11 April, 2008
(Bloomberg) -- Iris Corp., the subject of an international stock manipulation probe, fell to a three-week low in Kuala Lumpur after Malaysia's regulator sued U.S. hedge fund Aeneas Capital Management LP for market rigging and fraud.
The maker of digital identity cards dropped 3.6 percent to 13.5 sen at the 5 p.m. close, valuing the Kuala Lumpur-based company at 185 million ringgit ($59 million). Iris, down 34 percent this year, wasn't named as a defendant in the suit.Crackdowns on market manipulation are rising. Last month, U.S. regulators investigated trading of Bear Stearns Cos. shares after its stock plunged. Malaysia's Securities Commission said it worked with overseas authorities before filing a civil suit against 10 defendants including Aeneas Capital Managing Partner Thomas R. Grossman for creating fake demand for Iris stock.
``The authorities are stepping up efforts to clamp down,'' said Vince Ng, an analyst at Kaf-Seagroatt & Campbell Bhd. in Kuala Lumpur.
The Malaysian regulator said yesterday it wants to ban the defendants from trading any stock on the local exchange.
The filing at the Kuala Lumpur High Court also names Malaysian businessmen Tan Mong Sing and Low Thiam Hock, former chairman of Repco Holdings Bhd., the Securities Commission said. Tan and Low declined to comment yesterday.
Investigators analyzed more than 100 accounts at 15 Malaysian and 16 overseas brokers, and examined more than 200,000 e-mails, the Malaysian regulator said. U.K., Singapore and Hong Kong authorities collaborated in the probe, it said.
Kenneth Breen, a lawyer at Paul, Hastings, Janofsky & Walker in New York who represents Grossman, New York-based Aeneas and its related funds, said yesterday he couldn't immediately comment on the suit.
Grossman formed Aeneas in 2000 after leaving SAC Capital Advisors LLC, Steven Cohen's $10 billion hedge fund company.
``I have no comment as it doesn't involve the company,'' Iris Managing Director Tan Say Jim said by phone late yesterday.
10-04-2008
SC files suit against Repco Low and 9 others
by Risen Jayaseelan
KUALA LUMPUR: Close to two years after allegations that shares of Iris Corp Bhd were manipulated, the Securities Commission (SC) has instituted civil action against five individuals, five corporations and sanctioned two stockbroking houses and two dealers representatives involved in the case. The most prominent of the defendants is Low Thiam Hock, better known as Repco Low, who gained his reputation after he allegedly manipulated the shares of Repco Bhd in the late 1990s. Another defendant in the suit by the SC is one Richard Cohen, an American citizen alleged to have acted together with Low and a few others, in using numerous trading accounts that contributed to the strong demand for Iris shares. Cohen, whose last known address was in Bangsar, Kuala Lumpur, was a research analyst of Aeneas Capital Management, LP, a company that first emerged as a substantial shareholder in Iris in December 2005. Prior to his role in Aeneas, Cohen had worked at CIMB Securities in Kuala Lumpur as its senior vice president of institutional equity sales. The SC said: “The foreign defendants and their representatives worked closely with the Malaysian defendants in creating an artificial demand for Iris shares”. The SC is seeking a declaration from the court that all the defendants conspired to manipulate the market and share price of Iris and defrauded investors in the process. Apart from Low and Cohen, the other individual defendants are: • Datuk Tan Mong Sing, also a former director of Repco; The funds charged are based in the British Virgin Islands and the US. They are: • US-based Aeneas Capital Management and its related companies Aeneas Evolution Portfolio and Aeneas Portfolio Com; Priam and Acadian are companies based in the British Virgin Islands. The SC had initiated a formal investigation after Iris was declared a designated counter on May 11, 2006. The SC is also seeking that all profits made by the defendants in the trading of Iris shares be held in a trust for the benefit of affected investors and that the assets of the defendants be traced for the purposes of being used as compensation for affected investors. The SC is also seeking an injunction to stop the defendants from trading in all shares listed on Bursa Malaysia. The SC also imposed administrative sanctions against MIDF Amanah Investment Bank Bhd and PM Securities, in connection with the Iris manipulation case, fining them RM200,000 and RM400,000 respectively. Two dealer representatives from Avenue Securities, the husband and wife team of Lee Hooi Li and Patrick Taylor, had their licences revoked and suspended respectively. Another dealer representative from PM Securities, Lim Joo Lang, was barred for trading for nine months and fined RM10,000. Low gained prominence during the Second Board’s run-up in late 1995. He was a director of Repco Bhd, a Sabah-based company that was involved in gaming. Incidentally, co-defendant Tan had also emerged as a director in Repco in 1999 and both Low and Tan live two lanes apart in Bukit Damansara, the SC’s affidavit reveals. The SC’s criminal case against Low for manipulating Repco shares was only decided by the courts on Nov 14, 2006. Low was acquitted without even having to call his defence. SC chairman Datuk Zarinah Anwar told reporters after that decision she was disappointed with the judgment. Under Zarinah’s stewardship, the SC has sought to pursue civil actions more aggressively, as a strategy to punish offenders financially. The SC is also drawn by the civil courts’ ability to compensate companies and their shareholders quickly when offences have been committed. Civil cases also carry a lesser burden of proof. Last year the SC filed civil proceedings against Kenneth Vun, the former managing director and controlling shareholder of FTEC Resources Bhd to restitute RM2.5 million to the company and to restrain him from managing FTEC’s funds.
• Thomas Grossman, the managing partner of Aeneas; and
• John Suglia, Aeneas’ chief operating officer.
• Priam Holdings Ltd; and
• Acadian Worldwide Inc.
10-04-2008
The rise and fall of Iris
by Gan Yen Kuan
KUALA LUMPUR: It’s hard to believe that a stock like Iris Corporation Bhd, with a share base of 1.37 billion, could be manipulated. But that was alleged to have happened to the manufacturer of chips for electronic passport as it had a phenomenal run in 2006. From a penny stock in January 2006, Iris caught the imagination of investors when its share price skyrocketed to more than RM1 two months later, and rose to as high as RM1.37 on July 13, 2006. The rally in its share price began in mid-March 2006, and by March 28, Bursa Malaysia Securities Bhd had already queried the company over the sharp increase in its share price and high trading volume. In its reply to Bursa’s query then, Iris had said a multinational corporation had expressed interest in acquiring a stake in the company to form a strategic partnership. To add credence that the stock had indeed captured the imagination of foreign interest with some strange names appearing on its shareholders’ list. Among them were US-based Aeneas Capital Management and Priam Holdings Ltd, BVI company. Investors bought this story of Iris, given that Bursa Malaysia’s subsequent caution to the investors on April 6 did not stop the stock from rising further. On May 2, Iris first touched the RM1-mark, closing at RM1.05 on that day. The rally continued and it was only after Bursa Malaysia declared Iris as a “designated” stock on May 11 that its share price began to fall. With the designation, investors were required to make upfront cash payment for purchases and for disposals, the shares had to be made available before the transaction. By that time, Iris’ share price had surged 988% over a one-year period. When Iris resumed trading on May 16 after a suspension requested by the company on May 15, it fell to RM1 and later gradually declined to reach 87.5 sen on June 21. The trading restriction imposed on Iris was lifted on June 21 and that saw its share price hitting limit-up to RM1.17 the next morning. Excessive speculation seemed to have picked up again, sending Iris’ share price to historic high of RM1.37 on July 13. However, this time, the rally did not last long. Its share price fell to 85 sen on July 20, just five trading days after it touched the historic high, and had since then fallen steadily. On Aug 11, Bursa Malaysia again cautioned investors on the high volume and volatility in the trading of Iris’ shares, which was inconsistent with the broader market’s trading pattern. In the same month, the Securities Commission launched an investigation on an alleged manipulation and short-selling of Iris’ shares. Between mid-August 2006 and mid-January 2008, Iris was largely traded at below 40 sen. Meanwhile, for the past two months or so, its share prices were never higher than 20 sen.
“IRIS Corporation Berhad is a global security solution provider with core expertise in the area of securing government security documents i.e. National ID and Passport. Incorporated in 1994, IRIS is the first company in Asia to set up fully integrated manufacturing facilities for Contact and Contactless Smart Cards, Contactless Document Inserts and assembled Module in Tapes and Reels.
IRIS pioneered the world’s first electronic passport and national multiapplication smart card with the implementation of the Malaysian Electronic Passport in March 1998 and MyKAD - the Malaysian Government Multi Purpose Card in April 2001. These technologies are deployed in many countries across the Asia, Middle East and Africa regions.
IRIS also provides a full range of smart cards readers, integrated terminals, card personalization equipment and biometrics scanner to complement the application of its smart card solutions.
Other IRIS products include the Digital Conferencing System and Immigration Autogate.
IRIS Corporation Berhad is an MSC Status company and is listed on the Kuala Lumpur Stock Exchange.”
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