Non-compliance of licence holders towards disclosure based regulation in Malaysian securities markets

Asmah Laili Yeon and Faridahwati Mohd Shamsudin

Journal of Financial Crime, 2016, vol. 23, issue 3, 605-612

Abstract: Purpose - The purpose of this paper is to examine non-compliance of licence holders towards disclosure-based regulation in Malaysian securities markets in relation to the implementation of the disclosure-based regulation. Design/methodology/approach - This survey was conducted among 107 principal and representative licensees registered with the Securities Commission of Malaysia. They consist of licensed dealers, investment advisers and fund managers. The majority of the respondents were capital markets and services representative licensees, while only 17 respondents were capital markets and services licensees. Findings - The survey indicates that non-compliance occurs because of lack of ethical values and orientation of the players in the industry. In addition, non-compliance was also reported to occur due to lack of understanding of law and regulations, inefficient company’s surveillance, control and internal monitoring programmes and weaknesses in the implementation and enforcement of law. Other reasons include greed (wanting to be rich quickly), selective application of the law, complicity between offenders and regulators, slow judicial processes and high legal cost for victims to pursue compensation. Practical implications - As the enforcement agency, Securities Commission should further enhance efforts to monitor and enforce the law of capital markets. On the other hand, the courts have to impose fines on criminals based on the extent of the losses investors have suffered by investors and on the effects of the crime on market stability. More importantly, ethics training should be carried out to license holders by the relevant bodies and agencies in the securities market. Originality/value - This paper provides measures on how to curb the unethical behaviour by carrying out ethics training and introducing new rules and regulations for the industry.

Keywords: Non-compliance; Disclosure; Capital markets; Licence; Securities law (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-08-2013-0050

DOI: 10.1108/JFC-08-2013-0050

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