KUALA LUMPUR — The Securities Commission (SC) has initiated a civil enforcement action against eight foreign parties and two Malaysians in relation to the manipulation, market rigging and fraud of Iris Corp Bhd shares.
The SC said it has also sanctioned two stockbroking companies and two dealers representatives involved in the case.
"The milestone action marks the beginning of a new approach in combating market manipulation," the SC said in a statement here today.
According to the SC, the two Malaysians named in the suit were Datuk Tan Mong Sing and Low Thiam Hock while the foreign defendants comprised five companies and three individuals.
The foreign companies were Aeneas Capital Management L.P.(ACM); Priam Holdings Ltd; Aeneas Evolution Portfolio Ltd; Aeneas Portfolio Co L.P.; and, Acadian Worldwide Inc.
The three individuals were Thomas R. Grossman (managing partner, investment manager and portfolio manager of ACM); Richard Benjamin Cohen (research analyst-cum-Malaysian investment trader of ACM); and, John Suglia (principal/chief operating officer of ACM).
The SC said the civil enforcement approach would enable it to seek various reliefs from the High Court including injunctions, compensation, restitution and declaratory orders.
It filed the civil suit on March 27, 2008 at the Kuala Lumpur High Court.
In addition to the civil suit against the named defendants, the SC has imposed administrative sanctions against MIDF Amanah Investment Bank Bhd on Dec 17, 2007, and PM Securities Sdn Bhd on Feb 1, 2008.
"Both PM Securities and MIDF Investment were fined RM400,000 and RM200,000 respectively, and suspended from submitting any application to register new dealers representatives for six months," it said.
It said administrative sanctions were also imposed against two dealers representatives from Avenue Securities Sdn Bhd, namely, Lee Hooi Li and Patrick Taylor to revoke and to suspend their dealers representatives licences respectively.
"Lee was found to have used five accounts without authorisation of the account holders when transacting in Iris shares while Taylor was found to have failed to perform his duties efficiently, honestly and fairly in carrying out his supervisory responsibility over Lee.
"Additionally, a dealers representative from PM Securities Sdn Bhd, Lim Joo Lang, was suspended by Bursa Malaysia in July 2007," it said.
The SC said Lim was barred from trading for a period of nine months and fined RM10,000 for various breaches of Bursa Securities rules in relation to the trading of Iris shares.
It said it initiated formal investigation after Iris was declared 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 close at a high of RM1.36 on the back of very strong demand with an average of 200 million shares being traded daily.
"The SCs investigation found that the manipulation was carried out through a complex layering of the origination of the orders and transactions via foreign intermediaries in several jurisdictions," it said.
The commission said the investigation further revealed that the defendants had collectively used numerous trading accounts which contributed to the strong demand for Iris shares during the material period.
"The foreign defendants and their representatives worked closely with the Malaysian defendants in creating an artificial demand for Iris shares.
"The SC was able to unravel the defendants activities through painstaking and careful analysis of trading data of more than 100 trading accounts at 15 local and 16 foreign brokers, records of various communication modes between the perpetrators including more than 200,000 e-mail messages, and recording of statements from witnesses locally and overseas," it said.
The SC it in pursuing its investigation, it has worked closely with its foreign counterparts, namely, the US Securities and Exchange Commission, Hong Kong Securities and Futures Commission, Monetary Authority Singapore, Financial Services Authority UK, BVI Financial Services Commission and Cayman Island Monetary Authority. — BERNAMA