities Sdn Bhd from submitting any application to register new dealers for six months.
MIDF Amanah was fined RM400,000 and PM Securities, RM200,000.
It also revoked trading licences for two dealers from Avenue Securities Sdn Bhd, namely Lee Hooi Li and Patrick Taylor.
Another dealer from PM Securities, Lim Joo Lang, was barred from trading for nine months and fined RM10,000 for various breaches of Bursa Securities rules.