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Severe Penalties Imposed on Executive for Insider Trading
Kuala Lumpur: The Securities Commission (SC) has imposed severe penalties on a top executive for his role in an insider trading scandal involving a technology firm.
According to sources, the executive was found to have breached securities laws while in possession of non-public information related to audit queries and issues regarding suspicious transactions between the firm and its top debtors. The SC ordered him to pay a civil penalty of RM1 million and barred him from being a director of any publicly-listed company for five years, commencing 7 April 2022.
The technology firm was also delisted from Bursa Malaysia on 21 March 2014.
Regulators Intensify Scrutiny on Insider Trading
The enforcement of severe penalties in this case demonstrates the intense scrutiny that regulators, including the SC, are placing on insider trading and related activities at present.
In recent developments, Bank Negara Malaysia (BNM) released Regulation and Guidance surrounding conduct risk, which urges wholesale financial market firms to prepare a market conduct risk assessment. The guidance also highlights the importance of internal control environments, detective controls, and preventive controls in mitigating misconduct risk.
Market Conduct Guidance
The BNM’s Code of Conduct for Malaysia Wholesale Financial Markets (December 2021) and subsequent Wholesale Market Conduct Practices Guidance provide clear guidance on the measures that firms can take to mitigate misconduct risk. 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 disclosure of confidential information
MyComplianceOffice Solutions
At MyComplianceOffice (MCO), we have seen increasing interest from Malaysia-based firms regarding our Personal Trading and Control Room functionality.
Our solutions provide a comprehensive range of tools to help firms manage their compliance risk, including:
- Material Non-Public Information (MNPI) and Inside Information management
- Gifts and Entertainment tracking
- Personal Account Dealing monitoring
- Conflicts of Interest register
RegTech Solutions for Compliance
As compliance continues to rise in Malaysia, firms need to ensure they have the right processes and technologies to mitigate risk and avoid severe penalties.
MCO’s RegTech solutions can help firms automate their compliance management, stay ahead of evolving regulations, and gain complete confidence in their risk reduction strategy.
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To learn more about the many forms of compliance risk and how to drive beyond “tick-box” compliance, download our 15-page eBook.
Alternatively, request a no-obligation demonstration of MCO’s solutions and discover how we can help you automate your compliance management and stay ahead of evolving regulations.