NOBODY spends six years as chairman of the Securities Commission (SC) and not have an impact of the Malaysian capital market. The only question is, how exactly has he changed things?
In the case of Tan Sri Zarinah Anwar, PricewaterhouseCoopers executive chairman Datuk Seri Johan Raslan perhaps sums it up best when says: “Her tenure as SC chairman has been characterised by a concerted effort to move the capital market and the SC forward in a range of areas: the rules and best practices for the capital market; strengthening the SC itself through talent management, procedures and processes (including the establishment of the Audit Oversight Board); and beefing up enforcement.”
In fact, it was clear early on during her chairmanship that these would drive the regulator's initiatives.
In an interview a month after her appointment as chairman, she said: “I have a job to do. The law and rules are quite clear. Follow the rules and there will be no problems. What we want to build is a sustainable market. A sustainable market cannot be realised if unfair practices and disorderly conduct prevails in the market.”
In the SC's annual report 2006, Zarinah declared an intention to reorganise the SC. “The SC expects no less from ourselves than we do from participants in our capital market. We demand integrity, professionalism, transparency and accountability from our regulatees and PLCs (public listed companies) and it is therefore, incumbent that we meet the same standards,” she wrote.
“Towards this end, the SC has implemented business process improvements and undertaken organisational restructuring and capacity building to raise our performance and ability to meet the needs of the market.”
A lot can be accomplished in six years, and indeed, the SC has done plenty since April 2006, when Zarinah took over as executive chairman. Here are 12 milestones in chronological order:
l May 11, 2006: Iris declared a designated counter
Bursa Malaysia, in consultation with the SC, declared the securities of Iris Corp Bhd as “designated securities” due to excessive speculation and unusual patterns in the trading of Iris shares. Soon after, the SC began a formal probe.
The investigators found that there was market manipulation “through a complex layering of the origination of the orders and transactions via foreign intermediaries in several jurisdictions”.
In April 2008, the SC announced that it had initiated civil enforcement action against eight foreign parties and two Malaysians in relation to the manipulation, market rigging and fraud of Iris shares. In addition, the regulator sanctioned two stockbroking companies and two dealer's representatives involved in the case.
l Sept 26, 2007: Restitution suit against FTEC MD
The SC filed a civil suit against Kenneth Vun, managing director and a shareholder of FTEC Resources Bhd (FRB), to compel him to restitute RM2.5mil to the company. The sum represents part of proceeds raised in FRB's initial public offering in 2003. The SC's investigations found that Vun had used the money for “his own benefit and personal use”, which was in breach of the conditions set by the SC in the listing approval of FRB.
In November 2009, the High Court ordered Vun to repay the RM2.5mil. It was the first time in Malaysia that a company director has been ordered by the court to restitute company funds. In August last year, Vun exhausted his avenues of appeal after the Federal Court dismissed his application for leave to file an appeal against the decisions of the Court of Appeal and High Court ordering him to make the restitution.
l Sept 28, 2007: CMSA comes into force
The Capital Markets and Services Act 2007 (CMSA) streamlined securities regulation, introduced a single licensing regime, facilitated the establishment of self-regulatory organisations, and strengthened investor protection.
“The introduction of the CMSA marks significant enhancements to our approach in regulating the marketplace. It sets the stage for us to achieve key regulatory outcomes in relation to investor protection, market integrity and systemic stability,” said Zarinah in a press release.
l Sept 25, 2008: Judgement against Swisscash scam
The SC obtained a High Court judgement against three defendants involved in the illegal Swisscash Internet-based investment scheme. The defendants were ordered to pay US$83mil, and any further amounts traced by the SC, to compensate investors of the scam.
The regulator described the judgement as “the culmination of two years of intensive efforts”, including cross-border investigations spanning seven countries to gather evidence and to trace Swisscash monies.
In November 2009, the SC entered into a settlement with two of the defendants, thus making available RM32.7mil to restitute eligible investors who had suffered losses as a result of the scam. The restitution was later carried out based on a court approved distribution plan.
l May 8, 2009: New capital-raising framework and board structure
The SC and Bursa Malaysia launched a new framework for listings and equity fund-raising exercises in what the SC described as “one of the most comprehensive reforms to the country's capital market”.
The aim is to allow efficient access to capital and investments, as well as to make Bursa Malaysia a more attractive platform for Malaysian and foreign companies.
Among the changes was the merger of Main Board and Second Board to form the Main Market, and the transformation of the Mesdaq Market into the ACE Market.
l April 1, 2010: SC gets better enforcement tools
Two new sections of the CMSA came into operation, enabling the SC to act against directors and officers of PLCs who cause wrongful losses to the companies, and to act against any person who misleads the public through falsely preparing or auditing the PLCs' accounts.
l April 1, 2010: AOB is set up
With the naming of Nik Mohd Hasyudeen Yusoff as executive chairman and the appointment of six non-executive board members, the Audit Oversight Board commenced operations. The idea is for it to raise the standard of auditing and financial reporting in Malaysia.
l July 9, 2010: Illegal fund manager jailed
The Sessions Court sentenced a 49-year-old businessman to four years in jail after he was convicted of operating an online investment scam without holding a fund manager's licence. In the SC's annual report 2010, Zarinah wrote: “This is an important outcome for the SC which I believe will act as a strong deterrent against capital market offenders.”
l Dec 31, 2010: End of CMP1
Launched in February 2001, the first Capital Market Masterplan (CMP1) contained 152 recommendations on how the capital market should be developed over the next 10 years. By the end of 2010, 95% of the recommendations in CMP1 had been completed. Its successor, the CMP2, themed Growth with Governance, was launched on April 12 last year.
l Jan 19, 2011: Sidrec starts work
The Securities Industry Dispute Resolution Centre (Sidrec) was established to resolve small claims disputes (not more than RM100,000) between individual investors and capital market intermediaries. The aim is to resolve each complaint within 90 days of receipt of complete documentation.
l July 8, 2011: Corporate Governance Blueprint launched
The first major deliverable of the CMP2, the five-year Corporate Governance Blueprint provides the action plan to raise the standards of corporate governance in Malaysia by strengthening self and market discipline and promoting greater internalisation of the culture of good governance.
l March 9, 2012: Ranjit to be next chairman
When the SC announced that Datuk Ranjit Ajit had been appointed to take over as SC chairman from Zarinah from April 1, this marked a coming of age for the regulator. Ranjit, who has been with the SC since 1994, will be the first “home-grown” chairman.
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