SC, Bursa still probing CDS info leak

SC, Bursa still probing CDS info leak
Business & Markets 2013
Written by Lee Wen Ai of theedgemalaysia.com
Friday, 15 March 2013 09:20


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KUALA LUMPUR: The Securities Commission Malaysia (SC) and Bursa Malaysia are still investigating allegations that investors’ confidential information in their Central Depository System (CDS) accounts has been leaked to strangers although the stock exchange has failed to gather “credible” evidence.

In response to a question posed by The Edge Financial Daily, SC chairman Datuk Ranjit Ajit Singh said: “The SC has asked Bursa to conduct a report (investigation) on this. Bursa has undertaken a review and found, at the moment, that there was no credible evidence to support the allegations.”

At a press conference yesterday after releasing SC’s annual report, he said both the SC and Bursa are still looking into the matter.

“Given the importance of this, we will continue to engage relevant parties to obtain the necessary information and evidence to support the investigation.”
Ranjit said once the review is concluded, he will announce the SC’s instructions to Bursa, as well as the stock exchange’s findings.

To another question on whether the ministry of finance had ordered the SC to investigate the matter, the head of the capital market regulatory body said: “No, we have not been asked by the ministry to conduct a probe.”

On Jan 21, The Edge Financial Daily and theedgemalaysia.com reported that many investors had discovered that information of their CDS accounts on Bursa Malaysia has been leaked to strangers, who had called to offer advice and trading tips on specific speculative stocks with a promise of profit. Many investors had gained from this.

But several worried retail investors were questioning how their confidential information could have leaked and they fear that they may have been roped into a network of market manipulation by syndicates, according to remisiers.

Sam Ng, president of the Remisiers’ Association of Malaysia, confirmed to theedgemalaysia.com that the association had received many phone calls from its members on this.

“We are seriously concerned about the situation as this kind of information should not have been leaked. I hope the SC or Bursa will investigate this matter as it does not augur well for the capital market,” he said.

This “market manipulation” phenomenon, according to remisiers, had been going on for some time and was blatant on two counters late last year and early this year — Tiger Synergy Bhd and PATIMAS COMPUTERS BHD [].

In response to these allegations, Bursa reportedly said on Jan 31 that it had yet to receive an official complaint or report on the reported leakage and stressed that it was constantly looking to improve its system’s integrity and processes.

“I have yet to see and receive any official complaint on this matter. Notwithstanding that, it does not mean we are not looking into it,” Bursa CEO Datuk Tajuddin Atan was quoted as saying by a newspaper.

The exchange had also said any unauthorised release of CDS account holders’ information to a third party constitutes a breach of provisions in the Securities Industry Central Depositories Act 1991, and the persons involved, if found guilty, face severe penalties, including imprisonment.

Following the reports in The Edge, there was much discussion on the CDS leak online. The Edge understands that the ministry of finance and the Capital Task Force have been notified of the development.



This article first appeared in The Edge Financial Daily, on March 15, 2013.

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