Friday, July 09, 2010

Stock Manipulation On Axis Inc: Dealer Charged

Here's an interesting news update to the posting SC Warns On Destroyed Documents, Axis Inc Lodges Police Report! and Update on Axis Inc.

On the Edge Financial Daily
Dealer’s rep sanctioned for false trading, market manipulation

  • Dealer’s rep sanctioned for false trading, market manipulation
    Written by Loong Tse Min
    Friday, 09 July 2010 11:06

    KUALA LUMPUR: Bursa Malaysia Securities Bhd has publicly reprimanded and fined a commissioned dealer’s representative (CDR) of Kenanga Investment Bank Bhd RM100,000 for false trading and market manipulation in the trading of Axis Incorporated Bhd shares.

    In a statement yesterday, Bursa Securities said it ordered that
    Lee Beng Huat be struck off the register, if he was still a registered person of the exchange.

    The exchange said Lee had carried out
    false trading and market manipulation involving about 41 million Axis shares, out of the market turnover of 104 million Axis shares, for 87 trading days in 2006 and 2007.

    It said during that period,
    Lee had dealt in Axis shares mainly through the accounts of 10 clients.

    “He had entered buy and sell orders which were manipulative in nature and which had led to false or misleading appearance of active trading in, or market for, Axis shares and tantamount to stock market manipulations,” Bursa Securities said, adding that Lee had breached trading rules.

    It said the dealing in Axis shares by Lee via the 10 accounts, which were the top buyers and sellers during the period, had several characteristics:

    1. Entry of orders which were several bids lower than the last done price with no real intention to have the buy orders matched.

    2. Lee also engaged in order splitting, entering a series of buy orders in succession through any one of the 10 accounts with the same price. These buy orders gave rise to and created an impression of continuous demand for Axis shares which led to false or misleading appearance of active demand/market for Axis shares.

    3. The buy and sell orders executed in the 10 accounts:

    • had cross-trades which were matched among each other for about 12 million units of Axis shares involving Lee as their common CDR;
    • resulted in the buy and sell transactions of Axis shares in the 10 accounts without any change to the beneficial ownership of Axis shares (NCBO trades) and during the relevant period, there were 65 NCBO trades involving 385,800 units of Axis shares;
    • were frequently matched with the corresponding orders keyed in by another CDR from another broker which indicated that there were some form of pre-arrangements for these trades to be matched;
    • resulted in trades which were rolled over periodically with the same or almost the same block of Axis shares which gave rise to the manipulative trading activities; and
    • had trades which were subsequently amended to other clients’ accounts resulting in a change of the original party to the contract which is not permitted.

    Bursa Securities said Lee, by engaging in the manipulations, managed to sell about 72% of the sell orders (40.98 million out of 56.67 million units of sell orders entered for the 10 accounts) and bought about 55% of the buy orders (41.6 million out of 76.14 million units of the 10 accounts’ buy orders).

    It said the higher volume and percentage of the buy orders, which were subsequently cancelled and/or lapsed due to the orders being lower than the last done price resulting in lower percentage of buy orders matched, gave an impression of and created an inflated demand for Axis shares.

    This, it said, led to a misleading appearance of an active market for Axis shares.

    Bursa Securities said Lee had failed to take heed of the concerns raised by the exchange on his irregular trading activities in Axis shares in the 10 accounts but had continued to trade in the irregular and manipulative manner.

    This article appeared in The Edge Financial Daily, July 9, 2010.

Hmm... as stated in the article "Lee had carried out false trading and market manipulation involving about 41 million Axis shares, out of the market turnover of 104 million Axis shares, for 87 trading days in 2006 and 2007. ".

Here is the chart of Axis between 2006 and 2007... yeah... I can see the massive volume...


And what's interesting is what happened after 2008... here's the chart from 1 Jan 2008 to May 2009.

I wonder who were the big sellers were when the shares plunged in 2008. :P

Ok it's not very clear (LOL! yeah.. what's new! :P ) ... anyway, remember the posting Axis Inc Lodges Police Report!? I had an Axis chart posted?

Let me post an ammended chart now. :P ( I have now crossed out 2007 stock bumper year and changed it to 2007 Stock Manipulation time! :P )

Now see the bottom arrow on the volume...

Can you see what it suggests? Can you? *whistle*

Anyway.... I am glad that the dealer was caught but... I am wondering... is the dealer the chief 'tukang masak'?

11 comments:

Maverick said...

100K only, sounds like peanuts, tens of millions of shares traded, profit must have been in the millions. Is this supposed to be a deterrent ....?

Moolah said...

Spot on man!

Let me quote the article "The exchange said Lee had carried out false trading and market manipulation involving about 41 million Axis shares, out of the market turnover of 104 million Axis shares, for 87 trading days in 2006 and 2007."

And he's only reprimanded and fined rm100,000????

Moolah said...

ps: I am sure you had noticed that I did not highlight the 100k fine in bold in the posting.

I was terribly ashamed.... :(

bonny b said...

SC encouraging 'participation' on Bursa ma...ha ha

The Emperor said...

Who were the directors of Axis at the outset ? It is clear that these fellows will have knowledge of what happened. What is the police doing ?

solomon said...

Is this a false trading?

We need a coordinated prosecution team from SC, Bursa and Commercial Crime. A task force so to say.

Given a prosecution task, I will make sure Kenanga is not out of the fine list. What is their Compliance team doing or sleeping?
Don't u have a online monitoring or reporting on this?

Who are the 10 clients and are they part of it? Don't tell me they don't know of the transactions, Moolah?

hhc1977 said...

yo brother,

Should we say better late than never?
I am wondering whether by the action of one remiser can really pull off such a big stunt.

Who is the real owner of the 10 accounts? Are they in cohort?
Or are those account linked to someone inside Axis?

Why just stopped at surface level? The remiser is just the conduit. Without the support of big fund or insider, any kind of marker manipulation will invite major shareholders selling as we all knew that axis is in serious trouble during that time.

Fishy and standard cover up. Anyway in this bolehland, nothing is impossible.

Moolah said...

The Emperor: ya, as mentioned in the posting..... "I am wondering... is the dealer the chief 'tukang masak'?"

Moolah said...

solomon: Like I have said, I wonder if this dealer is really the 'chief tukang masak'.

hhc: Yes good questions!

Who is the real owner of the 10 accounts? Are they in cohort?
Or are those account linked to someone inside Axis?

Why just stopped at surface level?

ps: the dealer that was charged, was said to "carried out false trading and market manipulation involving about 41 million Axis shares, out of the market turnover of 104 million Axis shares, for 87 trading days in 2006 and 2007."

The last chart posted.. that was after 2007... see the bottom arrow on the volume... Can you see what it suggests? Can you?

random said...

so the money was made at the plunge eh?

The Emperor said...

If you google the names of the directors of Axis Inc over the years, you will find that a few names surface as directors in other troubled PLCs.