Tuesday, June 30, 2009

Investors Warned On Call Warrants

The Minister of Finance in answer to a question from MP Selayang, confirmed that Call Warrants are not the same as dsc01223.JPGWarrants. Warrants are issued by the public listed company and are convertible into mother shares. Call Warrants on the other hand are not issued by the listed company but by third parties such as banks and stockbrokers. On Maturity, they are not converted to shares but the investor is paid a profit if the price is more than the exercise price but the investors has all his money forfeited if the exercise price is less .

These are third parties. In the internet website list the Call Warrants together with Warrants without differentiating them. Many members of the public discovered they had purchased call warrants and not warrants after they had entered into the transaction. Many have lost millions. One of these unfortunate investors is Peter Loo. He lost RM24 million and intends to sue Bursa Malaysia and CIMB over his losses I am sure there are many more who have suffered similar losses.

I call on the Government and the authorities to review this unhealthy practice and to put the Call Warrants on a different list from the Warrants. A clear and prominent notice to warn investors stand the risk of having their entire investment forfeited. When they buy Call Warrants should also be given. I am of the opinion that this is not investment and is more of a form of gambling and it should not be allowed.

30 June 2009

William Leong Jee Keen
Member of Parliament

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