By Aidila Razak
While Low Thiam Hock—better known as Repco Low– prepares his defence after his acquittal over stock market manipulation was overturned by the Court of Appeal yesterday, brokers say market rigging still occurs to this day.
However, they said, regulations introduced since the go-go years of the Kuala Lumpur Stock Exchange has seen rigging largely limited to penny stocks instead.
Pong Teng Siew
According to Inter-Pacific Securities head of research Pong Teng Siew, this is because such shares may escape market surveillance.
“Any out of order price movement in the stock market attracts attention, compared to those days. But when it involves small blocks of shares, or the undertaking is not so blatant, the (regulators) may let it go,” he said.
A trader attached with a prominent broking firm who declined to be named said that penny stocks are an attractive option for ‘stock market operators’ because of the low entry price.
“It is easy to attract investors. If the stock starts at 10 sen and is pushed up to 50 sen, that’s already a 500 percent gain,” he said.
He said that manipulation is often suspected when stocks with “funny names are seen trading at top volume”.
“But you won’t see stocks go up from RM1 to RM100 and down to RM10 within a month anymore,” he said.
Among others, he said, the introduction of the Securities Commission in 1994 and the switch from manual “paper trade” to the electronic central depository system limits space for fraud.
“Back in the 1990s, manipulation was so rife that most involved were backroom people, like despatches and clerks who then lived the life of high-flyers,” he said.
‘Market needs some speculation’
While he welcomes the regulations, Pong said that increased transparency does have “drawbacks”, including the departure of retail investors to overseas markets.
“The market needs an element of speculation. Once you take away the mystery from some aspects of trading, it draws away the retails investors.
“You see them moving to Singapore and Hong Kong where such things are still somewhat tolerated and there is more volatility in stock market movements. This is appealing for those who have a risk appetite,” he said.
All the same, Pong said, the reversal of Low’s acquittal was a welcomed development as the earlier decision had “gone against normal thinking”.
According to the Securities Commission, the Court of Appeal unanimously overturned the High Court and Sessions Court’s acquittal for manipulating the price of Repco Holdings Bhd (Repco) shares on the Kuala Lumpur Stock Exchange on Dec 3, 1997.
He was charged under Section 84(1) of the Securities Industry Act 1983 which carries a penalty of a minimum fine of RM1 million and maximum jail term of 10 years.
Low was charged for instructing a Sime Securities Sdn Bhd dealer to purchase the Sabah gaming company’s shares in a bid to “create a misleading appearance with respect to the price of Repco shares”.
His alleged role in the stock’s bull run earned him the moniker Repco Low. The shares hit a high of RM140 in Sep 1997, but collapsed to less than RM3 less than a year later. It was suspended in Oct 2000 and de-listed in 2003.
Charged in 1999, Low was freed without his defence being called in 2006.
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