Bursa Malaysia has fined Australian brokerage Macquarie and two of its former heads of dealing for manipulating the price of stocks on the exchange over a period of eight months.
Thomas Chin Yun Phin and Hilton Lee were fined RM25,000 (US$8,396) and RM10,000 (US$3,358) respectively, while Macquarie received a fine of RM50,000 (US$16,792). Chin has also been permanently banned from trading on Bursa Malaysia, while Lee has been banned for a period of 18 months starting 23 November 2010.
The Malaysian exchange found that Chin – who it considered to be the main perpetrator – had an arrangement with Macquarie's facilitation desk to execute trades in a way that would alter the VWAP price of a stock and fulfill clients' guaranteed VWAP trades in order to minimise the broker's losses.
In one instance detailed by Bursa Malaysia, Chin and Lee entered six separate orders comprising 500,000 shares – larger than the corresponding client order – which lowered the market VWAP and led to an adverse execution price for clients.
A statement from Bursa Malaysia said that Macquarie had not undertaken an independent verification of the details provided to the exchange and had relied solely on representations made by Chin and Lee.
It added that the sanctions imposed reflected mitigating factors, such as the reporting of some of the inflated trades to the exchange by Macquarie and the remedial steps it has taken since, which include a thorough review of its dealing activities. ”¨