And later Vivocom announced their 3rd quarter results, very similar (but not exactly the same) as the numbers from CIMB. Probably CIMB used some preliminary numbers in their research report.
Bursa just today announced that it reprimanded SKP Resources and fined 3 executive directors.
SKP had verbally disclosed the Contract including the contract value [RM 400 Million worth] to 2 research houses on 7 May 2015 without making an announcement of the same to Bursa Securities immediately thereafter.
Of interest for the Vivocom case is the following (emphasis mine):
..... a listed issuer must ensure that no disclosure of material information is made on an individual or selective basis to analysts, shareholders, journalists or other persons unless such information has previously been fully disclosed and disseminated to the public (i.e. to Bursa Malaysia Securities pursuant to paragraph 9.08(5) of the Main LR).
In other words, it appears that Vivocom clearly breached the listing rules in a similar way as SKP by selectively disclosing (preliminary) quarterly results to CIMB.
Apart from that, there is the ethical issue, surely CIMB, being professionals in this business, must have know that Vivocom was breaching the listing rules.
And lastly there is the question if Vivocom and CIMB were much too close for comfort, as witnessed by the many postive research reports from CIMB, the high target price and the above breach of the rules.
Dear Mr Wind,
ReplyDeleteYou are in a class of your own. The local business media seldom questions the accuracy of the press handouts or pronouncements of directors/investor relation firms.
These investor relation firms are conduits to analysts/journalists.
Dear panaceaasia, thanks for your kind words. However, and I probably should have made that clear in my blog posting, today I simply acted on an anonymous tip-off. So kudos to that person, whoever he/she is.
ReplyDeletehave they now published a "final" results note? Lol
ReplyDeleteThis selective release of early news to privileged parties, we learnt about it because of the carelessness of a cowboy investment bank.
ReplyDeleteDoes it mean that this is rampant in that particular investment bank or in the corporate sector?
we first have to wait until the exact facts are established, but I have my fears in regards to your question
DeleteWill the authorities be transparent or choose to whitewash the matter to preserve confidence in the capital markets?
ReplyDeleteWouldn't confidence in the capital markets be higher if the authorities imposed the rules more aggressively? I'm not sure the average retail or institutional investor in M'sia has the highest degree of confidence in the broader market integrity
DeleteMr/Ms Wammo,
DeleteTotally agree.
The CEO of the investment bank/stockbroker should step down as this happened on his watch.
I am almost certain that these group of market players are in cahoots with the CEO/management.
Consider how frequently share prices react ahead of surprise results, major corporate announcements etc - there is clearly a degree of "leakage" at many corporates in M'sia. Is M'sia materially worse than other Asian/emerging markets? Hard to say, Singapore is pretty bad in my opinion too, but there is certainly room to improve towards 'developed market' standards (still not perfect). As highlighted on this blog, fines from Bursa (SKP, MyEG), albeit small, and the Vivocom incident are a step in the right direction. Minority shareholders and larger funds (too passive in general in my opinion - complicit?) need to do their bit to push for better governance too
ReplyDelete