Malaysians are upset at the regulatory and enforcement failure of the Securities Commission Malaysia (SC) in being unable to conclusively establish that MACC chief Azam Baki has committed a breach under section 25(4) of the Securities Industry (Central Depositories) Act 1991 (SICDA) after initiating investigations on 6 January 2022. Such regulatory and enforcement failure by the SC contradicts its legal duty as a self-funded statutory body entrusted with the responsibility to regulate and develop the Malaysian capital market, particularly rule-making and enforcing regulations pertaining to the capital market.
How can the SC perform its statutory duty if the SC cannot establish that Azam has breached Section 25(4) of the Securities Industry (Central Depositories) Act 1991 (Sicda) when Azam has openly and publicly admitted that he had allowed his brother to conduct proxy share trading? Like every developed capital market in the world, Section 25(4) SICDA has outlawed proxy share trading by providing that a trading account must be opened in the name of the beneficial owner or authorised nominee. In their statement today, SC did not disclose whether Azam’s brother had a share trading account at the same time, and if so the need for proxy share trading as well as the source of funds for the purchase.
Azam was a significant holder of warrants in the public-listed company Excel Force MSC Sdn Bhd as of March 2016, when he was head of the MACC investigations department. In his share trading account, Azam has bought millions of shares and warrants in public listed companies with a value well over the RM100,000 cap on equity holdings to be held by civil servants.
If the SC is unable to act on proxy share trading then it should also explain action taken against at least 3 individuals who were charged and penalised under Section 25(4) of SICDA with millions of ringgit in fines in the past. This is clearly double-standards. Is SC going to return the fines they have paid and apologised for prosecuting them?
Unless the SC can act against Azam, Section 25(4) of SICDA has been rendered impotent and broken. Unfortunately, the repercussions for Malaysia’s capital markets will not be a loss of investor confidence but also put the SC in the dock as to the establishment of SC, whether the SC is capable of performing its statutory duty without fear or favour.