Bursa Securities reprimands, fines dealer for abusing clients’ accounts

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KUALA LUMPUR (Sept 5): Bursa Securities has publicly reprimanded and ordered to strike off Mohd Izzaidi Hamzah from the register of Bursa Malaysia for carrying out trades in the accounts of two clients without their permission.

Izzaidi, who at the time of the offence was attached to Affin Hwang Investment Bank Bhd's Taman Midah branch, was also fined RM75,000.

In a statement today, Bursa Securities said Izzaidi had participated or allowed himself to be a conduit in a scheme orchestrated by third parties which had ultimately resulted in the opening of the clients’ Central Depository System (CDS) accounts without proper verification and unauthorised trades in their accounts.

With regards to the offence, Izzaidi had relied on the information or documents and partially filled account opening application forms received from one of the third parties (Third Party A) and proceeded to submit the applications to open the clients’ accounts with Affin Hwang without proper verification and authentication, said Bursa Securities.

Izzaidi had also undertaken trades in the clients’ accounts based on Third Party A’s instructions, which resulted in trading or contra losses in the clients’ accounts.

"The clients had denied opening the accounts and disputed the trades which resulted in losses in their accounts. The clients asserted that they did not fill in and sign the forms," said Bursa Securities.

"Evidence also showed that the scheme had, among others, the characteristics which showed that the scheme was fraudulent such as Third Party A would pass the pre-signed forms, supporting documents and details of the clients to Izzaidi.

"Izzaidi would proceed to complete and submit the forms to Affin Hwang without proper verification and authentication, hence the account opening breach," explained Bursa Securities.

Izzaidi was also paid a salary under the scheme, which indicated elements of moonlighting by him while being a dealer’s representative (DR) of Bursa Securities.

Izzaidi and Third Party A had also attempted to recruit other DRs into the scheme.

"Third Party A would secure funding for the trades undertaken in the clients’ accounts including for losses incurred and had provided the funds for Izzaidi’s remisier’s deposit; and the clients’ accounts were managed/operated by Third Party A who determined the trading limits and gave specific instructions to trade in the clients’ accounts," said Bursa Securities.

"Izzaidi had participated/continued to participate in the scheme despite/even after being aware that the scheme had elements of fraud/forgery and hence was fraudulent/illegal/illicit.

"Izzaidi had also attempted to conceal his wrongdoings or role in the scheme after the clients had disputed the account opening and trades, by persuading them to settle the losses via instalments to buy time for the third parties to secure the funds to settle the losses, as well as concocting explanations for the trades undertaken in the clients’ accounts," it added.

Bursa Securities said the public reprimand was imposed on Izzaidi as a deterrent consideration so as to create market awareness and reinforce the serious view taken by the regulator for cases involving DRs’ participation/failure to refrain themselves from participating in illegal or fraudulent schemes resulting in account opening breach and abuse of clients’ accounts by DRs to the detriment of clients or investors.

"Bursa Securities will not hesitate to take appropriate action against anyone who engages in such misconducts, including imposition of fines and striking off a registered person from the register commensurate with the severity of the breach," it added.