RM10 mil fine awaits half-baked stock market gurus, warns SC

USING a disclaimer to camouflage the rendering of investment advice does not safeguard an individual from the long arm of the law.

In its latest Guidance Note on Provision of Investment Advice, the Securities Commission (SC) said it is more likely to consider discussions on specific stocks on blogs, forums or other social media as an investment advice if they involve the provision of recommendation or opinion which may induce readers to take an action regarding the specific stock.

“Your activity of giving investment advice is likely to require a license under the Capital Markets and Services Act (CMSA) 2007 if that activity is considered as carrying on a business,” the market regulator cautioned.

As such, the SC pointed out that it will take into account the overall circumstances of a person undertaking the activity in making a final assessment.

“As such, the use of a disclaimer if any, does not, by itself, determine whether an activity amounts to carrying out a regulated activity of investment advice,” it noted.

Any person carrying on a business of giving investment advice without a license commits an offence under the CMSA which is punishable with a fine not exceeding RM10 mil or imprisonment not exceeding 10 years or both, if found guilty.

This guidance note which can be downloaded at www.sc.com.my/regulation/guiding-principles is issued in response to the increasing number of queries and complaints regarding various social media, chat rooms and messaging applications that appear to be providing specific stock recommendations to the public for a fee.

Information on persons licensed or registered by the SC can be found at the Public Register of License Holders www.sc.com.my/licensed-registered-persons and List of Registered Recognised Market Operators www.sc.com.my/rmo.

Members of the public who have any information on any person providing investment advice without a licence may contact the SC’s Consumers and Investors Department at +603 6204 8999 or email [email protected] – Dec 30, 2020

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