Securities Commission Cautions Against Unlicensed Investment Advisors
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The Securities Commission Malaysia (SC) has released a Guidance Note on Provision of Investment Advice, cautioning the public against dealing with unlicensed investment advisers. This was in response to the growing number of queries and complaints regarding various social media, chat, and messaging applications that seem to be offering specific stock recommendations and investment advice to the public for a fee.

“The SC cautions members of the public against dealing with unlicensed investment advisers, as they could be defrauded or used as part of a market manipulation scheme,” said the regulator in its note. “Investors are reminded to verify the licensing status of platforms, companies, and individuals offering capital market services or products including the provision of investment advice, before making any investment decision,” the SC said.

According to the SC, a person is required to be licensed for providing investment advice under the Schedule 2 of the Capital Markets and Services Act 2007 (CMSA), when the activity fulfils any one of the following:

  • carrying on a business of advising others concerning securities or derivatives; or
  • as part of a business, issues or promulgates analyses or reports concerning securities or derivatives.

So, if the giving of investment advice falls under one of the categories above, the giver must be licensed as the activity is meant to be regulated by the SC.

Under the CMSA, conducting a business of offering investment advice is an offence punishable with a fine not exceeding RM10 million or imprisonment not exceeding 10 years – or both.

You can refer to the SC’s Guidance Note on Provision of Investment Advice here.

(Source: The Edge Markets, The Sun Daily)

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