Capital Markets Integrity | The star

From time to time, capital markets around the world face challenges posed by participants trying to circumvent the law.

Capital market regulations have been developed over the years and are constantly being refined to suit today’s times.

The idea is simple: to ensure confidence in markets, regulators must enforce their regulations and securities laws to ensure that markets operate in a fair and orderly manner.

A well-regulated market has the potential to attract other investors to participate and help promote the development of the economy.

Capital markets that do not meet high standards of regulation and transparency will struggle to achieve these goals.

The highly publicized case of Serba Dinamik Holdings Bhd is relevant in this regard.

The case involves allegations of misrepresentation of financial results.

This is a crucial question, because if the published numbers are unreliable, investors have little else to base their decisions on.

In the case of Serba Dinamik, this involves a myriad of lawsuits.

A criticism related to a charge filed by the Securities Commission (SC) last December against a director and officers of Serba Dinamik for submitting to Bursa Malaysia a false statement involving income of RM6.01bil for its financial year ended 31 December 2020 (FY20).

However, this week SC imposed a compound on the four RM3mil leaders each for the alleged offence.

Under section 375 of the Capital Markets and Services Act 2007, the SC cannot bring proceedings for a breach of securities laws without the written consent of the Attorney General’s Chambers (AG).

Under Article 373(1) of the same law, the SC needs the written consent of the prosecutor to also offer a compound.

The CS said the compounds follow the public prosecutor’s decision to accept the representation made to the AG by Serba Dinamik and the individuals involved regarding the charges pending in court.

A letter of representation is usually sent either to reduce a charge or to have the charges canceled.

Seeking to fully continue its role as the frontline regulator of the Malaysian capital market, Bursa Malaysia this week filed contempt proceedings against Serba Dinamik and its directors for failing to disclose details of the update. survey which had been conducted earlier by Ernst & Young Consulting Sdn Bhd (EY Consulting). Serba Dinamik, by legal means, sought to prevent the publication of this report.

Recall that the appointment of EY Consulting as special auditor was made under the directive of Bursa Malaysia.

The appointment of EY Consulting was made after former Serba Dinamik auditor KPMG exposed questionable transactions worth RM4.54 billion.

The issue of FY 2020 revenue was first raised by KPMG to the board of Serba Dinamik in May 2021.

At the time, KPMG also reported Serba Dinamik’s sale transactions, trade receivables and payables, material on-site balances, as well as how it was unable to verify the counterparties involved, said we reported.

In the latest action against Serba Dinamik and its directors, Bursa Malaysia is seeking court leave to initiate committal proceedings stemming from Serba Dinamik’s failure to comply with an earlier High Court order that compelled the oil company and gas company to reveal the identity of EY Consulting report.

Also this week, Serba Dinamik failed to secure a stay of the High Court’s earlier ruling.

An earlier attempt by Serba Dinamik to obtain an injunction to restrain Bursa Malaysia from forcing the company to reveal the EY Consulting report was also rejected by the High Court.

In another case related to Bursa Malaysia, Serba Dinamik was filed as Practice Note 17 (PN17) by the stock exchange in January.

This was after its external auditor expressed a disclaimer of opinion on its audited financial statements for the 18-month financial period ended June 30, 2021.

It has the usual 12 months to regularize its financial situation under penalty of striking off.

Notably, Serba Dinamik’s external auditor, Nexia SSY PLT, had stated that a number of factors limited the completion of the group audit, including the non-availability of the report on the independent review conducted by EY Consulting. .

It seems that one thing would be good for all parties involved, especially for the integrity of the capital market: for the EY Consulting report to be made public.

Visitors observe Non-Fungible Token (NFT) works during an exhibition titled Indo NFT Festiverse at RJ Katamsi Gallery, Indonesian Art University which combines art and technology in Yogyakarta on April 13, 2022. (Photo by DEVI RAHMAN / AFP )

Fact-checking the value of NFTs

THE digitization of the world has seen the creation of “assets”.

From bitcoin to non-fungible tokens (NFTs), there has been a lot of discussion about where this new “fiat currency” will go.

Bitcoin and its other electronic iterations captured the imagination of young investors.

There is a strong drive to believe in the storage value bitcoin has after Gen X and the gush of cash that was splashed to counter the economic downturn of the Covid-19 pandemic also gave rise to NFTs.

Again, new age economic preachers were lyrical about the prospects of NFTs.

While it was hard to accept the economic and financial rationale for bitcoins, believing in the long-term prospects of NFTs took another leap of faith.

It was reported recently that the trading volume in NFTs shows that most of the activity is actually users selling tokens to help earn rewards in the form of more coins.

Called the washout trade, this trade hides and obscures what some might see as the true value of NFTs.

But if anyone needed to guess what the value of NFTs is, look no further than what was also reported last week.

The person who bought the very first tweet from Twitter founder Jack Dorsey for $2.9 million (RM12 million) had hoped to sell it for $46 million (RM195 million). It’s expecting a huge return on investment for a digital “asset” purchased about a year ago.

The NFT was listed on the Opensea NFT Market and only managed to attract a paltry bid of US$280 (RM1,185).

Hopes of a multi-bagger were quickly dashed by the realization that such a digital asset might need to be mined for much longer than a year before there was a strong appetite for such digital assets.

The problem with NFTs is that it’s not the Mona Lisa.

If anyone wants to see what Jack Dorsey’s first tweet of 2006 is, they can easily find it on the internet.

To see the Mona Lisa, you would have to fly to the Louvre Museum in Paris.

Therein lies the fundamental intrinsic difference between the two art forms.