Swisscash at News This Week Part.2

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SC Plans Criminal, Civil Proceedings to Punish Corporate Crooks

By YAP LENG KUEN

PETALING JAYA: The Securities Commission (SC) is stepping up the fight against white-collar crime by adopting both criminal and civil action to bring corporate crooks to book.

The regulator has also adopted pre-emptive measures to freeze assets, disgorge ill-gotten gains and also make restitution to investors in its move to restore credibility and accountability in the sector.

“Our aim is to ensure that not only are the perpetrators punished but also that investors have the assurance that their investment monies are safe,” chairman Datuk Zarinah Anwar told The Star.

She said the SC had heightened its focus on achieving a more holistic outcome for investors.

“There is a convergence globally to resort to a wide range of enforcement options in order to achieve the desired regulatory results,” Zarinah said.

She said the SC's increasing use of its civil enforcement powers had shown significant results.

“This year alone, there were several breakthrough civil actions that involved a cumulative sum of over RM73mil,” she said.

She said the Capital Markets and Services Act that was recently introduced gave the SC the clout to take tougher civil action against perpetrators of a wider range of market misconduct.

Previously, the SC’s powers to claim three times the profit made, or loss avoided by a person, was confined to insider trading offences.

With the Act, the SC is able to take similar action of disgorgement with respect to manipulation, fraudulently inducing persons to deal in securities and disseminating information about illegal transactions, among others.

The SC is also working with regulators from other countries to enable it to be more effective.

Zarinah cited the recent Padiberas Nasional Bhd (Bernas) case where for the first time, aggrieved investors in Malaysia were successfully compensated for investment losses resulting from a securities law transgression.

In that case, the SC managed to disgorge ill-gotten profits amounting to RM2.08mil arising from insider trading of Bernas shares by Kuala Lumpur Securities Sdn Bhd and Wan Azmi Wan Abdul Rahman.

In the Swisscash case, the SC obtained a Mareva injunction to prevent disposal of assets and secured an order to compel the return of RM35mil from 14 bank accounts in Hong Kong and Singapore. The case saw 22 accounts in Malaysia being frozen.

“We facilitated a meeting of regulators from eight different countries in Hong Kong to trace fund transfers from bank accounts in one country to another,” she said.

The SC had also:

# INJUNCTED RM20mil in proceeds from The Ayer Molek Rubber Company’s sale of land;

# RESTITUTED RM12.8mil to investors of Powerhouse Asset Management Co and filed a civil suit against the company and the fund manager for the shortfall of RM1.9mil; and

# COMMENCED a civil suit against the managing director of FTEC Resources for restitution of RM2.5mil that he is charged with utilising for his own benefit.

Source : http://thestar.com.my/news/story.asp?file=/2007/11/16/nation/19492160&sec=nation