The Securities and Exchange Commission (SEC) in a bid to harmonise regulation with those of the region is trying to incorporate stringent deterrents for manipulators to the SEC Act. “The SEC needs to have a wider armory of how to deal with offenders. We identified certain offences which are in the SEC rules and incorporate them under the SEC Act,” an official told The Business Times.
The SEC has identified offences such as manipulation, front running, etc to be incorporated under the Act. “Presently there’s only insider dealing under this Act,” the official said.
By including these under the Act, the official said it’s easier for the SEC to uniform the offences and the regulator also plans to bring in civil sanctions (as opposed to the criminal sanctions in force now) to ensure ‘restitution’ of investors. “We identified offenders and there will be certain provisions to charge thrice the profit or the loss by the act of market manipulation from the offenders and pay one third of it to the investors who made a loss through this. This is called ‘disgorgement’,” the official said.
He explained that in other countries, those who breach (SEC) regulations are typically required to pay both civil money penalties and disgorgement. Civil money penalties are punitive, while disgorgement is about paying back profits made from those deals hat violated the SEC's regulations.
The SEC says this is a better deterrent than the criminal sanctions which are now practiced. “This is also practiced in Malaysia and the burden of proof is lesser than in criminal sanctions. The proof is on the balance of probability,” he added. |
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