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Investment advice and corporate finance
Module 12Investment Management and Corporate FinanceModule 6 · Topic 9
Securities offences are a large share of Section 3 of Module 6, and the questions are mostly short scenarios: a dealer's representative, a client, a director or a listed company does something, and you must say which provision bites, whether a defence applies, and what the penalty or civil remedy is. Almost everything sits in Part V of the Capital Markets and Services Act 2007 (ss.174 to 201), with the dealing offences in Part III (ss.91, 93, 97, 98) and the general offence provisions in Part XII. The exam is open book, so the marks go to candidates who know which section to turn to and can tell a deeming rule from a defence.
9 min read6 sections
Capital Markets and Services Act 2007 (Act 671), consolidated text incorporating A1499/2015 and P.U.(A) 473/2025 (sc.com.my), cross-checked against the 2007 principal Act and SC enforcement releases on penalties and civil actions; SC Guidance Note on Provision of Investment Advice (R2-2024) para 3.5. Checked as at 12 October 2026. Independent prep, not endorsed by SIDC or the SC.
Subdivision 1 of Division 1 of Part V lists the conduct that distorts the market for listed securities. Section 174 applies it to acts in Malaysia involving any company's securities, and to acts abroad involving securities of a company formed, carrying on business or listed in Malaysia. One penalty section, s.182, covers them all.
| Section | Conduct | What examiners test |
|---|---|---|
| 175 | False trading and market rigging | Wash trades (no change in beneficial ownership, including sales to an associate) and matched orders are deemed false trading |
| 176 | Stock market manipulation | Any number of transactions that raise, lower, peg or stabilise a price, with a purpose that may include inducing others; nobody need actually be induced |
| 177 | False or misleading statements | Materially false and likely to induce dealing or move the price; not caring whether it is true is enough |
| 178 | Fraudulent inducement to deal | Knowingly false statements, dishonest concealment, reckless statements, or false records stored in a device |
| 179 | Manipulative and deceptive devices | Any device, scheme or artifice to defraud in connection with a subscription, purchase or sale |
Every note. Every question. One pass.
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| 181 | Dissemination about illegal transactions | Spreading price talk about a ss.175 to 179 transaction when you or an associate took part, or you expect a benefit |
| 182 | Penalty | Imprisonment up to 10 years AND a fine of not less than RM1 million |
The s.175(4) defence to a deemed false-trading charge needs both limbs: the purpose was not to create a false appearance, and the person did not act recklessly. Section 178(2) gives a narrow defence for false records: no reasonable grounds to expect anyone would see them.
Trap: reading 'RM1 million' as a ceiling. In s.182 it is a minimum fine, and imprisonment and fine are cumulative, not alternatives.
Takeaway: Part V misconduct means up to 10 years' jail plus at least RM1 million; wash trades with a spouse or partner are deemed false trading.
Malaysia uses an information-connected test. Under s.188(1) anyone is an insider who possesses information that is not generally available, which a reasonable person would expect to have a material effect on price, and who knows or ought reasonably to know it is not generally available. A taxi driver who overhears a board discussion can be an insider.
Trap: assuming an insider must be a director or employee, or that information is public the second it hits Bursa. Both are wrong under ss.184 and 188(1).
Takeaway: Insider = holds non-public price-sensitive information and knows (or should know) it is non-public. Status and profit are irrelevant.