KUALA LUMPUR (March 2): Bursa Malaysia has publicly reprimanded, fined and suspended two dealer’s representatives (DRs) for engaging in manipulative or false dealing activities in the securities of Notion Vtec Bhd (Notion).

The DRs, namely Hon Sook Yin and Ang Kian Chuan, were also required to undergo training on the conduct or professionalism of DRs for market the offences (mandatory training), said Bursa in a statement.

Hon has been fined RM100,000, suspended for 12 months and required to undergo mandatory training while Ang has been fined RM40,000, suspended for  three months and made to undergo mandatory training.

Hon and Ang were found to have contravened the Pre-Revamped Rules of Bursa Malaysia Securities in regard to the manipulative trading activities of Notion (fundamental: 1.15; valuation: 1.2) shares.

Hon was found to have contravened the rules over a period of about two months in a client’s account, while Ang was found to have done so over a period of about a month in several clients’ account based on trade instructions from an unauthorised third party.

Bursa did not specify when these contraventions occurred.

“Bursa places a strong emphasis on the need to maintain a fair and orderly market and will not tolerate any acts or practices which could lead to false trading, manipulative activities and/or compromise the integrity of the market.

“Bursa will not hesitate to take appropriate actions against anyone who engages in such misconduct which commensurate with the severity of the breach, including suspension/striking off a Registered Person from the Register and imposition of fines,” it said.

According to Bursa’s statement, Hon, who was at the material time of the breach, a Commissioned DR of HwangDBS Investment Bank Bhd at its Taman Tun Dr Ismail Branch, had engaged in manipulative/false trading activities of Notion shares in a client’s account including bidding up the price and rolling over block of shares.

The regulator said Hon had manipulated the price of Notion shares on numerous trading days by executing increasing bids buy orders, at prices higher than the last done price in her client’s account, including using small quantities (100 units) buy orders which were undertaken to influence/dictate Notion share price movement to be sustained at/moved to certain price levels to enable profitable trades for her client.

Hon undertook these manipulative activities by rolling over and passing on a block of Notion shares which were bought earlier at a lower price (rollover Activities), Bursa added.

In the Rollover Activities, there were a series of on-market cross trades executed by Hon deliberately matching her client’s buy and sell trades on the due dates for settlement to the opposing orders of Ang (Cross Trades or Cross Trading) giving rise to false market activities.

These Cross Trading activities had resulted in significant spikes in the trading volume of Notion shares on the relevant trading days, the regulator said.

These activities had impacted the market, activity and the price of Notion shares and thus created artificial volume and active demand as well as artificial volatility of price that induced investors to trade which had facilitated her client’s selling, Bursa said.

“By engaging in the above manipulative trading activities of bidding up, cross trading and rollover, Hon’s client had gained substantial profits in her series of buying and selling through several trading cycles of trading activities in her account,” it added.

Meanwhile, Ang, who was at the material time of the breach a salaried DR of OSK Investment Bank Bhd at its Kuala Lumpur Branch, had engaged in manipulative/false trading activities of Notion shares in several clients’ accounts which involved the execution of a series of on-market cross trades in Ang’s clients’ accounts in support of the rollover activities of Hon.

“These Cross Trading and Rollover activities had resulted in significant spikes in the trading volume of Notion shares on the relevant trading days,” said Bursa.

In addition, Ang had acted on the instructions of an unauthorised third party in respect of the execution of trades in Notion shares in his clients’ accounts without their written authorisation.

“By Hon and Ang engaging in the aforesaid trading misconducts/facilitating their clients to trade through creation of false market activities/manipulative trading, the investing public’s interests and market integrity/orderliness were compromised.

“The investing public was deceived by the false appearance of the artificial price movement, increased/inflated/strong demand or trading volume of Notion shares which were artificially created by, amongst others, the on-market pre-arranged cross trades and rollover of trades among the clients of these two DRs, not knowing that these activities emanated from the two DRs,” Bursa said.

Notion shares were actively traded between July and August 2014. Its share price had moved up to a record high of 72.5 sen on July 22, 2014 from around 60 sen in the beginning of the month.

Notion closed 2.33% lower at 42 sen on Monday, giving it a market capitalisation of RM115.36 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. )