High Court issues civil penalty order against Pheim Malaysia

Company to pay penalty of $250,000 and legal costs to the MAS for Market Rigging.

The Singapore High Court found that a Malaysian fund manager, Pheim Asset Management Sdn Bhd (“Pheim Malaysia”), and its founder and CEO, Dr Tan Chong Koay had contravened the market rigging provisions under section 197(1)(b) of the Securities and Futures Act (SFA) by trading with the intention of creating a false or misleading appearance in the price of United Envirotech Ltd (“UET”) shares. The High Court ordered Pheim Malaysia and Dr Tan to each pay a civil penalty of $250,000 and legal costs to the Monetary Authority of Singapore, according to a MAS report.

The High Court found that Dr Tan had placed large orders to purchase UET shares, through Pheim Malaysia, over the last three trading days of 2004 and within the last half an hour of trading on each day. These trades accounted for 88% of all trades carried out over those three days for UET shares and caused the price of UET shares to rise by 17%. The High Court found that Dr Tan had purchased UET shares in this manner with the intention of creating a false or misleading appearance in the price of UET shares. In particular, the sole and primary purpose of the trades was raise and set a higher market price for UET shares. This “window dressing” then enabled certain funds managed by the Pheim Group to outperform their respective benchmarks.

Leo Mun Wai, Assistant Managing Director (Capital Markets Group), MAS said, "Fund managers should not engage in window dressing practices that would mislead investors as to the performance of securities and the funds under their management. As this case illustrates, MAS will not hesitate to pursue and take stern action against anyone who attempts to rig our capital markets, regardless of whether the perpetrator is in Singapore or overseas.”