1.1. Key Provisions: Establishment of Securities Commission (SC) Powers and functions of the SC: - Licensing authority - Supervision of capital markets - Oversight of mergers & takeovers Enforcement powers: - Investigation authority - Civil and criminal enforcement
1.2. Obligations of Market Participants Companies: Provide accurate disclosure during corporate exercises Intermediaries: Comply with licensing and conduct requirements Investors: Act within legal trading boundaries
1.3. Regulatory Actions and Penalties: - Administrative sanctions such as reprimands, suspension - Civil actions: compensation orders - Criminal charges: imprisonment, fines
1.4. Real-World Case Study: - Kenmark Industrial Co. (2010) – SC took enforcement action for failure to disclose material financial changes; CEO absconded, triggering market panic and investigation.
2. Capital Markets and Services Act 2007 (CMSA)
2.1. Key Provisions: - Licensing of capital market services (e.g., fund management, dealing in securities) - Investor protection provisions - Prohibition of market misconduct: - Insider trading - False trading and market rigging - Disclosure requirements for prospectuse
2.2. Obligations of Market Participants: - Companies: Must issue truthful prospectuses; adhere to disclosure and corporate governance standards - Intermediaries (e.g., brokers, fund managers): Require licenses and must follow fit-and-proper criteria - Investors: Subject to restrictions on insider trading and manipulation
2.3. Regulatory Actions and Penalties: - Revocation of licenses - Civil enforcement: restitution to investors - Criminal prosecution: jail terms for insider trading, manipulation
2.4. Real-World Case Study: - Transmile Group Berhad (2007) False financial reporting led to inflated revenue reports; SC charged executives under CMSA for misleading statements.
