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By P Gunasegaram
An enduring question arising from those corporate mafia allegations is whether the Securities Commission should be looking at it, even if much of the allegations involve coercion and intimidation which does not fall under the SC’s ambit.
Is it actually powerless? Or is there something that it can do, especially since such allegations affect market confidence and integrity which falls well within the SC’s purview and is given much power under the law to regulate?
Surely there is something that the SC can do in cooperation with the police and the MACC even, against which allegations have been made, to nail this problem and investigate at two or three levels.
According to a report, SC chairman Mohammad Faiz Azmi said it cannot act on “corporate mafia” allegations if they fall outside securities laws. He said most issues reported in the media involve criminal offences like intimidation and extortion, not violations of securities regulations.
“I don’t regulate murder”
“SC does not regulate criminal intimidation and extortion. I don’t regulate murder and manslaughter,” Faiz told reporters after releasing SC’s 2025 annual report on Wednesday, “Why do you think that’s my job? My job is securities laws.”
But it is still clear that securities laws could well have been violated. Those acts of intimidation and extortion move prices up and down in the capital markets. Control can change at depressed prices.
That’s market manipulation, a clear indisputable violation of securities laws.
Let’s go back and look at some of the allegations made in that famous or infamous, depending on your point of view, Bloomberg report in question which has been strongly denied by the MACC.
That report alleges that there are people working with the MACC, including its chief commissioner, to pressure shareholders to sell their stakes, often at reduced prices by mounting unwarranted investigations.
It starts with a threat to mount investigations. If these become public then the share price would fall. And if bank accounts are frozen, companies can’t operate. It will not take many dots to conclude that there is systematic market manipulation if the allegations are true.
It does not matter whether there was coercion, extortion, intimidation or any other means, it still remains market manipulation and therefore warrants an investigation by the SC.
Market rigging is a crime
Section 176 of the Capital Markets and Services Act (CMSA) which governs share trading says: “No person shall effect, take part in, engage in, be concerned in, or carry out, either directly or indirectly, any number of transactions in securities of a corporation, being transactions that have, or are likely to have, the effect of— (a) raising; (b) lowering; or (c) pegging, fixing, maintaining or stabilising, the price of securities of the corporation on a stock market in Malaysia, for the purpose which may include the purpose of inducing other persons, whether or not another person is induced, to acquire or dispose of the securities of the corporation or of a related corporation.”
It’s a mouthful but basically it says that market manipulation by any means is out. The penalties for violation are imprisonment for a term not exceeding ten years and a fine of not less than one million ringgit. That’s a big deterrent.
A market regulator cannot stand by and say that if there is criminality then we cannot investigate. The proper thing to do is to conduct joint investigations to nail the culprits if any, using the police or MACC for criminal intimidation and the SC for securities offences.
Securities offences are often also criminal offences even if they are not covered by laws for usual criminal activity. As with other enforcement agencies, the SC investigates criminal offences as well.
When there are intimidations, threats, extortion, coercion, forced resignation or share sales, and abuse of enforcement power the usual agencies to deal with it are the police and the MACC.
But if there is an impact on capital markets, then the SC has no choice but to intervene and conduct its own investigations in parallel.
Will the SC head go to jail?
Is the SC allowed to speak about investigations? Yes. We dealt with this in a previous column titled Will SC head go to jail if he discloses a probe?
The conclusion was that if it is authorised by the SC, details of investigations can be revealed to the public. In some circumstances it helps capital market confidence to reveal that investigations are being conducted, especially in cases where serious allegations are in the public domain already.
We trust that the SC will be discreet in its disclosures such that capital markets are not allowed to wonder about the courses of action.
Overall, in this case of allegations made against the MACC for irregularities involving shares of companies, more timely information and assurances will help soothe genuine concerns over the state of our markets. We are sure that’s what the SC wants too.
(P Gunasegaram says market uncertainty increases with information paucity.)
P Gunasegaram (t.p.guna@gmail.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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