Public are urged to only deal with company or individual who are licensed or registered with the commission 

by AUFA MARDHIAH / pic TMR

THE Securities Commission Malaysia (SC) is calling for investors to increase their awareness and protection against the possibility of falling victim to investment scams. 

According to the commission, it has received more than 1,800 complaints and enquiries related to investment scams and unlicensed activities alone for the first nine months of this year (9M22). 

“In fact, Internet scams in Malaysia have increased significantly in the last two years, with about 72,000 scams and RM5.2 billion in damages, and investment fraud accounted for about 12,000 of the totals. 

“This shows that Malaysian investors have a relatively low financial literacy which continues to expose their vulnerability to unlicensed activities and scams,” SC chairman Datuk Seri Dr Awang Adek Hussin said recently. 

He highlighted that scammers are also finding sophisticated ways to target investors, who range from the vulnerable at one end to those who invest primarily by the desire — or hope — to gain lots of money irrespective of the risks involved. 

“Most scams are spread through social messaging apps and platforms like WhatsApp and Facebook. And we have recently noticed that they have started using Telegram as well. Many of these scams also claimed to be ‘syariah compliant’,” he said. 

Investment Products Providers Must Register with SC

Awang Adek stressed under Malaysian law, any company or individual who wants to provide capital market products and services to Malaysian investors such as unit trusts, stocks, digital investments and bonds, they must be licensed or registered with the SC and this also applies to those who are or claim to be licensed overseas. 

He added that entities who are licensed or registered with the SC must fulfil stringent regulatory requirements that are designed to protect investors. 

“Investors who choose to trade on unlicensed platforms risk not being protected in the event of any dispute arising — we cannot protect you if you choose to invest with unlicensed people. 

“There is also the increasing use of ‘celebrities or influencers’ to promote retail investment offerings on social media which includes using unlicensed celebrity endorsements to provide investment advice to investors or using celebrities to talk about or promote successful investments. 

“Furthermore, the public should also be wary of self-proclaimed investment gurus who offer questionable advice or use social media to spread false or misleading information,” he further added. 

Actions Taken to Address Scams

To address the growing problem, Awang Adek said the SC has increased collaborative efforts with various stakeholders through its multi-pronged approach which includes alerting the public via their “Investor Alert List”, blocking websites and geo-blocking offending social media pages. 

“Last year, we added 275 names to our ‘Investor Alert List’, blocked 143 websites and geo-restricted 35 social media pages. This year, we have added 194 names to the list and blocked 143 websites and 26 Facebook pages,” he said, adding that the alert list and blocked sites are constantly updated to warn investors of suspicious companies or individuals that carry out unlicensed investment activities or scams. 

Additionally, Awang Adek also revealed that the SC would also suspend the licences of those who make false promises or influence investors to follow their advice. 

“We need to ensure those licensed by the SC are behaving or operating in certain manners so that the public or investors will not be cheated of their hard-earned money. 

“If they are not doing as told then we will be forced to take actions. We cannot let this happen because it will affect the discipline and integrity of our capital market,” he said. 

On the SC’s target for solving investment scam cases, he said: “Cases will continue to increase — even after we have completed a number of cases, there will be more cases coming in. This is what worries us; Malaysians are still easily influenced by the promises of irresponsible parties. 

“The situation is made worse when the investors are cheated by companies that operated illegally or that are not approved by us. Hence, this is a risk that has to be borne by investors,” he said. 

He then urged the public not to be fooled by promises of high returns in a short time as there aren’t such businesses or investment opportunities to begin with. 

Awareness Efforts 

In terms of awareness campaign to increase the public’s financial literacy, Awang Adek said the SC is conducting year-long investor education and outreach programmes through the commission’s InvestSmart initiative. 

“It encompasses a wide range of initiatives that use novel approaches to educate the public including mobile applications, social media and other digital platforms to supplement traditional investor outreach channels such as exhibitions, seminars and roadshows,” he said. 

He mentioned that the SC will also be giving some focus to secondary school students in rural communities nationwide as they intend to increase the group’s financial literary. 

“It will be conducted through the use of a computer-assisted e-learning platform called Agen Bijak Labur Desa,” he said, adding that InvestSmart also connects with urban bottom 40% income population through Malaysia Digital Economy Corp’s #SayaDigital programme to promote digital inclusion, basic financial literacy, banking and investing.

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• This article first appeared in The Malaysian Reserve weekly print edition