SECM Clamps Down on Financial Scams and Illegal Trading

THE Securities Exchange Commission of Myanmar (SECM) is clamping down on financial scams and illegal trading by unlisted companies in the country.

On July 3, it appealed to the public for more information on I Smart Co, a company with operations in Mawlamine. I Smart Co is reported to be engaged in suspicious trading activities in the Ayeyarwady region and related to the now defunct Saxon Capital Limited (SCL).

SCL was ordered to cease operations on June 27 as a result of illegal trading activities, which included selling shares on an unauthorised banking and mobile platform across the Yangon, Mandalay, Ayeyarwady and Taninthayi regions, according to an SECM statement.

According to reports on local news website 7 Day Daily, SCL had been accepting deposits masked as shares and promising its depositors interest returns of up to 80% for every 120 days. To fund the interest payments to existing investors, SCL took deposits from new investors, essentially operating under a Ponzi structure, The Myanmar Times understands.

SCL has since shut down its Yangon office and the whereabouts of its senior management as well as the management of I Smart Co are currently unknown.

The SECM is now investigating both companies and trying to punish the responsible personnel, SECM member U Htay Chun told the Myanmar Times.

Not new

Such financial scams are not new in Myanmar. In July 2015, Global Growth Company Limited, a company run by Hong Kong businessman Ng Kwok Fai, was granted a license to run a money exchange business in Myanmar.

Instead, the company ran an illegal futures broking business where it claimed to invest customers’ funds in the futures markets. In return, the investors were paid interest on their investments. However, when Global Growth Company ran into difficulties raising new funds, its existing investors stopped getting paid. They also did not get their original deposits back.

Trading legally

Back then, there were limited avenues for investors involved in such scams to seek justice or help in getting their money back. But things have been changing after the establishment of Yangon Stock Exchange (YSX) in March 2016.

Before the launch of the YSX, some 200 registered companies had sold shares directly to investors, which encouraged illegal scams. Since March 2016 though, the SECM has ordered all trading of company shares to be done on the exchange, which it oversees. And, investors can only trade in shares of officially permitted companies, which limits fraud.

At present, only the 4 YSX-listed companies are permitted to sell their shares to the public. These are First Myanmar Investment Co., Ltd. (FMI), Myanmar Thilawa SEZ Holdings Public Ltd., (MTSH), Myanmar Citizens Bank Ltd. (MCB) and First Private Bank Ltd.(FPB).

Meanwhile, two other companies – Yangon Bus Public Company (YBPC) and Myanmar Agro Exchange Public Ltd (MAEX) – are licensed to sell their shares on an OTC (Over the Counter) basis.

In addition, trading of shares on the YSX must be conducted through licensed securities companies.

Currently, these are AYA Trust Securities Company, CB Bank Securities, Myanmar Securities Exchange Center, Global World Securities, Expert Investment Securities, Aung Myint Mo Min Securities, KBZ Stirling Coleman Securities, KTZ Ruby Hill Securities, Amara Securities, Union Trust Securities Company and Amara Investment Securities Company Limited.


Source: The Myanmar Times

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