Crackdown down on financial scams in Myanmar

There has been a move from the Securities Exchange Commission of Myanmar (SECM) to crack down on illegal trading and financial scams carried out by unlisted companies in Myanmar.

The SECM appealed to the public in July 2017 to gather information on a specific company trading in Mawlamine. The company is called I Smart Co and has been reported as engaging in suspicious trading in Ayeyarwady. The company has also been linked to Saxon Capital Limited (SCL), which was shut down due to illegal trading.

Unauthorised selling of shares

 According to the SECM, SCL was selling shares on an unauthorised mobile and banking platform across Mandalay, Yangon, Taninthayi and Ayeyarwady. According to reports, SCL were accepting fake shares and promising returns of up to 80% every 120 days. To pay for the interest to current investors, SCL took more deposits from new investors – basically operating a Ponzi scheme.

While SCL has now shut down its office in Yangon, the management is still under investigation, along with I Smart Co.

Financial scams not unusual in Myanmar

 Unfortunately, these kinds of illegal scams are far from unknown in Myanmar. In 2015, a company run by Ng Kwok Fai, called Global Growth Company Limited, was licensed to run a money exchange company in Myanmar.

However, the company was actually an illegal brokerage, which scammed customers by pretending to invest in future markets. When the company ran into inevitable problems, investors didn’t get paid. They also didn’t get their initial deposit back.

Yangon Stock Exchange mitigates fraud

 Back in 2015, there weren’t many ways for investors to get their money back, but since the start of the Yangon Stock Exchange (YSX) in 2016, there has been a change. Before the YSX was established, around 200 companies were selling shares directly to investors. This encourage scams and illegal activity.

Since the establishment of the YSX, the SECM oversees all trading of company shares. Investors can also only trade in shares of companies that have been registered, which further limits fraud.

At the moment, only the four companies (First Myanmar Investment Co., Ltd. (FMI), Myanmar Thilawa SEZ Holdings Public Ltd., (MTSH), Myanmar Citizens Bank Ltd. (MCB) and First Private Bank Ltd.(FPB)) that are listed on YSX are allowed to sell shares to the public. Two other companies are permitted to sell shares on an Over the Counter (OTC) basis. Shares also have to be traded through licensed securities companies.

All of these regulations are set to protect investors and limit financial scams across the country.

Htet Tayza

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