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

Publication Date04 Jul 2016
AuthorAsmah Laili Yeon,Faridahwati Mohd Shamsudin
SubjectAccounting & Finance,Financial risk/company failure,Financial crime
Non-compliance of licence
holders towards disclosure based
regulation in Malaysian
securities markets
Asmah Laili Yeon
College of Law, Government and International Studies,
Universiti Utara Malaysia, Sintok, Malaysia, and
Faridahwati Mohd Shamsudin
School of Business Management, College of Business,
Universiti Utara Malaysia, Sintok, Malaysia
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
licenseesregistered 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, inefcient 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
nes 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
Paper type Research paper
The past two decades have marked the remarkable ascend of capital markets in the
global economy. In 1990, the global equity market capitalization amounted to only
This research is sponsored by the Fundamental Research Grant Scheme, Ministry of Higher
Education of Malaysia and Universiti Utara Malaysia.
The current issue and full text archive of this journal is available on Emerald Insight at:
of licence
Journalof Financial Crime
Vol.23 No. 3, 2016
©Emerald Group Publishing Limited
DOI 10.1108/JFC-08-2013-0050

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