Financial Crime World

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SECURITIES COMMISSION IMPOSES SEVERE PENALTIES ON TECHNOLOGY FIRM FOR INSIDER TRADING

Kuala Lumpur, June 2012 - The Securities Commission (SC) has imposed severe penalties on a technology firm for engaging in insider trading, highlighting the intense scrutiny of regulators on such activities.

According to reports, the executive in question was found to have breached securities laws while possessing non-public information related to audit queries and suspicious transactions between the firm and its top debtors. The executive was ordered to pay a civil penalty of RM1 million and was barred from being a director of any publicly-listed company for five years, commencing April 7, 2022.

The firm itself was delisted from Bursa Malaysia on March 21, 2014.

REGULATORY CHANGES CREATE CLEAR GUIDANCE

In recent developments, the Central Bank of Malaysia (Bank Negara Malaysia) has released regulations and guidance surrounding conduct risk. The Code of Conduct for Malaysia Wholesale Financial Markets (December 2021) and subsequent Wholesale Market Conduct Practices Guidance urge wholesale financial market firms to prepare a market conduct risk assessment.

Conduct Risk Assessment

The practice involves reviewing the firm’s products on offer, the likelihood and consequence of producing misconduct, and how to mitigate or control the impact. Many risk assessments have found that firms have various surveillance mechanisms but lack a proper risk assessment to gauge overall exposure.

MITIGATING CONDUCT RISK

Bank Negara has also described ways in which organizations can mitigate or manage potential conduct risk once their risk assessment is completed. These include:

  • Trade Surveillance: monitoring dealers’ trading activities to detect patterns that warrant further scrutiny
  • Communications Surveillance: monitoring written and verbal communications to detect collusion or the disclosure of confidential information
  • Guidance for Detective and Preventive Controls: highlighting the importance of internal control environment, including the usage of both detective and preventive controls

MYCOMPLIANCE OFFICE PROVIDES SOLUTIONS FOR CONDUCT RISK MITIGATION

At MyComplianceOffice (MCO), we understand the importance of conduct risk mitigation. Our solutions include:

  • Trade Surveillance Software: detecting patterns that warrant further scrutiny
  • Gifts and Entertainment Manager module: recording and detecting risk within declared gifts and entertainment
  • Material Non-Public Information and Inside Information module: documenting receipt of inside information, wall crossings, and approval processes
  • Personal Account Dealing module: automating pre-clearance and post-trade review process for personal trading activity
  • Know Your Risk Module: preparing Conflicts of Interest register and facilitating regular reviews

ENSURING MATERIAL NON-PUBLIC INFORMATION COMPLIANCE

It is never been more vital for organizations to ensure material non-public information (MNPI) remains in compliance with securities laws and regulations within Malaysia. MCO’s Insider & MNPI Management module automates and standardizes insider trading list management, identifying people who present potential conflicts due to the nature of their roles.

REGTECH SOLUTIONS FOR COMPLIANCE RISK MANAGEMENT

Enacting regulatory compliance is vital for enterprise risk management. Our 15-page eBook provides insights on understanding the many forms of compliance risk, driving more than “tick-box compliance,” dealing with cross-border compliance complexities, and empowering company-wide compliance through RegTech solutions.

Alternatively, request a no-obligation demonstration of MCO to discover how we can help you automate your compliance management, stay ahead of evolving regulations, and gain complete confidence in your risk reduction strategy.