KUALA LUMPUR (June 26): The Securities Commission Malaysia said on Wednesday it has sued prominent investor Datuk Dr Yu Kuan Chon for alleged market rigging and manipulation involving shares of Shangri-La Hotels (M) Bhd (KL:SHANG) in 2018.
In its civil suit, the SC is seeking orders to compel Yu to pay disgorgement amounting to RM26.57 million, three times the gain from the alleged manipulation, the regulator said in a statement.
The SC also wants a civil penalty of RM1 million be imposed on Yu and for him to be barred from managing any public company for five years, and from trading on the stock exchange for the same period.
The regulator alleged that Yu had traded Shangri-La shares between March 1, 2018 and July 24, 2018 in a manner that caused a surge in the traded volume and share price of the hospitality group.
“Yu had allegedly traded and transacted in Shangri-La Hotels shares using 15 central depository system (CDS) accounts during the material period. His trades represented approximately 81.9% of the total volume of Shangri-La Hotels shares traded on the market during this period," said the SC.
Claiming that Yu had engaged in manipulative activities in the trading of Shangri-La shares, the SC said his trading activities were in breach of Sections 175(1) and/or 176(1) of the Capital Markets and Services Act 2007.
The regulator stressed that market manipulation undermines the integrity and transparency of capital markets, which can erode investor confidence and disrupt market efficiency.
"The SC views market manipulation very seriously and will continue to maintain a strong enforcement stance to protect investors and uphold the integrity of the capital markets," it said.
Between March 1, 2018 and July 24, 2018, Shangri-La's share price surged to as high as RM5.80, its highest for that year.
Before that, the counter was trading between RM4.39 and RM4.60 from Jan 2 to Feb 28, 2018.
Shangri-La’s trading volume spiked to 1.08 million during the March 1 to July 24, 2018 period, compared with around 526,000 shares and below between January and March that year.
Yu was holding a minority stake of 1.26% in Shangri-La in March 2018, according to the company's 2018 annual report.
But in the latest annual report, his name does not appear under the shareholders' list.
On Wednesday, Shangri-la closed unchanged at RM2.25, bringing the group a market capitalisation of RM990 million.
Yu is the largest shareholder in YNH Property Bhd (KL:YNHPROP), with a 32.6% stake in the property company. He is the chairman and executive director of the company.