Duo arrested by the Securities Commission


  • Nation
  • Monday, 27 Jun 2005

BY YAP LENG KUEN

PETALING JAYA: The Securities Commission (SC) has arrested two people in connection with the trading of shares in Fountain View Development Bhd.  

Sources close to the SC told The Star that the two would be charged at the Kuala Lumpur Sessions Court on Monday. 

One of them was arrested on Sundy morning and the other on Sunday afternoon  

One of them is believed to be a major shareholder of Fountain View. 

Fountain View is a developent company which also owns oil palm plantations. 

It was listed via a reverse takeover of Plantations & Development Bhd at the end of 2003. 

The sources indicated that investigations were still going on in connection with the trading of the shares. 

This included those of Fountain View which had made a good debut on the stock exchange. 

It had ended its maiden day at RM2.70 compared with its reference price of RM1. 

Fountain View shares, which had been traded as high as RM5 for almost a year, recently fell to just over 40 sen.  

Its share price plunged 90% in just five days in late April and early last month.  

This brought down its total market value from a peak of RM2bil to just RM200mil, a loss of RM1.8bil.  

This was one of the biggest and fastest collapses of the market value of a listed company in Malaysia. 

As a result, brokers and bankers had reviewed their lending facilities for shares. 

Many stocks were subsequently designated as not marginable and could not be pledged for collateral.  

That in turn led to the market break last month when a series of other stocks were traded limit-down. 

Prices of many other stocks, especially on the Mesdaq Market and second board, fell sharply.  

On the “roller-coaster rides” were share prices of Mexter Technology Bhd, Karensoft Technology Bhd, Golden Plus Holdings Bhd, Seal Inc Bhd, Foremost Holdings Bhd, Suremax Group Bhd, Sanbumi Holdings Bhd, Fajar Baru Capital Bhd and I-Power Bhd. 

CWorks Systems Bhd, which made its debut on Mesdaq in the middle of last month, saw its share price shaved by 45% on the first day of trading. 

This dire situation was recently highlighted by Prime Minister Datuk Seri Abdullah Ahmad Badawi when he asked the authorities to check share manipulation and to expedite investigations. 

The SC and Bursa Malaysia had met on the issue following a statement released by the SC that it viewed “seriously the recent disruptive price movements in the market and had initiated investigations.” 

Early last month Bursa CEO Yusli Mohamed Yusof had asked for protection for whistle-blowers who provided information on share manipulation. 

He said the exchange was in talks with the SC on ways to pre-empt speculative trades. 

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